Evening star., 1934-02-16
Gas Rates Issue in
Arlington County, Va.

To the Editor Of The Star:
have been following with interest
the case involving the valuation for
rate-making purposes Of the property
Of the Washington and the George
town Gas Light Companies, since I,
as member of the Public Utilities
Commission Of Arlington County, d.
rected the case that eliminated last
year in a decision by the State Cor
poraticn Commission Of Virginia re-
ducing the gas rate for the county
from $3.50 10 $1.20 per thousand
cubic feet. The gas distributed in
Arlington County is purchased whole
sale from the Washington Gas Light
Co. by a subsidiary corporation, so
that we also had an interstate factor
involved.
the case for the defendants was
presented by the same accountants
and engineers as those now appear
ing for the company in the District
of Columbia and they advanced sub
Stantially similar claims. 1t is diff
ficult to understand why some Of
these claims should be presented, un-
less it be that, in general, 1t Is antici-
pated the consumers will be caught
mapping or their representatives will
be found to be incompetent. Aside
from common claims Of high labor and
material costs, items that border on
the ludicrous are offered at times
For example, In addition to cash and
operating materials properly required
for working capital, these companies
claimed additional amounts for gas
appliances held for sale and for book
accounts representing such sales al
ready made. These items were as
sailed by us and we're rejected by the
Virginia Commission, perhaps in their
own minds even before they left the
bench at the hearing.
Probably the most fantastic OF all
claims are those for huge amounts
under the heading Of going concern
value" After including every pos
sible dollar that the owners have in
vested or that expresses current value
Of the property, further claims Of 10
to IS per cent are made under this
heading for amounts apparently
drawn from some ones imagination.
They are never clearly explainable.
Apparently they represent capitaii-
zation of the fact that the plant
actually operated, as it was expected
to do, when the switch was first turned
on, making it going concern" or
they are q capitalization of the need
OF the patrons for the service. In
any event, such a claim is largely
q duplication of amounts already in
cluded in the appraisal. Occasionally
it is said to represent deficiencies in
earnings during the early years Of the
plants operation; in fact, even when
not 80 stated, that seems usually TO
be the basis Of the claim. However,
! In most cases the promoters antici-
pated this deficiency by the issuance
OF common stock that cost them
nothing and later became valuable
as the plant succeeded in operation
and could be sold TO the public. Too
often approximately 10 per cent for
q so-called going-concern value has
been slapped on and has been ac-
Cepted by public authorities without
an analysis Of the nature of the items
or due regard to overhead expenses
already included. In our case claim
OF Is per cent was made for this item;
the Virginia Commission accepted
per cent.
Unless the representatives of the
public are clearly informed on such
matters, some Of these questionable
claims may succeed, which probability
doubtless encourages their repeated
presentation. c. I. KEPHART.