Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-07-19
FIGHT RENEWED
TO FORCE PHONE
RATE REDUCTIONS
Utilities Commission Seeks
to Increase DepreCia-
ton Reserve.
ENGINEER FOR SPECIAL
STUDY TO BE NAMED
Announcement by Elgen Follows
Order for $4,000 Assessment
for Investigation.

The Public Utilities Commission
today began a new fight to force the
Chesapeake a. Potomac Telephone
Co to reduce annual charges on sub
scribers to increase the depreciation
reserve used to replace wornout prop
critics.
The commission announced 1t is
seeking to employ Andrew Sangster,
consulting engineer. who previously
has been engaged by the commission
on special studies to make new in
vestigation OF depreciation rates OF
the local phone company and classes
Of property to which they are APP
piled.
The commission contended in the
recent telephone case before District
Supreme Court that the company was
collecting annually from its subscrib-
ers about 100000 more than was
needed for replacement Of WORKOUT
properties.
Today's announcement was made
by Riley E. Elgen, commission chair
man. after the regulatory body had
ordered the Potomac Electric Power
Co. to meet an assessment OF $4,000
to begin an investigation to deter
mine II the power company has
credited TO its valuation base figures
for properties which are in fact not
used and useful in its service.
$1,000 for Inquiry.
The commission plans to assess
the telephone company $1,000 10 pay
the cost Of the depreciation reserve
inquiry. The Utilities Commission
act provides that the cost Of such
investigations shall be charged against
the utility concerned.
The commission already has or
dered the telephone company TO sub
NIT new depreciation rates on or
before August !. Elgen said the re-
cent decision by District Supreme
Court means that the commission has
power to fix depreciation rates up to
the time the new Communications
Commission establishes depreciation
rates. II the Federal agency starts
proceedings TO TX rates then the local
commission will carry its Tight there
and submit recommendations for
rates 1t thinks should be adopted for
the local phone company.
The power assessment Is the FIRST
assessment for the purpose and others
may be made, depending on the show
ing Of experts engaged to make the
study.
The commission also viii establish
rules for the handling Of accounts
for properties which are ruled not
used and useful, that is, whether they
should be charged Off against depre-
citation reserve or operating expense.
This decision will be of interest to the
public, since If charges for replace
ments 60 on operating expense the
apparent profits Of the company are
correspondingly reduced. leaving that
much less for rate reductions under
the consent decree.
s32,500,OOO Rate Base.
Under the original consent decree,
by which rates are automatically ad-
justed, with profits above a certain
per cent returned TO the customers in
the form of rate reductions on a slid
ing scale, the rate base. or valuation,
was fixed at $32 500 900. as of De-
cember 81, 1924. To this figure have
been added the costs OF Improvements
and betterments since that date. The
valuation now is said to be approx
mately $50 .O00.0 900, an increase Of
about $500 900 in the last 10 years.
This has led the commission to in
woke an investigation of the used and
useful property.
If a great amount Of property is
found to be no longer used and useful
to the public. but still Is credited to
valuation, a saving in rates may be
accomplished by the commission by
striking such figures from the rate
base, 1t was said.