Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-04-03
COURT MUSTPASS
ON PHONE RATES
Commission Stands Firm on
Cut Order-H0IdS Earn
ingS Adequate.

The fate Of the 10 per cent cut in
telephone rates, ordered in September,
1882, by the Public Utilities Commits
sion, now rests with the District Su-
I preme Court. Late yesterday the
commission elected to stand on it's
original orders, after having been
afforded by the court the opportunity
required by law to change its orders
in the light of new testimony intro
duced by the Chesapeake g. Potomac
Telephone Co. when the case was
tried in the court.
The commission filed its reasons for
not changing its mind in a paper 26
pages long. The next step is to argue
this decision, and so important is the
issue considered that no less than
three days will be allowed for court
argument After that it will be up
to Justice Jesse c. Adkins to decide
whether to uphold, modify, or set
aside the order The argument is
expected to be set for some time SUBJ
sequent to April 9.
The document filed by the commits
sion showed the company and the
commission are still as far apart as
ever as to some OF the important ele-
mentS in the case. Even where the
commission did not challenge the
company'S figures, it rediStributed
them, in some cases diSalloWed their
entry into rate calculations, and
otherwise modified the effect sought to
be given them by the company in
several directions.
Figure Earnings.
The sum of it all. however, was
that the commission found the value
of the company's properties for rate
making purposes to be S23 ,672 ,316 as
of December 81, 1881. 1t also found
that if the rate reduction order had
been in effect the company would
have earned a net income, available
for return on fair value, of $4,000 500,
or 1929 per cent. in 1882; and ST.
9l8,659, or 7.4l6 per cent in 1888. 1t
found a return Of per cent might
be considered lust and reasonable"
for the telephone company, and there
fore the order was not confiscatoIy
or otherwise unconstitutional
ference were depreciation, for which
the commission deducted S6,900,000,
while the company deducted only S.
1877 099; working capital. written in
by the company at Sl,l46,l00 and by
the commission at $550O 900; and going
concern value. included by the COM
pany at S4,000.O00, and not allowed
as a separate item by the commission,
which contended that it had viewed
the property as a going concern in
arriving at the reproduction cost
figure.
Differences in Interpretation of fig
ureS occurred over the license fee paid
by the local company to its parent,
the American Telephone g. Telegraph
Co. These payments aggregated Sl32.-
1872 in 1882 and $129,183 in 1888, and
were charged in their entirety by the
local company to operating expenses.
The commission, however, modified
this account by allowing the local
company to charge but Is per cent of
the payments to operating expenses,
considering the balance a capital
charge since it is represented by I'M
provementS in the companys plant,
arising from research work done by
the A. T. & T. AS a result of this
and other notifications the charge to
operating expenses was reduced to
S57,320 in 1882 and to $50 PSI in 1888.
The commission also declined to
consider charges made to operating
expenses, averaging S36,646 per an
mum, as accrual to a reserve to be
used for pensioning employees of the
company. 1t points out the employees
have no legal right to the pensions,
and the accrualS are in excess of the
amounts paid out of the fund in pen
sions.
The commission found that the
amount of annual charges to operat-
ing expenses for property retirement
reserves is at least 100000 too great
for every year since 1881, and there
fore would not take that amount into
consideration for determination of the
case.
Claim Excessive Prices"
The commission found that scat
tered through the charges to operat-
ing expenses are the costs of replace
ments of parts bought from the affil-
lated Western Electric Co. at "exces-
sive prices" 1t makes no specific
finding as to the excess, because the
amount of the overcharge cannot be
ascertained from the evidence in court
The matter" however, warrants in
vestigation and cannot be ignored in
consideration of the adequacy of the
rates fixed"
The effect of all of these downward