Evening star., 1935-11-10
PEPC0 RATES DUE
FOR DOUBLE PROBE
BY COMMISSION
Study of 7 Per Cent Return
Base May Lead to
Lower Charges.
"BURDENS" ARE FEARED
WITH w. R. E. TRANSFERS
Roberts Statement Will Deal Also
With Relation to Anti
Merger Act.

Prospects of a reduction in the net
rate of return allowed the Potomac
Electric Power Co. arose yesterday
when the Public Utilities Commission
ordered an investigation of the effects
OF the sliding-scale plan governing
the company's charges to the public.
Reduction of the net profit of the
concern would be reflected in amounts
applied in the future in consumer
rates. A return of 7 per cent on the
agreed valuation now is permitted
before the sliding scale operates to cut
consumer rates reductions.
Another development in the tangled
power company situation came yester-
day with a declaration by PEOPLES
Counsel William A. Roberts that he
believes AL kinds of burdens" would
devolve on the Washington Railway 81
Electric Co. as result of the stock
transfer planned by the North Amer
lean Co., in divesting itself of control
over the w. r. G. E. The North Amer
lean Co. owns controlling interest in
w. r. e. E, which in turn owns the
power company.
Roberts said he would list the So
called burdens" in a report he will
make soon to the Public Utilities Com
mission on the North American pro-
posal as filed with the Securities and
Exchange Commission Roberts said
his statement also would deal with the
proposal Of the North American Co.
as 1t relates to the La Toilette anti
merger act, the charter of the railway
company and the transit merger act.
Sequel to Stock Boom.
Action of the Utilities Commission
in planning a scrutiny of the rate of
return OF the power company under
the sliding scale plan also came as a
sequel to a study it is making of the
North American Co. announcement,
which has sent the bid and asked
prices for w. R. g. E. stock soaring
on the Washington market. The
giant utilities holding company stands
TO reap a gigantic profit from its plan
TO sell its holdings in w. r. g. E.
under proposed stock transfer.
The District commission served
notice on the power company yester-
day that existing facts" warran;
consideration of the rate of return
allowed under the sliding scale plan,
prior TO the annual decision on con-
sumer rates. The commission, how.
ever. did not commit itself as ia
what revision in the plan might be
contemplated. Date for the hearing
will be announced later. The annraI
correction of consumer rates is de.
termined about the middle of each
January.
Inc power company last year gar
nered a net operating revenue Of
approximately s50OO.000. The exces,
OF profit over the allowable z per
cent return on the agreed valuation
was found to be s295, 900. The com.
mission, applying the sliding scale,
determined that SI47,500 should bs
the amount of rate reductions for
this year. This cut was spread over
several brackets of rates.
The company keeps ali its profits
for the past year, a sum equal ia
certain percentage of the excess
profits being determined for appli-
cation in consumer rate reductions
for the next year.
How Scale Operates.
Under the present scale, one-half
of the excess profits between 7 and
825 per cent are held available for
rate reductions. This progresses az
excess profits increase. Between 82j
and 9 per cent profits the amount ta
be applied in consumer rate cuts
would be three-fourths of the total
sum. and for profits above 9 Per cent
the amount would be f1ve-sixths.
In recent debate over the proposed
adoption of sliding scale plan for
the Washington and Georgetown Ga,
Light Cos. Peoples Counsel Robert,
has insisted basic per cent prof,
would be no lower than reasonable.
The present sliding scale plan dates
back to 1882. Each year there have
been excess profits and each year re-
ductions in consumer rates have been
ordered
Even if the per cent allowed profit
to the company is not reduced as q
result of the new inquiry. there is ex-
pected to be some reduction in electric
rates effective next February /.
The peoples counsel will submit hi,
report on the North American Co
proposal to the Securities Commits
sion as we'll as to the District Com.
mission. While he declined yesterday
to announce what would constitute
the burdens" to be placed on the
w. r. g. E. as the result of the deal
he intimated they consisted chiefly oi
expenses the railway company would
(See PEPCO, Page 81