Evening star., 1935-11-13
NORTH AMERICAN
MAY HALT SHIFT
OF ". R. {. CONTROL
Announcement of "Revi-
sion" of Original Plan
Causes Rum0rS.
COLEMAN'S DECISION
CITED BY OBSERVERS
Move of Utilities Commission to
Cut Net Return Rate Also
May Be Factor.

The North American Co. may with
draw its proposal to relinquish con-
troll of the Washington Railway &
Electric and Potomac Electric Power
companies, according to reports cur
rent today in financial and utility
circles.
The rumors, attributed to reliable
sources. followed closely report which
DR.. William M. Mcclellan. president OF
the railway company, filed with the
Public Utilities Commission, announc-
ing that North American would revise
its original plan for moving out Of
the Washington utilities field. Changes
would be made, he said, to place the
major share of the cost of carrying
out the plan on the North American
instead of the railway company.
Utility experts see two reasons at
this time why North American might
want to abandon the plan.
l. The recent decision of Federal
Judge Coleman in Baltimore, holding
the Wheeler-Rayburn holding COM
pany act unconstitutional in its en-
tirety.
2. The move of the utilities COM
mission. which is expected to result
in reduction in the net rate of re-
turn allowed the power company.
Roberts Viewpoint.
Since William A. Roberts, people S
counsel before the utilities commits
sion, and other authorities on the
utilities CIT lid
gard compliance with the Wheeler
Rayburn act as the principal motive
of the North American for divesting
itself of control of the railway and
power companies, conversely, they do
not believe Judge Coleman's decision
would be the main object now for a
sudden change in plans.
The primary motive, then, would be
the prospective reduction in the rate
of return of the power company.
The North Americans original plan
proposed the substitution of l,625, 900
new shares for the outstanding $1,000
odd shares OF common stock in the
railway company and was predicaJed
on continuance of per cent net re-
turn by the power company A reduc-
ton in this rate by the Utilities Com
mission, it was pointed out, would ne
cessitate change in the original plan.
The move of the Utilities Commis-
sion, obviously toward a cut in the
net return, was revealed in a notice
served on the company that existing
facts" warrant consideration of the
rate of return allowed under the slid
ing-scale plan governing electric rates.
The commission, however, did not
commit itself as to what revision is
contemplated.
Operating Revenue.
The company last year had a net
operating revenue of approximately
s5,000,000 The excess of profit over
the allowable Z per cent on the agreed
valuation was found to be 1926, 900.
Applying the sliding scale, the COM
mission determined that S147,000
should constitute the amount of the
rate reductions for this year. This
cut was spread over several brackets
of rates.
A reduction to 6 per cent in the
net return may be the commissions
goal. That figure was used recently
by Peoples Counsel Roberts during a
debate over the proposed adoption of
a sliding scale plan for the Washing
ton and Georgetown Gas Light Cos.
He insisted basic per cent profit
would be no lower than reasonable.
DR.. McClellan's disclosure that the
original plan of the North American
would be revised to relieve the rail-
way company of the burden of ex-
pense in connection with the pro-
posed stock transfer was contained in
an answer to a series of questions
asked by the commission. One was:
why were all the costs incident to
the carrying out of the terms of this
agreement placed on the Washington
Railway g. Electric Coz"
DR.. Mcclellan said it was not the
intention to place all of the costs on
the railway company.