Evening star., 1935-11-19
$35O,OOO Gas Rate Reduction
To Be Weighed at Hearing
Cut Is in addition to $500, 900 Discount.
Sliding Scale Plan Also Viii Be
Considered by Commission.

The company is said to be desirous
Of making use Of what 1t calls pro
motion rates" In certain schedules.
This is designed to promote the use
of gas. Rate at which gas Is sold
to the District and Federal Govern
ments Is fixed by Congress at 10 cents
per 1000 cubic feet.
Study Of a proposed sliding scale
was initiated last August by Peoples
Counsel Roberts, in move to end the
protracted battle before the commits
sion over the valuation and rates Of
the Washington and Georgetown COM
panieS.
The proposed basic rate Of return
to be allowed the companies under the
sliding scale plan-or 6.5 per cent
Is less than that now allowed the
Potomac Electric Power Co., which is
a base of per cent. The commission.
it will be recalled, however, has or
dered an investigation Of the rate OF
return allowed the power company
under its sliding scale, and a hearing
will be held prior to the annual ad-
justment Of power rates in January.
This move by the commission has
been interpreted as an indication 1t
may consider a reduction of the basic
return allowed the power company.
Company Sets Years Profits.
The proposal now made for annual
adjustment of the gas rates means, as
doos tho p0var coronopv Slidipo GRO Ia
plan, that the company be allowed to
keep all its profits for any one year, re-
gardless Of what Is the amount of the
excess" of returns over the basic
rate. But certain portions of the
excess would be considered as the sum
to be ordered for rate reductions in
the succeeding year.
The gas company sliding scale plan
would work In this fashion: II earn
ings are in excess Of 65 per cent on
the agreed valuation, or rate base, and
less than rs per cent, one-haf of the
excess would be the sum to be calcu-
lated for rate reductions.
If earnings are rs per cent and less
than 8.5 per cent, further future re-
ductions would be in order and a new
element would come into the picture.
The amount calculated for rate re-
ductions would amount to three
fourths Of earnings in excess Of rs
per cent. To this would be added q
sum equal to one-half Of / per cent of
the agreed rate base.
OfficiaI Explains Plan.
One official figured this phase this
way: Suppose the companies earned
$1,000 over and above rs per cent
return on the valuation of $21, ,75O, 900.
Then three-fourths Of the excess earn
ings above rs per cent on the base
would amount to $3.50. To this would
be added $1os. .75o. or one-half of per
cent Of the rate base Of $21 .750, 600.
If the companies earned 8.5 per cent
or more, rates would be reduced by
f1ve-sixths of the excess earnings
above S.5 per cent and one and one
fourth Of the rate base
Should earnings of the companies
fall below the allowed rate return Of
6.5 per cent, there would be no tn
crease in charges to customers until
after the expiration Of two years.
Rates then would be increased.
If the rate of return was between
SIS and per cent the increase would
be three-fourths of the difference be-
tween the actual return and the agreed
6.5 per cent return: If SIS per cent or
less, the amount available for increase
in charges would be five-sixths of the
difference between the actual return
and the agreed 6.5 per cnt.