Evening star., 1935-11-15
NORTH AMERICAN
W|THDRAWS PLAN
Utilities Commission Blamed
for Move to ReIinquish
w. R. & &.

xkiC XNOI fiulCllCdI W. bOudy
Withdrew its proposal to the Securi-
ties and Exchange Commission to re-
linquish control of the Washington
Railway & Electric and Potomac Elec-
trio Power Companies.
Blame for the move was placed on
the Public Utilities Commission for
initiating move apparently designed
to reduce the net return of the power
company below the present allowable
Z per cent.
The company's action did not come
as a surprise in public utility and
financial circles in Washington, which
heard rumors several days ago that
such . step was contemplated.
The North Americans plan to di-
vest itself of control of its Washington
properties proposed the substitution of
1875, 900 new shares of stock for the
1000 odd shares of common stock in
the railway company, which owns the
power company.
Relationship Unchanged.
Announcement of the North Amer
lSdll dSIlOA1 wac hlhdC oAAAIdlIcAACOAoty
by the Securities and Exchange Com
mission and j. F. Fogarty. president
of the giant utility holding company.
Fogarty's statement, however, empha-
sized that as a result of the with
drawal Of the plan the relationship
between the North American and its
properties in washington and vicinity
would remain unchanged.
Fogarty's statement follows:
"On October 81 Washington Railway
& Electric Co. filed with the Securities
and Exchange Commission registra-
ton statement covering the $1,000
shares of its outstanding common
stock and 1,625 900 participating shares
representing such common stock. At
the same time, the North American
Co. filed registration statement with
respect to the participating shares ap-
plicable to its holdings of common
stock of Washington Railway & Elec-
tric Co. and in connection with its
proposal to sell such participating
shares to underwriters for public Of
fering.
Pepco Receives Letter.
ION November 8, Potomac Electric
Power Co., principal subsidiary of
Washington Railway & Electric Co.,
received a letter from the Public Util-
tiles Commission of the District of
Columbia stating that existing facts
warrant consideration prior to or at
the time Of the annual rate hearing,
which would ordinarily be held in the
near future, of the rate Of return al
lowed that company under the exist
ing sliding scale arrangement. In
view of the uncertainty thus created,
it has been deemed impracticable to
proceed with the proposed offering at
this time. and an application has been
filed with the Securities and Exchange
Commission asking its consent to
withdrawal of the registration state
ment. Consequently, the relationship
of the North American Co. with the
electric and principal transportation
utility properties in the District of
Columbia and adjacent territory In
Virginia and Maryland remains un-
changed"
North Americans plan to move out
of the Washington utilities field was
attributed by william A. Roberts, peo-
pies counsel before the Utilities Com
to three motives
/. To comply with the public util-
tiles act Of 1885, which, however, will
not become effective for two years.
2. To release control at q time
when there is q good market for the
It had been estimated that
the company would have made ap-
$25, ,000. 900 under its plan.
3. The threatened invasion of the
Washington utilities field by the Asso-
ciated Gas g. Electric Co., which re-
Gently acquired control Of the Vir-
ginia Public Service Co., which pro-
vides electricity for q major portion
of Arlington County and other sec
tions Of Virginia.
Roberts, however, did not believe
that compliance with the utilities act
was the principal reason Of North
American for Its move. Since he
expressed that opinion Federal Judge
Coleman of Baltimore has held the
act unconstitutional In its entirety.