Evening star., 1936-01-29
PEPC0'S REVENUE
CUT TDEMANDEDBy
!. FOLSOM, ROBERTS
Downward Adjustment of
Rate Base Also Asked
of Utilities Board.
HEARING ON REDUCTION
is EXPECTED PROMPTLY
Commission Will Hold Executive
Session After Counter-Attack
by Company Counsel.
BY DON S. WARREN.

Demands for reduction Of the basic
per cent rate of return allowed the
Potomac Electric Power Co. and for
a downward adjustment of its rate
base, against which profits are figured,
were laid before the Public Utilities
Commission today by its counsel,
Hinman D. Folsom and Peoples Coun-
sci william A. Roberts.
After hearing a counter attack by
S. R Bowen, counsel for the company,
the commission will hold an execu-
tive session and is expected to an.
nounce decision promptly on pro-
posed modification Of the sliding
scale plan governing the amounts to
be set aside in the future for rate
reductions.
Hearing on Cut to Be Called.
Hearing on the amount of the rate
cut for this year and its distribution
among consumers then will be called.
The commission is expected to order
reduction of the basic return, despite
a declaration by President William
Mcclellan that the company could
not accept anything less than per
cent as reasonable.
Folsom declared the record in the
case amply justified reduction of the
basic return that he was prepared to
defend a commission order to that end
at any time and place. convinced 1t
would stand any test. He demanded
adjustment of several abnormal oper-
ating expenses, so they might be
amortized over a period Of years and
not 'distort operating expenses charged
for the past year" This would affect
corporate returns for the last IL
months.
Six Per Cent Base Return Sought.
Roberts insisted the basic return be
slashed to 6 per cent, and cited de-
cision of the United States Supreme
Court holding as reasonable return of
SIS per cent allowed the Illinois Bell
Telephone Co. two or three years ago.
He said the record showed rapid in
crease in company business in recent
years. its huge surplus the dividends
on its common stock which have run
from IA to 42.5 per cent in the last 10
years, and the downward trend in costs
of money and the lower rate of returns
stock and bond holders throughout the
country now are accepting.
The Mcclellan statement was taken
as a warning the company may take
the issue to court if the commission
orders the initial rate of return re-
duced. The commission called the
present hearing to determine. among
other things. the reasonableness of
the present rate Of return
Gas Rate Plan Cited.
Folsom remarked at one point that
those who had drafted the new sliding
scale plan for the Washington and
Georgetown Gas Light Cos, which
allows a basic return of 6.5 per cent,
were so pleased with it they would
seek to have it adopted by other gas
utilities.
Mcclellan promptly retorted that
the sliding scale plan was not in oper-
alton elsewhere, that there was q
wide difference between the electric
power and gas industries "One of
them is live industry" he added.
and do not want to talk about the
other"
When arguments are concluded to-
| day the commission will consider the
case briefly and after decision there
will come the annual hearings on the
distribution of the 1886 consumer
rate cuts among the various classes
of customers.
Commission Chief Accountant Byars
Mex. Bachman has estimated the
| company's excess profits for last year
were Sl68.000 which would indicate
sum of $4,000 as available for
consumer rate cuts for this year.
Company experts have figured the
excess profits at about Sl26,OO0, Civ
ing some $4,000 for consumer rate
cuts. Both these calculations, how
ever, may be vitally affected by COM
mission decisions on important ac-
counting issues raised at the hearings.
Profit Accounting Upheld.
The commission staff suffered an
upset late yesterday when Company
Vice President A. G. Neal produced
a memorandum of the commission to
show that the commission agreed to
methods used by the company in ac-
counting for profits it gained in the
sale to the United States Government
of the old power plant at Fourteenth
street and Constitution avenue.
Earlier in the day Bachman had
charged the company violated COM
mission accounting rules in failing to
credit the sale receipts to the retire.
ment reserve, and, instead, crediting
the s3,600,0O0 to profit and loss"
The net profit of the company is es-
timated at between. s1,200,000 and
a