Evening star., 1936-01-31
ELECTRIC RATES
WILL Be SLASHED
$314,0)O IN 1886
Utilities Commission Orders
Return Rate Cut From
7 to 6.5 Per Cent.
ABOUT 100000
TRIMMED FROM BASE
Public Hearings on Proposed New
Schedules to Open at 10 AM.
Tomorrow.
BY DON s. WARREN.

Charges for electric service this year
will be slashed by approximately
$3l4.0O0 as a result of action today
by the Public Utilities Commission Or
dering reduction from to 6.5 per
cent in the initial rate of return al
lowed the Potomac Electric Power Co.
and slicing about $2,000,000 off the
rate base against which profits are
figured.
Just how the consumer rate cuts
will be applied has not been deter
mined. Public hearing on proposed
new rate schedules for this year will
start at 10 am. tomorrow.
In announcing its decision on modi-
fication Of the sliding scale plan under
which rates of the company are ad-
justed annually, the commission called
on President William Mcclellan to
submit new rate schedules as Of Feb
ruary !.
The commission decisions mean the
be about $229,000 greater than what
had been calculated by commission
accountants on the basis of the old
basic rate OF return and the former
agreed rate base.
Commission Chief Accountant Byars
NICK. Bachman had figured the rate
cut for this year would have been
S84,4l5 on the old premises. That
figure was nearly $4,000 higher than
estimates submitted by the company.
Cut Bitterly Fought.
Reduction of the rate of return was
bitterly fought by company officials
Mcclellan warned the commission the
company could not accept anything
less than per cent as reasonable. ;"
Against this was declaration by
Commission Counsel Hinman D. Fol-
som that the record amply supported
the rate of return cut. Peoples Coun-
sci William A. Roberts, who had argued
the rate should be cut to per cent,
declared the United States Supreme
Court had sustained as reasonable"
a rate of return of but SIS per cent in
the case Of the Illinois Bell Telephone
Co. several years ago.
The company keeps all its profits
for any one year under the sliding
scale plan. but sum equa! to a Gel
tain percentage of the excess profits
is considered available for consumer
rate cuts the next year.
The old scale was that half of the
excess In profits between 7 and 81
per cent be considered available for a
rate cut; three -f1fths between 8A and
9 per cent. and three-fourths of prof.
its in excess of per cent.
The new scale calls for use for
consumer rate cuts Of ore-half of
profits between 6ia and 7L per cent;
three-fifths of the excess between ~
and 8la per cent, and three-fourths
of any amount in excess of 81 per
cent.
The commission directed the COM
pany to reflect a substantial reeuc-
ton in lighting rates to the District
and Federal Governments in formu-
lating the proposed new rate sched-
ules. Engineer Commissioner Dan I.
Sultan had directed special attention
to possibilities of reducing rates paid
by the Government for street lighting
1885 Net Income.
Calculations presented at the hear
ing showed the company last year had
a net corporate income for the past
year of $5,028,981 The basic return
of 6.5 per cent would take up s4,387 .05l
of that sum. The excess profits of the
company for the past year, on the new
scale, therefore. Is figured at $641 $50
One-half of that, which would now be
available for rate reductions this year.
would be some $325,000, but commits
sion officials said certain adjustments
brings the figure down to about $3l4,-
600.
The weighted rate base OF the COM
pany as of December 81, 1885, was re-
ported to amount to $69, 1926 800. The
commission order today calls for re-
duction of the base by deduction Of
items totaling 1882, ,649.37, represent
ing corrections In the estimates of the
value of properties retired from service
in the past 10 years.
This deduction therefore brings the
rate base down to $67, ,493. ISL as of the
end of the past year. The company
had charged the value of the retired
properties at their original cost"
figures. Evidence was submitted to
show the real value was greater and
that therefore the rate base deduc-
tions should be increased correspond
insly in calculating the effect OF the
retirement from service of such prop
critics.
A company witness submitted q
study indicating the deductions from
the rate base should amount to ST.
100000. Bachman, for the commits
sion staff, presented calculations to
show the rate base cut should amount
to So, ,289.0 under his formula.