Evening star., 1936-01-23
WITNESS REPORTS
42%PEPCO RETURN
ON COMMON IN So
Public Utilities Commission
Gets Figures as Hearing
Is Resumed.
RATE PROBED WITH VIEW
OF HELPING CONSUMER
Indications Are Rate Reductions
Which May Be Ordered for
1886 Will Be $4,000.
nv DON s. WARREN.


Evidence showing the rate Of return
on the common stock Of the Potomac
Electric Power Co. during the past
calendar year amounted to 42.5 per
cent, compared with SO per cent in
1884, was laid before the Public Util-
tiles Commission today by its CHIEF
accountant, Byars NICK. Bachman.
These and other data were intro
duced at the resumption of the public
hearing called by the commission to
determine II the initial rate of return
allowed the company under its sliding
scale plan is too high. This is pre-
liminary to decision later this month
on reduction in consumer rates.
Indications now are the consumer
rate reductions which may be ordered
for 1886 will total $84, 4,585, or half the
company profits in excess of the initial
2 per cent rate of return allowed In
the sliding scale plan.
Holding Company Owns All Stock.
All of the common stock of the
power company - $6,00O,000 worth
with par value of $100-is owned by
the Washington Railway & Electric
Co., holding company. the majority
stock of which, in turn, belongs to
the North American Co. Potomac
Electric common is not listed on the
Washington Stock Exchange. Wash
ington Railway & Electric recently was
offered at more than $700 share.
The gross operating revenues of the
company for the past calendar year
were reported by the witness at $13,-
1882. and the net operating income
at $5,022,774.
The consumer rate cut, calculated
on a company showing its rate base,
or the value of the properties set up
for applying the z per cent rate of re-
turn, is $50 ,425, 1865. This shows an
increase of $3,746,313 over the total
. year ago. Any change ordered by
the commission in the rate base would
affect the amount which would be
ordered in consumer charges.
Under the sliding scale plan, first
adopted in 1925, the company keeps all
its profits, but sum equal to half OF
the profits between and per cent
is to be considered available for con-
sumer rate cuts in the following year
Bachman's statements today, based on
company books, showed the concern
itself made net profit of 1924 per
cent in the past year on the rate base
figured at $50 9,425, 1865 at the end of
the year.
Pepco Loses First Tilt.
Should the commission order q
change in the sliding scale plan, cut
ting of the initial rate of return to
6.5 per cent or per cent, instead of
leaving it at per cent, would affect
greater possible consumer rate cuts
next year, but not in 1886.
The company lost the first contest
In the current hearings today. Bach
man previously had introduced data
showing decreased costs of money and
decreases in returns on various kinds
of stock and bond investments. S. r.
Bowen, Pepco counsel, today moved to
exclude them as irrelevant and imma-
terial, but Commission Chairman Riley
e. Elgen overruled him. Bowen noted
m exception.
Bachman's charts showed that for
1888, 1884 and 1885 the total par value
OF common and preferred stock
amounted to $13,O00,827. For 1893 the
total dividends paid amounted to $2,-
195,044, or rate of 1868 per cent; for
1884, $2,675,042, or a rate of 2O.5 per
cent, and for 1885, $2,945,04l. or a
rate of 22.6. The averages for the
past 10 years were found by Bachman
to be $12,675,371 for the par value of
the stock, and the average yearly div
idends to have amounted to $1,870,274,
or 4 rate of 14.7 per cent,