Evening star., 1937-01-25
$512,491 REDUCTION
IN ELECTRIC RATES.
FOR D. C: . PROPOSED
Estimated Cut Is Revealed
as Utilities Commission
Hearing Opens. ~
FEDERATION OFFICIAL >
CHALLENGES LEGALITY
Holds Proceedings Invalid in Alb.
sence of Definite Valuation
of Company.

A reduction of $512,491 SO in elec-
trio rates for Washington consumers,
largest in recent years, was proposed
by the Public Utilities Commission at
hearings opening today on the appli-
cation of the sliding scale under which
the power rates of the Potomac Elec-
trio. Power Co. are adjusted each year.
The estimated reduction for this
year was based on a computed COM
pany net return of 1893 per cent on an
agreed valuation of $70,134, ,509.79. As
figured by the commission, this rep
resents earnings of $1,000, ,266.28 in
excess Of the 61z per cent return al
lowed the company by law.
B. M. Bachman, chief accountant
OF the commission, presented the
financial statement which drew no
protest from the power company. It
was expected the fight would come
later over the method of spreading the
distribution over the various classes Of
consumers.
Last year the excess amount resulted
in a cut Of more than 100000, which
was spread over the several classes Of
power users.
Commission Challenged.
At the outset of today's hearing
William NICK. Clayton, chairman of
the Public Utilities Committee of the
Federation of Citizens Associations,
challenged the commission in two in
stances. He demanded that the North
American Co., as holding company,
should be made a party to the case.
Next he questioned the legality of the
commission proceeding in the absence
Of a definite valuation Of the power
company.
Neither Of these motions was ac-
ceptible to the commission. Richmond
B. Keech, vice chairman, disposed Of
the question Of valuation by saying
'the commission has for the past year
been preparing a valuation of the Po-
tomac Power Co., and is now nearly in
a position to make showing on orig
tnal cost"
S. r. Bowen, general counsel for the
power company, protested that the
North American Co. had no essential
part In the hearing now pending.
Clayton had contended that since
the North. American Co. controls the
Capital Transit Co., which in turn con-
trols the power company, it plays q
very important part in questions Of
policy. He referred to the recent hear
tngs on one-man street cars, contend
ing that Bowen had stated at the
hearing the transit company did not
propose to 60 further than its appn-
cation for one-man street cars di-
Tected.
Future Policy "In Air"
If the North American CO. had been
made a party to that case. Clayton
contended, the question of policy would
have been put squarely before the COM
mission and definitely developed. As
it is now, he indicated, the future poll
cy with respect to one-man street cars
Is still in the air.
AS the holding company, Clayton
asserted, it should be made a party
to the electric rate case, so that the
future policy with respect to valuation
and rate fixing could be definitely de-
termined. Chairman Riley E. Elgin
of the commission reminded him that
this case involved only the sliding
scale which has been fixed by law
since 1924.
In making his second motion, Clay
ton told the commission there Is no
valuation on the power company In
the sense as required by law. His
contention was that the commission
cannot legally proceed to fix rates
Unless it has a valuation, and that
1t lacked the power to enter in an
agreement as to valuation, which was
done in 1924.
Sees Consumers Harmed.
THAT agreed. valuation was deterr
mined behind closed doors and it con-
tinues today" Clayton said. "The de-
probation fund has been treated to
the detrhnent Of consumers"
''The valuation you now have is not
one under the law" he added. Vice
Chairman Keech at that point dis
posed of the question by reminding
him that the commission, after years
study, Is nearly ready to make show
ing on original cost.
It was at this point that Bachman
was allowed to present financial evil
dence prepared by the commission
bearing on the excess earnings Of the
company in relation to the sliding
scale.
Virtually only s8,470.44 appears in
dispute between the commission and
the power company with respect to
the sum available for rate reduction.
This was brought out by figures given
for the company by A. G. Neal, vice
president and general manager. He
fixed the rate Of net earnings at 7.9l
per cent, which would make $504,-
021.19 available for rate reduction as
compared with the $5l2. .49l SO shown