Evening star., 1938-01-25
VALUATION FIGHT.
BREAKS|NHEA
ON NPEPCO RETURNS
lCivic Spokesman Demands
the Appraisal Before Basic
Rate Is Fixed.
ST, 100000 AT STAKE
IN REDUCTION PLAN
Sessions on Suggested Cut From
6.5 to 6 Per Cent in Com.
panys Earnings.
BY DON s. WARREN.

ny "AnnEN.
A dispute over the lack of mod
ern and orthodox" valuation of the
properties of the Potomac Electric
Power Co. broke before the Public
Utilities Commission today as it
opened public hearings on a suggested
reduction from 65 to per cent in
the paste rate of return allowed the
concern under its sliding scale plan
for annual adjustment of consumer
charges.
William NICK. Clayton, counsel to
the Federation of Citizens Associa-
tions, demanded that action on the
basic rate of return be withheld until
there was formal valuation but
after sharp argument did not per-
slst in his position.
Luther R. Maddox of the Columbia
Heights Citizens Association picked
up the battle to move adjournment
OF the proceedings until there was
valuation, but he was overruled by
the commission. The hearing into
what changes there should be in the
basic rate of return and the con-
surer rates for this year then was
resumed.
About $1,000, 900 at Stake.
Somewhere between S750,OO0 and
Sl,OOO,Oo0 is at stake in the decision
on the basic return allowed hereafter
under the sliding scale plan. The
commission has not formally said it
proposes to cut the basic rate to 6
per cent, but this is expected to de-
velop as the hearing proceeds.
Mr.. Clayton precipitated the debate
over the valuation at the outset of the
session, when he noted that the COM
missions call for the hearing did not
tie in the rate of return with an es-
taollshed valuation. When the COM
mission members insisted they were
proceeding in accord with the Public
Utilities Act, which permits the slid
Ing scale plan. Mr.. Clayton shouted:
Have valuations passed out of exist
ence?"
When Commission Chairman Riley
E. Elgen sought to explain that the
sum in excess of S70OOO,OOO used last
year by the commission as the COM
panys value for rate-making purposes
was based upon the 1924 consent de-
cree, Mr.. Clayton retorted:
Gas Company Case.
oh, yes, you can quibble if you
will, and you can go around Robin
Hoods barn if you wish, but you
haven't used normal procedure to es-
tabllsh an orthodox valuation. If YOU
want to abrogate your rights to the
courts, all right. We want to know it,"
Commission Vice Chairman Rich
mond B. Keech interjected that the
commission had not abrogated its
rights, but was faken to court by the
company, but Mr.. Clayton insisted
that the comml lssion, after some years
OF prodding," had fixed valuation for
the Washington Gas Light Co., which
also has sliding scale plan.
S. R. Bowen of counsel for the
power company demanded to know if
MIR. Clayton was proposing that the
whole question of changes in con-
sumer charges for this year, as we'll as
the question of the basic rate of re-
turn, should be set aside until there
was formal valuation.
Refuses to Be Caught.
Mr.. Clayton quickly retorted: "Oh,
no, you can't catch me like that, am
insisting that there be a formal val
uation. The sliding scale has nothing
to do with valuation, as such. There
can be valuation without a sliding
scale. We are taking no position on
changes in the sliding scale. We are
merely asking valuation before the
commission fixes the rate of return"
Chairman Elgen wanted to know if
Mr.. Clayton was asking the commits
sion to adjourn the consumer rate
hearing for as long as two years.
Mr.. Maddox, speaking for the Co.
lumbia Heights group, then said he
would wait that long if the making of
a valuation would require two years,
and he moved that the whole pro-
ceeding be adjourned. Mr.. Elgen
denied the motion and Mr.. Maddox
noted and exception. B. M. Bachman.
commission chief accountant, then
took the stand to discuss changes in
the classification of accounts which
have been required of the power COM
pany by the Federal Power Commits
sion. The commission is not expected
TO decide the question of the basic
rate OF return today and proposed
schedules of new consumer rates will
not be offered by the company until
this Is done.