Evening star., 1939-04-22
Gas Companies
Value Is SET
Al Lower Rate
Public Utilities Chief
Accountant estifies
At Hearing
By DON S. WARREN.

ny DON D. VAnnEINs
The value of the Alexandria and
Hyattsville gas companies, as cal
culated on a capitalization basis, Is
some 100000 less than the sums
estimated by witnesses for the
Washington Gas Light Co., the
Public Utilities Commission was ad-
vised today by its chief accountant,
B. M. Bachman.
Testimony to this effect-damag-
Ing to the hopes of the ownership
trust that controls all three of the
operating concerns for payment of
81 ,250,000 In preferred stock, was
given today as hearings on the
merger plan were resumed.
Answering questions from the COM
missions counsel, Lloyd B. Harri-
son, Mr.. Bachman said he felt the
Washington company could pay as
high a price as $950,00O for the Sc
curities of the two suburban con-
Germs and enable it to 60 along
without undue strain" on the
Washington firm. He spoke also of
the grave dangers" that should be
faced as to the effect of the proposed
merger, mentioning need for capital
for the suburban concerns expan-
sion, the question Of what con-
sumer rates may be adopted for
them by other Jurisdictions and the
possibilities Of coal shortage for
the suburban manufacturing plants.
Views on Use of Natural Gas.
In the latter connection he said
his studies showed that If the Alex
andria and Hyattsville concerns
used only natural gas, instead of
manufactured gas, they should
prove more profitable to the Wash
ington company than otherwise. He
said he had not dealt with the cost
nor engineering problems OF use Of
natural gas only.
To arrive at his estimates of value
by use of the capitalization method,
Mr.. Bachman took the net earning
figures for the two suburban con-
Germs and deducted from these sums
estimates of the amount of capital
that would be required for future
operation of their plants. Taking
the resulting total, combined for the
two companies, he found that
capitalization at S per cent would
indicate a combined value of $685.
300; at SIS per cent, $859.8O0; at 6
par cent. $788,2O0, and at 6.5 per
cent, $72O,900.
Witnesses for the company have
figured by various methods of ap-
praisal that the value was some
where between 81 800 900 and $780,
600. so that Mr.. Bachmans capitali-
cation method would indicated he
places the value, by this method, at
only somewhere near half the esti-
mates of company witnesses.
Mr.. Bachman told the commission
that the absence of its control over
the consumer rates of the suburban
concerns, or over the use of the as
sets of the Washington company
for the suburban concerns-which he
termed "two unknown quantities" +"
were questions of grave concern, and
that the Washington commission
must consider any possibilities that
the credit of the local firm might be
impaired.
Meanwhile Public Utilities Com
mission officials awaited an an
swer from the trust which controls
the Washington Gas Light Co. as
to whether it would accept a substi-
tute plan suggested by Riley E.
Elgen, commission chairman, for ac-
QUESTION of the Alexandria and
Hyattsville gas concerns, also owned
by the trust.
Plan Involves Earnings.
After hearing four days of debate,
partly revolving around the use of
common stock as against preferred
as payment, Chairman Elgen asked
spokesmen for the trust to consider
q substitute which he outlined as
follows:
The Washington company would
give the trust a 4 per cent note,
which would be amortized out of
the net earnings of the two subur-
ban concerns. whatever amount was
available each year after necessary
sums had been used for extensions
and improvements OF the plants.
There was challenging touch to
the plan for the reason that 1t as
sumes there would be continued or
increased profits from the two SUBJ
urban companies, and the record of
the hearing contains numerous dec
1arations by officials Of both the
trust and the Washington company
Of their conviction that the Alex
andria and Hyattsville concerns had
GOOD nroSnectS of nrof7tah1e dovs n,