Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-01-24
Electric Rates
To Drop al Least
.S454,766 Here
CutCouId Be as
Much as $575,029;
Profits Over TO
BY DON S. WARREN.

Electric Power Co. will be reduced
for this year between S454,766 and
$575, 029, depending on how the Pub
lie Utilities Commission decides a
contest raised at the outset of to-
days public hearing on annual adj
justment of the power rates.
The public hearing was called by
the commission to consider what
adjustments should be made in the
company.s rates in keeping with the
sliding scale plan under which the
company has been operating since
January. 1925. There has been a
rate cut every year in the past IS
years.
Profits of the company last year
were sufficient to warrant a rate
reduction of $575 029y44, according TO
testimony presented at the begin
ming of the hearing by George H.
Wilson, chief accountant of the
P. U. c., who recently was promoted
to that post when B. NJ Bachman
was made assistant assessor of the
District.
AS soon as he had completed his
report on the financial experience Of
the company for the past year,
challenge came from company
Spokesman, who were prepared TO
offer revised rate schedules which
would effect consumer savings to-
falling s454,766
Reason for Difference.
William K. Laws. who with S. R.
Bowen appeared as counsel for the
company, promptly suggested that
the higher figure depended on a
change in accounting methods which
the Commission had ordered in
keeping with rule established last
year by the Federal Power Com,
mission. This had to do with the
treatment of various miscellaneous
items of property, formerly charged
TO operating expense, and during the
past year handled through the de-
probation reserve item accounting.
The net effect of such change
in accounting procedure was to re-
duce the company's showing of OPP
Grating expense and thereby to in
crease it's reported profits, thus
showing higher excess of profit
over the basic per cent rate
of return, which determines the
amount of the possible consumer
rate cut.
Later in the hearing the company
will propose revised rate schedules
which would go into effect within
a few days after the commission
issues its order. If the commission
upholds the contention of it's chief
accountant preparation of revised
rate schedules would be necessary
and it is expected this would delay
the final order for a brief period.
However, Commission Chairman
Riley E. Elgin said he hoped the
hearing would be concluded today.
Business Wants 1t All.
Prospects of a battle over how
the prospective rate cut should be
distributed among customers arose
when the commission received
letter from Rufus S. Lusk, secretary
of the Building Owners e. Man.
ayers Association, demanding that
the entire cut should be given to
commercial users.
III of a cold at home, Mr.. Lusk
sent letter to the commission,
asking that it be made part of the
record, in which he declared:
THE proposed cut in electric
rates should be allocated in its en-
tirety to commercial users of cur
rent. Domestic rates have been cut
, until householders can and do buy
their current at cheaper rate
than commercial users, who con-
sumo electricity in wholesale quaint
tiles. Thousands of domestic users
are paying less than it costs to give
them service.
"A man should not be made to
pay more for the same service at
his place of business that at his
home. The assumption that BUSH
ness man is able to pay the higher
price for this same service than
a householder is simply not a fact.
1t is also discriminatory and unfair.
1t is practice that should cease"
Return Was 7.S9 Per Cent.
Mr.. Wilson reported that from his
examination of the company's books
he found that operating revenues of
the company amounted to Sl5,842,-
073.82 and that operating expenses
totaled $9,872 ,84092. With an adj
justment for certain items, Mr.. VIII
son figured the net income available
for return was $685. .565.31.
Mr.. Wilson reported the value Of
the company's properties for rate
making purposes as of the end Of
the last calendar year was $780,
974,758.74. Figuring the profits Of
the company against the rate base,
he found the rate of return &C
tually earned amounted to 739 per
cent, which would bring into play
the second as we'll as the first
bracket in the sliding scale plan
for the prospective consumer rate
reduction.
The company submitted its own
figures on its financial experience
for last year, placing the rate base
at $81 ,002. 15424 and placing the net
income available for return, after
adjustments, at $3.50 ,661 36, or 7.12
per cent, which would mean the
amount available for consumer rate
reductions within the first bracket,
instead of carrying it into the Sec
ond, as proposed under Mr.. Wilson's
accounting.
Last year the commission ordered
a rate cut of $394,085. This affected
the monthly bills of the consumers
only by few cents because of the
large number of customers partici-
pating in rate reductions.