Evening star., 1941-01-25
Pepco Rate Cut
DuetoBeFought
Again Monday
Sum for Reductions
Raised to $337, ,004;
Opposed by Firm

A battle over this years reduce
ton in Potomac Electric Power Co.
rates Is expected to be resumed
Monday when members of the Pub
lie Utilities Commission meet to de-
termine how to allocate the S337,-
00432 they have decided is avail
able for consumer rate reductions
in 1941.
Officials of the power firm said
today they would prepare suggested
new rate schedules rejecting that
figure in compliance with instruc-
tions issued by the Utilities Com
mission late yesterday, but indi-
Gated they might have something
more to say about the size of the
rate cut when the hearing is re-
sumed at 2 pm. Monday.
The amount determined as avail
able for rate reduction under the
sliding scale plan is more than
twice the sum company spokesmen
had contended for at yesterdays
public hearing, and is actually
~1O'OoO 4A45AACA Ol4dl4 lIlC
originally submitted by the COM
missions own staff.
AT the outset Of the hearing, V. A.
McElfresh, the commissions chief
accountant. testified that profits Of
the company last year were suff-
cient to warrant a rate reduction
of S3l83l5. Then Alfred G. Neal,
president of the power company,
took the stand to contend that the
rate cut should amount to no more
than s16O,703.
Neal Wants No Reduction Sum.
In fact, Mr.. Neal told the COM
mission, in his opinion, mot one
cent should be available for rate
reductions" He insisted the COM
pany should be given greater allow
ance for depreciation and actually
should not have to pay for depre-
citation of its properties in rendering
service to its consumers.
However, the commission took a
decidedly opposite view and, at an
executive session held after the
hearings was recessed, decided to
deduct from the company's operat-
ing taxes S144 ,687.81, which repre-
Sented the difference between de-
probation allowances for 1888 and
1899 Federal and District income
taxes the company actually paid for
those two years
In its original statement Of net
income available for return, the
commission had deducted s107,310.S1
from operating taxes, or the differ
ence between book accruals for in
come taxes based on a depreciation
allowance of per cent and an esti-
mate based on depreciation allow
ance of 80 per cent for the years
1898, 1899 and 1910.
The company contended it should
be permitted to deduct all operat-
ing taxes-amounting to 50 ,445, ,050-
from operating revenues in deter
mining net income available for
return, but the commission insisted
the company should include only
the taxes actually paid for 1888 and
1899 and its estimate of the tax to
be paid for 1910.
May Ask Rehearing.
At the conclusion of its meeting
late yesterday, the commission
issued a statement directing the
ules, and added:
consideration of all the data
submitted indicates to the commits
sion that there are no changes
needed at this time in the rates of
depreciation"
The commissions decision came
too late in the day for the company
officials to meet and discuss it, Mr..
Neal said, but he indicated the firm
may file a plea for a rehearing.
The power firm also had sought
to have included in operating ex-
penses a sum of S195,058 as MAIN
tenance cost for retirement Of
equipment, but the commission held
this item should be charged to de-
probation reserve accounts and not
operating expenses.
The utilities body also refused to
allow deductions for P. E. P. Co.,
contributions to the Greater Ma
tional Capital Committee, the
Cherry Blossom Festival and a
public utilities executives informa-
ton service. Company spokesmen
contended these should be charged
to operating expenses because they
benefit both company and consumer.
To support their stand, they
called Edgar Morris, chairman of
the Greater National Capital Com
mittee, and Francis G.. Addison, jr.,
former Board of Trade president,
who testified that other business
houses charge such contributions
to operating expenses. The wit
nesses said the committee brings
visitors, conventions and perma-
nent residents to Washington and
thus increases the amount of elec-
trio power used.
Net Income Is S5,735,353.
Mr. Meals report placed operating
revenues at S16,649 ,319 and operat-
ing expenses at $10,930,297. With
adjustments, he figured the net in
come available for return at $5, 1885,
353. He placed the value of the
company's properties for rate
making purposes as of last Deem
ber 81 at S84,978,7O1.
Mr.. Meals figures put the firms
rate base at S85,141,371 and its net
income available for return, after
deductions, at IS ,429, ,246.
Under the sliding scale plan,
which has been in operation for 16
years. half of the company's excess
of profits over the basic 6 per cent
rate of return Is made available for
rate reductions. There has been q
rate cut every year since the plan
was placed IN operation.