Evening star., 1942-08-18

| man. and Mr.. Prettyman replied,
1T is only question of propriety. u
Mr.. Stevens said the commission
in 1885. in adopting the sliding
scale plan to fix a rate base for
the gas company, had considered
original cost. the value of the COM
pany as if it were new organiza-
ton, and the question of deprecia-
ton and had arrived at value at
that time of about $21 ,000,0
He said the value figures had been
decided by the commission as nearly
as possible on the bases of original
cost, with the exception of the
value of the land. The land items,
he said. were based on an actual
| finding of the value by the commits
sion, the figure being less than ap-
praised values as testified to by wit
nesses for both the company and the
commission.
In accepting original cost for the
other items, he said, the company
was very careful" to say that
merely because 1t had accepted
original cost data, generally speak
ing, for the purposes of adopting
the sliding scale a3gement, 1t
did not mean that in normal val
uation case the company was will
ing Ito 60 along" on that kind
of a rate base"
1.-TWO Way Argument"
Mr.. Stevens said it seemed ''un-
fair" to inquire into fundamental
of the sliding scale plan now that
the plan would operate to give the
company a rate increase, whereas
no protest had been made in the
last seven years when the plan op-
Grated to provide consumer rate
reductions.
THE sliding scale plan" he said
always was intended to operate
both ways-it is two-way agree
ment."
Mr.. Hankin promptly questioned
whether there was any substance"
to the suggestion that his question
was unfair. He asked that Mr..
Stevens suppose that the land item
of more than ST 900, 900, 900 had had
no proper place in the original
agreement. Then, Mr.. Hankin con-
tinued, though the consumers got
rate reductions in past years, the
reductions may not have been
large enough.
Mr.. Hankin took the position that
| the rate payer should be relieved
of paying charges on an unfair
rate base"
Plan of Flexible Character.
On these issues the OPA counsel
said that in adopting the 1885
sliding scale plan the PUG had made
clear that it could not divest itself
of responsibility for fixing fair and
| reasonable consumer rates and had
recognized that any sliding scale
plan must be of flexible character.
On the question of what is a
fair rate of return" Mr.. Booth said
! the courts have held that what
| is a fair return In one year may
not be fair return in another year.
He added that the company's own
| figures seemed to show that its
earnings were about 5 per cent ana
that in view of present economic
conditions and the efforts of OPA
to prevent price imitation, the COM
mission we'll could consider whether
that rate of return might be con-
| sidered adequate.
Lloyd B. Harrison. special assist
ant corporation counsel assigned to
the PUG, was asked by Chairman
Hankin for his views He said he
regarded the land value item in the
rate base as one of its ''fundamen-
/ tails" and that his recollection was
that when the PUG had considered
reduction in the initial" rate of
return allowed the Potomac Elec-
trio Power Co. under its sliding scale
plan (Which dates from December
1924 the commission had notified
the company in advance of it's in
tention to inquire into the question
of such rate reduction.