Evening star., 1943-03-13
Pepco TO Offer
Testimony 10
Fight Big Cut
Hearing Resumed
With Possibility Of
Court Rute Bottle
BY DON S. WARREN.

With the case apparently heading
for the courts. hearings before the
Public Utilities Commission on rates
of the Potomac Electric Power Co.
were resumed today with company
witnesses prepared to testify in an
effort TO refute a wide variety of
Government claims calling for rate
cuts this year ranging from S242,000
to as much as s2,000000
Federal intervenors yesterday Of
fered sizable stack of exhibits, sta
tiStics and other data in support of
their demands and said their case
was completed-eXcept for submis-
sion of additional documents and
rebCttal testimony.
The days proceedings we're
marked by many disputes over ad-
misslbility of evidence. objections
and taking of exceptions for use if
the case goes to the courts, with
PUG Chairman James H Flanagan
insisting that the present case be
restricted to the bounds of the notice
and the original rulings.
Calculations Ruled Out.
Near the end of the session, the
PUG majority ruled out of the case
calculations offered by Gregory
Hankin, commission minority men,
ber, and various calculations Gov
ernment intervenors had sought to
get into the record as being beyond
the scope of this case and more
properly part of the broader in
vestigation and hearings to follow.
These actions brought outspoken
protests from Thurman Hill, counsel
for the Treasury Procurement Di-
vision, and Harry r. Booth. OPA at
torney. Mr. Booth said his case was
about closed and declared that de-
spite the restrictions the commits
sion had placed on the intervenors,
he felt the evidence justified rate
cut of Sl,500,000.
Mr.. Hill was more specific in his
summation of protest, asserting that
mistakes" made in use of the slid
ing scale plan since 1925 should not
be perpetuated He listed three
things as mistakes.
Excess Values Claimed.
The first one, and the biggest"
he said, was that the 1924 rate base
written into the consent decree es-
tabllshing the sliding scale plan in
cluded between s9OOO,000 and s10.-
0O0,000 OF values in excess of the
original cost OF the then company
properties. This, he said, had been
admitted by commission staff
members. He ado ID there remained
about $6000,000 of this difference in
value over original cost.
/ Secondly, Mr. Hill said, the PUG
had refused to abide by the decision
of the United States Supreme Court
in the Natural Gas Pine Line Co.
case, decided last March. And,
thirdly, he claimed the commission
had failed to follow out the provi-
sion Of the District utilities law per-
mitting the commission to use
sliding scale or other formula but
still requiring adoption of just and
reasonable rates.
| He added the Treasury had hoped
! the PUG would expand the proceed
! ing beyond the indicated narrow
confines but would have no further
testimony since it had not.
Mentions Later Hearings.
| In reply Chairman Flanagan said
| the PUG members were fully cog
INFANT of their duties under the law
and had been proceeding along that
line. He. repeatedly, had stated
earlier that the broader issues
would be considered at later hear
ings after time had been available
for proper investigation"
| In the windup, Mr.. Hill asked that
an interim order be issued and that
the case be continued as to the
broader issues. Chairman Flanagan
reserved ruling on this motion.
David A. kosh. an OPA rate
| analyst, was recalled to the stand
by Mr.. Booth to explain Govern
ment exhibits as to cumulative"
figures on rate savings under the
| sliding scale, amounts of earnings
IN excess of the basic returns under
the scale formula, and the like, but
when commission or company coun-
! sci asked him the answers to some
! calculations, he said he wanted time
to consider his replies.
Two exhibits ruled beyond the
scope of the case were prepared by
PUG accountants at the request of
MI. Hankin. These showed that by
a different system of depreciation
accounting than the commission has
used and by limiting Federal tax
bills charges TO operating expenses
to 81 per cent tax rate, consumer
rates this year might be reduced by
more than $1174,O00.
Tax Rate Theory Ruled Out.
Also excluded from this case.
under rulings by the PUG majority,
! were the conclusive portions of ex-
| hlblts presented by Mark Wolff,
New York economist and ac-
countant, who is serving as a con-
sultant with OPA, offered as wit
ness for both the OPA and the
Treasury Procurement Division. In
his last three exhibits ne had made
depreciation and profit calculations
applying only 10 per cent tax
rate charge against operating ex-
penses and applying what was called
principles approved by the United
States Supreme Court in the Ma
tural Gas Pipe Line case. These
calculations ended with a showing
that power rates should be reduced
by more than Sl.l08000
S. r. Bowen and William K. Laws
OF company counsel protested and
were sustained by the PUG majority.