Evening star., 1944-08-13
Pepco May Ask
Court Ruling On
PUG Rate Slash
Company Is Insistent
Reduction Puts Ban
On Fair Return
By BAINBRIDGE CRST

ny DA1NDnlDUE Ch2SI.
If the Public Utilities Commission
turns down the request of the Po-
tomac Electric Power Co. for recon-
sideration Of its order reducing rates
for the year by s1,037 ,189 and modi-
Tying the sliding scale Arrangement.
1t appears that the rate case is
headed for the courts.
Although the statement of Alfred
g. Neal, Pepco president, issued Fri
day when the brief of the company
was filed with the PUG, did not say
in so many words that the matter
would be taken to the courts, he
stated fatty:
THE manner in which the conn
mission now proposes to modify the
existing sliding scale plan of opera
ton is such that we simply cannot
continue longer to accept changes
SO detrimental to the welfare of the
company"
Altered Rate Base.
In the order of July % the COM
mission reduced the rate of return
from 6 per cent to SIS per cent: all
tered the rate base from an unde-
preciated one to deprecated one;
adopted a new procedure for de.
probation. eliminated cash work.
ing capital from the rate base and
also eliminated from the rate more
than s5,500,000 deemed to repre-
sent more than the original cost OF
property.
One OF the principal objections
cited in the company's brief is that
the PUG order "purports to estab-
llsh. by unilateral action and with.
out the consent of applicant (Pepcop,
a new sliding scale ARRANGEMENT
Tor the determination of applicants
rates Of charge"
Ihls is not the first time the
question Of the right of the COM
mission to modify the sliding scale
arrangement has been raised. In
the case of Potomac Electric Power
Co. VS.. the Public Utilities Commits
sion, decided in 1882 by Justice Os-
car R. Luhring in the then District
supreme Court, now District Court.
the right OF the commission to mod
lfy the arrangement was upheld, ac-
cording to legal sources at the Dis.
trict Building.
Cites Utility Law.
The company contends that par
agraph l8 of the public utility laws
authorize the use of sliding-scala
arrangement for the determination
of a public utility's rates only upon
the agreement of the interested
public utility to the application of
such method and to the provisions
OF such arrangement; and the COM
mission Is without power, of its own
motion and without the consent Of
the applicant, effectively to promul-
gate new or modified sliding-s scale
arrangement for fixing applicants
rates Of charge"
The paragraph in question states:
THAT nothing in this section
shall be taken to prohibit a public
utility, with the consent of the
commission, from providing
sliding scale of rates and dividends
according to what is commonly
known as the Boston sliding scale,
or other financial device, that may
be practicable and advantageous to
the parties Interested"
Sees Stand Bolstered.
1t also provides that the arrange
ment shall not be lawful unless an
investigation of the Commission
establishes its reasonableness. The
paragraph then adds sentence
which District legal sources say
holsters the Commissions stand:
The Commission shall ascertain,
determine, and order such rates,
charges. and regulations, and the
duration thereof, as may be neces-
sary to give effect to such arrange
ment, but the light and power to
make such other and further
changes in rates, charges and regu-
lations as the Commission may as.
certain and determine to be neces-
sary and reasonable, and the right
to alter or amend all orders relative
thereto. is reserved and vested in
the Commission notwithstanding
any such arrangement and mutual
agreement
In protesting removal of the S..
100000 fro mthe rate base, the COM
pany contends in its brief that this
results in rate base not only sub
stantially less than the replacement
cost but also less than the amount
actually and prudently expended by
applicant for its property used and
useful for the convenience of the
public"
In its order of July %, however,
the PUG stated that "a rate base
predicated upon the original cost
Is fair to the utility, its investors
and consumers because it gives
recognition to every dollar actually
invested in the property
Protest Deduction.
The company also vigorously pro-
tested deductions from the rate
base of s17.844,120 for accrued de-
probation in order to adopt de-
preciated rate base. 1t contended
that it was Illegal since it was
deducted without reference to the
actual condition" of Pepco's prop
erty as required by law and that it
vas in excess OF the amount accrued
for corporate purposes, thus re-
quiring a charge against earnings
Of prior period.
While the PUG order did not 20
(See PEPCO, Page B-1l.)