Evening star., 1944-02-29
Neal Defends
Sliding Scale
OF Pepco Rates
, Will Ask Directors
To Abandon System il
Returns Are Cut
BY CAMBRIDGE CRIST.

BY CAMBRIDGE CRIST.
Alfred G. Neal, president of the
Potomac Electric Power Co.. today
warned the Public Utilities Commits
sion that If the rate of return al
lowed his company was materially
reduced he would strongly urge the
Board Of Directors to Withdraw
from the sliding scale arrangement.
Mr.. Neal made his statement
shortly before noon during the Sec
ond day Of the annual rate hear
ings Of Pepco. He presented to the
commission the historical back
ground on the sliding scale arrange
ment for rate determination which
grew out of a consent decree in the
courts in 1924.
Mr.. Neal said the company was
not asking for any modification of
the sliding scale arrangement, "de-
spite the fact that we are not now
and have not been earning a fair
rate OF return under the consent
decree as we interpret It,"
CASAAoS OAuA1lS SC8lcs
Mr.. Neal defended the sliding
scale arrangement as one which en-
ables the consumer to get an an
nual reduction in rate If an amount
Is found available for such q re-
duction. He pointed out that the
rate Of return has been progress
sively lowered from 7h per cent in
1925 to 6 per cent at present.
Earlier In today's hearing Greg
ory Hankin, member of the COM
mission, questioned the relevancy of
charts on the operation of the
Potomac Electric Power Co.
Technical information on the
operation and cost of operation of
Pepco was submitted yesterday and
today by Fred A. Sager, chief engi-
neer OF the commission. He pointed
out that the ratio Of kilowatt-hours
accounted for out Of total produc-
ton had risen from 1854 per cent in
1925 to 81 per cent In 1943, indicat-
ing a drop in leakage during
distribution.
Connaughton OverruIed.
Asked by Mr.. Hankin how such
data would help the commission to
decide whether the sliding scale
should be abandoned, Mr.. Sager
replied he was trying to present a
historical record of the arrange
ment, and said figures on operation
costs and efficiency on distribution
showed how it had been possible to
reduce rates to consumers in past
years.
John H. Connaughton, vice chair
man Of the Public Utilities Com
mittee Of the Federation CT Citizens
Associations, objected to Mr. Han
ktn's questions as incompetent and
but was overruled by
Chairman James H. Flanagan, who
said the commission was entitled to
hear Mr.. Sager's opinion on how
the technical information related
to the sliding scale.
Asked by Thurman Hill, general
counsel Of the Procurement Division,
Treasury Department. whether he
considered the operation of Pepco
plants efficient, Mr.. Sager replied
they were operated more efficiently
now than in the past.
Public Charged for Loss.
Under questioning OF Harry r.
Booth, special counsel for the pro-
curement division, Mr.. Sager said
the public was charged for elec-
tricity lost in transmission, but ex-
pressed the belief that the company
had made unusually rapid" prog
ress in overcoming losses. He said,
however, that he had not recently
compared losses Of other companies
with PEPCO.
V. A. McElfresh, chief accountant
OF the PUG, testified yesterday the
sliding-scale arrangement was very
desirable" from the standpoint of the
consumer and the power company
and enables. a regulatory body to
keep rates in fairly close relation
to costs"
Mr.. McElfresh defended the slid
ing scale as one which gave an in
centive to consumers to use more
power and an incentive to the COM
pany to reduce production costs.
Mr.. Hankin, however, differed with
Mr.. McElfresh, saying that rate re-
ductions under the arrangement
were "a metaphorical expression"
McElfresh Disagrees.
"You can say that, of course"
replied Mr.. McElfresh, "but I
wouldn't agree"
At the outset of the afternoon
session, Chairman Flanagan an
nounced the commission would
grant the petition for Intervention
by the Federal Works Agency, which
demanded abrogation of the slid
ing scale. charging that 1t resulted
in an unjust burden" on consumers.
Earlier in the day, Mr.. McElfresh
introduced a series of rate schedules,
comparing the cost of power to con-
sumers in Washington with the cost
in seven other cities, Boston, KAN
sas City, Buffalo, Queens (New York
City,, Cleveland, Providence and
Milwaukee.
The schedules showed that month
ly residential bills for 100 kilowatt
hours Of PEPCO had dropped from
1924 in 1924 to $2.56 in 1912, while
the average for the seven cities had
merely dropped from $5.74 in 1924
to $399 in 1912.
Detail charts and graphs on the
physical plant and operations of
PEPCO were presented by Mr.. Sager,
who took the stand after Mr.. Nc
Elfresh. Attorneys for PEPCO ad-
vised the commission they would
need several days of study before
cross-examining Mr.. McElfresh.
Maghan Granted Plea
For Trial by Civilians
The Commissioners today granted
the request of James j. Laughlin,
attorney for Robert j. Maghan, IT,,
SllSllnNnded Yo1icenoan far hao rfy, a.