Evening star., 1944-05-03
FWA Charges Plot
Gave North American
Control Of Pepco
Insists Sliding Scale
Will Tend to Continue
Excessive Rotes' Here
BY BAINBRDGE CRIsT.

by bAINbkIDGE CRIST.
Acquisition by the North Amer.
ican Co. of control of the Potomac
Electric Power Co. was accomplished
by conspiracy" and continuation
of the sliding-scale arrangements
for rate adjustments will tend to
perpetuate excessive, unjust, un-
reasonable and unlawful rates for
electric energy" in the District,
Alan Johnstone, general counsel for
the Federal Works Agency, charged
yesterday.
Referring to North Americans
voting stock In the Washington
Railway & Electric Co., which
owns all the common stock OF Pepco,
Mr.. Johnstone also charged that the
sliding scale had becomes device
for channeling unlawful electric
rates to Wreco and thence to North
American.
The FWA official also claimed
that the liberation Of this plan and
conspiracy by the predecessors in
loff1ce of the members of this COM
mission was unlawful and in dero-
CATION of their duty"
Puts Charges Before PUG.
Mr.. Johnstone made his charges
before the Public Utilities Commis-
sion in arguing that exhibits dealing
with the relation between the North
American Co. and Pepco should be
admitted In the present rate hear
ings. The PUG took the matter
under advisement.
Reading from prepared state
ment, Mr.. JohnStone claimed that
North Americans control in Wreco
and Pepco was accomplished by a
conspiracy among these three COM
panies and certain of their en-
ployes and officers, who secretly con-
ceived, framed and executed the
scheme to acquire such control,
in violation of the statutes of the
United States of America prohibit
ing such acquisition and control"
North American now holds 34.55
lper cent Of the voting stock OF
Wreco.
One purpose OF the acquisition.
according to Mr.. Johnstone, was
to impose unreasonable and unjust
rates on consumers. 1t was also ito
permit the North American Co. to
profit excessively from its invest
ment in Wreco and indirectly in
Pepco through annual dividends;
and also by such methods to accu-
mulate as earned surplus of Pepco
additional and excessive and unrea-
sonable profits"
Attacks Sliding Scale.
Elaborating on his charge that the
sliding-scale arrangement inaugu-
rated in 1925 had resulted in ex-
tracting 4unlawfup rates. Mr.. john
lstone said that between 1925 and
1943 the arrangement had meant
that more than $45 5,o00, 900 in pay
ments from the earnings of the Po-
tomac Electric Power Co. have been
ipaid to Wreco on the original in
vestment Of ,$5,250,000 and thence
flor the most part to North Amer
tican co.
/ Company Attorneys William K.
Laws and S. r. Bowen, John II.
Connaughton, vice chairman of the
Public Utilities Committee of the
Federation of Citizens Associations
and Assistant Corporation Counsel
Lloyd Harrison objected to the ex-
hibits offered by Mr.. Johnstone.
Mr.. Laws told the commission that
the exhibits might have "a serious
effect on investors" and Mr.. Bowen
objected that if the violation of law
referred to the La Toilette anti
Merger Act the complaint should
be made by the Commissioners to
the Supreme Court of the District
and that the PUG was not the group
to hear the matter.
Mr.. Bowen termed it "sophistry
Of the worst kind" to intimate that
the documents offered by FWA off,
cials affected rates and MIR. Con-
naughton remarked that he was not
impressed "by such rot" He con-
tended that the problem before the
commission was to set fair rates,
which had nothing to do with who
controlled Pepco.
| Chairman James H. Flanagan, on
Preserving judgment on Mr.. john
stones motion, adjourned the hear
ings subject to call.