Evening star. [volume] (Washington, D.C.) 1854-1972, 1946-03-14
Early Approval
|0n Disso|ving
|Wreco Expected
Decision Forecast
After Testimony by
| Clark Tomorrow
By Don S. Worren

the Harris Subcommittee of the
House District Committee on legis-
lation proposed by the Washington
Railway & Electric Co. to permit it
to dissolve under financial plans it
has outlined to the Securities and
Exchange Commission.
The Wreco plan, involving mill
lions in proposed stock issues, trans
fers and retirements, would be bat a
part of larger plan to comply with
holding company death sentence"
orders OF the SEC, involving WASH
ington interests of the North Amer
lean Co.
Decision has been deferred to
await presentation of the views of
Attorney General Tom Clark, sched-
uled for tomorrow morning. The
group is expected to recommend
thereafter the adoption of the
Wreco-sponsored bill for limited ex-
ceptions from District utility stat
utes to permit the pending reorgan-
lzation or the shelving of the bill
to await decision by the appellate
court here on litigation relating to
District power rates and the validity
of North Americans acquisition Of
local utility controls.
Rates Protested as High.
The Wreco plan was Endorsed at
yesterdays first hearing by Chair
man Ganson Purcell of the SEC and
Chairman James H. Flanagan. of
the District Public Utilities Com
mission. but was bitterly attacked BY
Alan tombstone. general counsel Of
the Federal Works Agency. The
FWA and Treasury Procurement
officials, who pay some $1,000 900
annually for power services to Fed
eral buildings in and near Washing
ton, including the Pentagon Build
ing in Arlington County, have pro-
tested present rates as far too high,
Mr.. tombstone, who had tried to
upset the traditional sliding scale
plan for annual adjustment of Po-
tomac Electric Power Co. rates, seeks
to prove not only that rates and
Pepco valuations are too high but
that North American Co. ACQUISITIONS
OF power company stocks here were
Illegal"
New support for the Wreco plan
was submitted today by the District
PUG In the form of printed copies
of its 1914 decision on the rate case
of the Potomac Electric Power Co.,
delivered to all members of the
Harris Subcommittee.
Pepco is owned outright by
Wreco, which is controlled by North
American and would be a principal
in the Wreco reorganization plan in
volved in proposed exemptions from
provisions of the La Toilette anti
merger" law of 1879
| This PUG order contests claims
made by Mr.. tombstone and Treas
ury Department officials in 1943 PUG
hearings and in the current appel
late court case, regarding valuation,
rates and the sliding scale plan for
annual adjustment of Pepco.
Under the latest rate order of the
PUG, Pepco rates were to be cut by
more than 100000. FWA and
Treasury spokesman had held out
for rate cuts as high as 20 and Is
per cent, to be achieved by many
drastic changes.
PUG Rejects Theory.
| After reviewing contentious made
by counsel for the Public Buildings
Administration. represented by Mr..
tombstone, the PUG said in its 1914
order:
This commission rejects the con-
tentions of counsel for the PBA on
the grounds that their adoption
would be unsound, without merit,
inequitable and at complete variance
with established law"
The same order struck at the re-
peated declarations by Treasury
spokesman that the prudent invest
ment" theory should be employed in
measuring Pepco's value. Replying
to PBA and Treasury suggestions,
the order of the PUG states:
THE elimination of earned sur
plus or undistributed earnings from
invested capital finds no support in
reason or law. On the contrary, it
Is universally recognized by both
courts and regulatory agencies that
undistributed earnings invested in
the assets of corporation are just
as much part of invested capital
as are the dollars obtained by the
sale of securities