Evening star., 1946-03-24
Hearing Slated
For tuesday
On Pepco Rates
Government to Argue
That PUG Reductions
Are Not Sufficient
By John w. Thompson. Jr,

Inc orlVe OF the Federal Govern
ment for greatly reduced power
rates to consumers of the Potomac
Electric Power Co. is expected to
be resumed Tuesday at 10 am
when the Public Utilities Commits
sion holds its annual rate hearings
in the board room of the District
Building.
The hearing will be the first since
1914 when the PUG order cutting
rates, to consumers a little more
than million dollars was appealed
by the Government as being insuffi-
cient and also by Pepco for other
reasons. A hearing was scheduled
last year but was called off with
out any testimony being taken be-
cause of the unsettled legal situ-
alton.
The two cases are still undecided
but a Court of Appeals trial is
scheduled for April 8. Chairman
James H. Flanagan of the commits
sion said the full hearing will be
held this time. 1t was limited, how.
ever. that no revisions of rates
could be expected by consumers
until the legal snarls are ironed
out.
Treasury Interested.
Meanwhile the Treasury Depart-
ment has already filed a petition
to fake part in the scheduled rate
proceeding as consumer paying
an annual electric bill of 5000 600
for the Government. 1t was also
reported that the Federal Works
Agency, through its general coun-
sci, Alan Johnstone, may take SINH
lar action tomorrow.
Pepco officials and Chairman
Flanagan took issue with state
ments Of Mr.. Johnstone several
days ago during House hearings on
the plan to dissolve the Washing
ton Railway & Electric Co.. parent
holsing company of Pepco. Mr..
tombstone opposed the plan and
attacked the rates and valuation
Of Pepco as too high.
At the present time, Washington
consumers are paying electric rates
OF 1943 which were ordered by the
PUG after study of the company
financial operations of 1912. These
rates are determined by what is
called Sliding scale" arrangement
in which the company Is authorized
a certain per cent of profit based on
the value of the plant. Rates are
then adjusted up or down depend
ing on whether the company fails to
make or exceeds the authorized
profit. The sliding scale" was be-
gun In 1925 as the result of q consent
decree.
Cut Ordered in 1914.
After the rate hearings OF 1914,
the PUG issued an order reducing
the rate of return to 5z per cent
Of a deprecated rate base from the
6 per cent of a nondepreciated
valuation the previous year. Since
1925, it was said, the rate has been
cut by the PUG from 71a per cent
to 5h per cent.
Under this ruling of July %, 1914,
the power company would have to
cut the consumer rates by 81 ,037 600
during 1945. This was accepted
neither by the company, which con-
tended the PUG had no authority to
modify the sliding SCALE" nor by
the Federal Government which ar
gued that the cut in rates should be
much larger. Federal spokesmen
talked in terms of 20 and Is per
cent slashes, and in their court ac-
ton against the order challenged the
validity of the sliding scale" method
from the very beginning.
PUG officials said that if the 1914
order is upheld, the company will
have to readjust bills beginning with
March /, 1914. Pepco, they added,
has set aside close to $4,000, 600 to
make the refunds, If they become
necessary.
Tuesdays hearings will pit COM
mission valuations of Pepco against
those of the company as to whether
last years earnings justify further
rate reduction or not. The Federal
Government, 1t was believed, would
again argue for large reductions.