Evening star. [volume] (Washington, D.C.) 1854-1972, 1946-03-13
Battle on Power
Rates Revived al
Wreco HEARING
U. S. Asks Cut; Bill
Would Simplify
Holding Company
By Don S. Worren

a pattle over rates charged the
United States for electric power here
and questions of the validity of local
utility controls by the giant North
american Co. was revived today be-
lore House subcommittee consider
ing bill to enable the Washington
Railway & Electric Co. to dissolve
and simplify its present holding
company structure.
Alan tombstone, general counsel
Tor the Federal Works Agency. de-
clared rates charged the Govern
ment by the Potomac Electric Power
Co. should be reduced by 20 per
cent, and contended the approval
OF the utility reorganization plan, as
proposed by the railway and electric
company might mean the Govern
ment would be overcharged by ST.
100000 a year.
Spokesman for the Potomac Elec-
trlc Power Co., wholly owned by
Wreco, which now is controlled in
turn by North American, took sharp
issue with the tombstone statement
and asserted the reorganization
plan has nothing at all to do" with
consumer rates.
House Unit Opens Hearing.
The issues arose at a hearing be-
fore the Utilities Subcommittee of
the House District Committee,
which is headed by Representative
Harris, Democrat, Of Arkansas.
1t was considering plea for
early action on a bill proposed by
Wreco which the company con-
tended was necessary to enable it
to comply with orders of the Sc
cur1ties and Exchange Commission
regarding dissolution of holding
company controls. This relates to
the SEC order to the North Ameri-
can Co. to divest itself of its controls
over Wreco, Pepco and the Capital
Transit Co., as well as the SEC Or
der for the dissolution of Wreco,
holding company for Pepco and
other subsidiaries.
After two hours of debate the
subcommittee adjourned until Fri
day morning to await a statement
from Attorney General Tom Clark
as to the position of the Justice
Department on the issues raised.
This applies mostly to two ques-
tons: First, whether enactment of
the enabling legislation would jeop-
ardize final court adjudication of
issues over Pepco rates charged
the United States, and, second,
whether it might interfere with
questions about the validity of North
Americans acquisition, years ago,
Of Wreco, Capital Transit Co. and
other utility interests here.
PUG Head Favors Bill.
. General approval of the bill was
given by James H. Flanagan, chair
man of the Public Utilities Commits
sion, and by Ganson Purcell, chair
man of the SEC. Both these officials |
explained the bill was enabling legis-
lation to permit Wreco and it's sub
sidiaries to carry out reorganization
plans proposed in keeping with
SEC orders. They pointed out that
the plans still would be subject to
approval by the regulatory agencies.
These proposals, however, the sub
committe was told, require modifca-
tons of the La Toilette antimerger |
law to permit them to be adopted,
If approved by the commissions.
Representative Dirksen, Republic
an, Of Illinois remarked at one point
che proposed simplification would be
a great improvement" over the
present corporate structures. How
ever, later, after Mr.. tombstone had
blasted at the North American Co.
acquisitions and present power rates
to the Government, he and other
committee members decided to delay
action until Attorney General Clark
WIS heard.
Old Issues Revived.
Reviving many issues debated in
the past several years before the
kPUC, and now awaiting court action
sn appeal, Mr.. tombstone declared
that between 1925 and 1912 the divi-
dend Of Pepco had amounted to
$42, lbs, 900. This, he said, repre-
sented an annual return of 38.49
per cent on the par value of out
standing stock, and that it repre-
sented 101.3 per cent on the amount
OF money actually invested in
Pepco's plant.
Mr.. tombstone put. particular
stress on a portion of the Wreco dis
solution plan, which he said would
mean, on final approval, the use of
some $29 100000 of surplus in the
Pepco capitalization. This is one of
the issues involved in the case on
appeal to the court.
As to the North American Co., he
protested that the PUG had refused
to admit evidence in the 1943 rate
case, now on appeal, to- show that
North Americans acquisition of
Wreco's stock was effected pur-
suant to a conspiracy to violate the
antlmerger law and that the con-
tinued holding of such stock Is
illegal"
Is Neal Protests Statements.
Alfred G. Neal, president Of |
Wreco and Pepco, took sharp issue
with the tombstone statements. He|
said they implied the SIS, 900 900 sur
plus Gas of 1943) belongs, in effect !
to the consumers, whereas every
cent OF it" is the stockholders
money. He declared the SURPRISES
constituted undistributed profits
which, under sound, conservative
management policy, had been
"ploughed back" into the companv's
property instead OF being distrib-
uted.
I'm the face of this conservative
policy" he protested, ut now isl
there to haunt U.S." He added that
consumer rates were fixed by the
Public Utilities Commission annu-
ally and were held to a 5k per cent?
rate OF return on the company'sl
rate base-or valuation for rate
making purposes.
Mr.. tombstone declared passage
Of the legislation would amount toI
a "prejudgment" Of the rate case
now on appeal. A different yiewI
was taken by the SEC chairman
Under committee uuestinninr hcI