Evening star., 1946-03-26
PUG Says Pepco
Can Cut Rates
By$486,613
Estimate Presented
At Hearing Is Based
On 1945 Eurninos

Potomac Electric Power Co. earn.
lngs in l945 will permit a rate re.
duction to consumers of s486,613 a.
Public Utilities Commission audit of
power company finances revealed to-
day at the opening of the annual
electric rate hearings at the Dis.
trict Building.
rms would be in addition to the
Sl,039 900 rate reduction ordered bv
the commission in 1914 but still tied
up In Court Of Appeals litigation by
ootn the power company and the
Federal Government.
Because Of the pending court pro.
ceedlngs, S. r. Bowen, attorney for
the power company, challenged the
right of the commission to hold a
hearing on rates.
Sees Injunction Violated.
We don't see how the commits
sion could conduct this hearing" Mr.
Bowen declared, without violating
the injunction"
Mr.. Bowen said the company was
setting aside monthly an amount
which it feels will cover the nee
essary refunds to consumers should
the PUG order of 1914 be upheld
by the Appellate Court.
Il don't see how there can be anv
basis for consideration of rates" Mr.
Bowen declared, when we don't
know the exact amount to be re-
turned to the consumer"
The attorney said the onlv legal
rates now in existence are those
prior to the contested order. and
pointed out that today's hearing was
called under the terms of the con-
tested order.
Only Date Stayed.
Assistant Corporation Counsel
Lloyd Harrison told the commits
sion, however, that the court case
stayed only the effective date of
the rate reduction called for in the
1914 order. He contended it was
no violation to conduct the hearing.
Mr.. Harrison advised, however,
that no new schedule of rates be
determined by the commission until
the court case is decided.
Chairman James H. Flanagan of
the commission ruled that the hear
ing would be held and Mr.. Bowen
asked that an exception be noted
oy the company against all testi-
mony taken.
Mr.. Flanagan denied the Federal
Works Agency the right to take
part in the proceedings on the
grounds that the United States was
represented by the procurement
division of the Treasury. Both had
filed petitions to intervene in the
proceedings.
Treasury Filed on Time.
Asked by Maxwell H. Elliot, FWA
attorney, why the commission was
making distinction between his
organization and the Treasury, Mr..
Harrison replied that the Treasury
petition was filed on time and met
commission requirements. The FWA
petition, ne said. failed to meet
the time and proof of service re-
qulrements of the PUG. He also
recalled that the same action was
taken at last years brief hearing.
Both Federal Government agen-
cles are interested in heavily re-
duced rates, and contended at the
1874 hearings that the reductions
should be from 20 to 25 per cent.
Inc Government case against the
1914 order attacks the sliding scale
method of computing the rates and
contends that the million dollar
rate reduction ordered is insufi-
cient.
The 1914 order reduced the au-
thorized rate of return for the COM
pany to 5lz per cent from 6 per
cent, and required that it be ap-
pied to a deprecated plant val
uatlon. Basis of the Pepco suit
against the order is the conten-
ton that the commission has no
authority to modify the sliding scale
arrangement which originated in a
consent decree in 1925.
1943 Rates Used Now.
Present rates paid by consumers
are tnoSe OF l943, based on the COM
pany's income of 1912. Under the
sliding scale. these rates are an
nually adjusted up or down in
accordance with the rate of return
earned by the company compared
with the authorized rate.
V. A. McElfresh, commission ac-
countant, presented the details of
the commissions financial audit to
the hearing. He recommended that
the company set aside monthly one
twelfth of the $486,613 available for
rate reduction until such time as
the legal snarls can be cleared I'D
and a new rate order issued by the
PUG.
According to his figures, the Fed
eral Government last year paid an
electric bill of s4,399, ,752. The Dis
trlct government paid 1,255, 1868, and
all other consumers paid s18,-
237,47O.
Mr.. Bowen declined to cross.
examine the witness and said the
company would present no exhibits
or witnesses of its own, in line with
its contention that the proceedings