Evening star., 1947-10-18

|fIdn JCncQuIeQ
PUG to Take Month
To Study Proposal to
| Add 81 900, 900 Gross
Public hearings will be held
within month" on a petition by
the Potomac Electric Power Co
seeking the use of the full amount
OF that company's revenues, James
H. Flanagan, chairman of the Dis
trict Public Utilities Commission
said today.
The Pepco petition, filed late yes
terday with PUG, unfolded a plan
for increasing the company's gross
yearly income by about $1,000, 600
with no increase in power rates.
The power company proposed tc
do this through use of money now
being put aside, at the rate of about
$95, 900 month, in a special cash
account from which would be paid
any customer refunds which PUG
might order in the future.
Cost Factor Cited.
Pepco's president, A. G. Neal, ex-
planned to reporters he was asking
in effect the abolition of the Gus
toner system to help the
company meet its increased oper-
ating costs.
"If this relief is obtained" he
said, II do not anticipate we shall
have to ask for a rate increase
for 1948."
Mr.. Neal stressed the company is
asking for immediate" action on
its petition.
1t will take about a month for
PUG to complete its examination of
Pepco's proposal and to prepare for
public hearing, Mr.. Flanagan said.
He and other commission officials
declined to express any reaction to
the development until they have
had time for thorough study of the
petition.
Says Return Below Scale.
The power company's argument
yesterday was based on a claim that
Pepco, in the last II months, has
had return of 49, per cent of its
investment, instead of the SIS per
cent return to which it is entitled
under the sliding scale" system
for determining local power rates.
BY the terms of the current ar
rangement between PUG and Pepco,
whenever its return falls below 5
per cent the company is entitled
to immediate adjustments restoring
the return to the approved SIS per
cent. Normally, these adjustments
would be in the form of an increase
in rates paid by the consumer.
In its petition, however, Pepco
asked no such rate increase. Use
of the money set aside for possible
refunds, with taxes deducted, would
bring the company's return every
close" to the SIS per cent mark, Mr.
Neal said.
The power company reminded
PUG it had paid $3,213,601 worth OF
customer refunds under the COM
missions direction since 1943. Last
March l, Pepco recalled, it had
sought an end to the practice OF
setting money aside for possible
future refunds.
The request was denied by PUG
Since then, $667 7,325 has accumu-
lated in the special account.
Costs Up 48 Per Cent.
Meanwhile, said Pepco, company
earnings have been squeezed like
a sponge by the pressure of rising
costs. In its petition, the company
contended its operating and main
tenance costs are up 48 per cent
over 1943.
Pepco said it must do $43, 600, 600
worth of new construction work
during the next five years and
added its present low earnings
would make 1t hard to attract the
necessary capital for this expan-
sion.
Mr.. Neal told reporters the COM
pany's gross earnings for the IL
months ended September 80 had
been $25 100000 and that the net
return to the company had been 81
100000. He estimated taxes would
whittle down to about 100000 the
additional $1,040,000 the company
will receive each year If the PUG
allows it to stop putting money ASIDE
for customer refunds.
This is $169,700 less than the
amount of net income which would
be required to bring the company's
return to the approved SIS per cent
The Pepco petition, filed by At
torneys James F. Reilly and William
K. Laws, stressed the rates for cleo
trio power never have been increased
since the sliding scale" arrange
ment was inaugurated in 1925, but
on the contrary, have decreased pro-
greSsively