Evening star., 1947-10-20
Phone Company
Seeks 10 Avoid
Usual Appraisal
Asks Rute Increase
y Be Granted Without
EvoIuotion Step

'SsstSO FVltUOuV
EvoIuotion Step
A hearing on the Chesapeake
& Potomac Telephone Co.'S re-
quest for an increase In tele-
phone rates opened today before
the Public Utilities Commission
with the company asking that
the rate increase be granted
without the usual evaluation of
the companys property.
This request was made by William
q. Gassaway, company counsel.
The company, he told the COM
mission. has experienced decline
IN earnings due to an increase in
operating expenses including high
labor costs. Earnings of the COM
pany, he said, are less than 2 per
cent for the latest three-month per-
iod.
Operating expenses have in
creased about 100 per cent since
1889, he said,l declaring this was
due principally to the company's
labor expenses which are now 235
per cent in excess of 1899.
Months Increase of IS cents.
The requested increase in tele-
phone rates would amount to SIS
cents a month unlimited local sery-
ice. This service would go up from
$4.20 to $4.75 for a single-party line
A two-party line unlimited rate
would go from $3.50 to 81 a month.
Prepared to oppose the request
were several parties. These included
the Federal Government through
the Treasury Departments Bureau
Of Federal Supply, the Washington
Industrial Union Council, CIO, the
Federation of Citizens Associations
and some individual telephone users
The hearing is expected to be long,
drawn -out affair.
The request for new rates without
commission finding on the value
OF the property was to be considered
by the commission at an early stage
in the hearing, it was understood.
The commission usually has gone
into the evaluation of property in
any consideration of new public
utility rates.
Says Earnings Will Be Down.
Mr.. Gassaway, in making his re-
quest on this point, said the COM
pany hopes it will not be necessary
for the commission to make "the
usual findings Of a rate base or a
rate of return thereon, and in lieu
thereof merely to find and determine
that the new rates proposed by the
company are neither unjust as to
the customers nor in excess of rea-
sonable rates, and to thereupon au-I
thorize the company to put these
new rates into effect at the prac-
ticabh date"
In his request for the company,
Mr.. Gassaway said that If the in
crease in rates is authorized, "the
company will still earn somewhat
less than per cent on the original
cost of its property, less the amount
In the depreciation reserve plus
material and supplies.
This includes no allowance for
working cash for in keeping with its
determination to avoid, If possible,
any controversial issues, the COM
pany has not included this item in
measuring the effect of it's earnings
under the proposed rates." Mr.
GassaWay stated.
First Plea Since 1920.
Mr.. Gassaway emphasized that
the petition for an increase in rates
was the first time since 1920 that
it had sought a raise here.
Other company witnesses included
j. B. Morrison, vice president; j. NJ
Howard general commercial man
ager, and Robert w. Niche, vice
president.
Mr., Morrison told the commission
that earnings of the company have
reached such critical stage that
the management recognizes it must
obtain prompt relief if the COM
pany is to continue as successful
business"
Asked by company counsel to ex-
plain the reasons that had prompted
the company to ask for higher rates,
he testified:
Briefly stated, this is what has
happened to our business since 1893,
the last normal preWar year. Since
that time we have had tremendous
growthS-in stations, In usage, in
revenues and in expenses. All of
which would be fine if all had grown
In their proper proportion.
This has not been the case. AS
expenses-primarily because of in
creased wage rates-have far ex-
ceeded their proper proportion, and
as a result we find ourselves mo-
longer able to show a satisfactory
earnings condition.
Furthermore, the conditions sur
rounding the company's operations
now, and in the foreseeable future,
indicate with reasonable certainty
that earnings will continue at an
extremely low level unless rates are
increased"
An elaborate series of charts was
presented by the company witnesses
to back up the case. Mr.. Niche, the
last witness at the morning session,
explained in great detail charts and
figures to show the companys claim
that its earnings had deterioratad to
the point where the situation was
progressively critical.