Evening star., 1947-12-10
PUG Probes Further
Into Fiscal DEALINGS
Al Phone Rate HEARING

The Public Utilities Commission
today inquired further into the fiscal
relationship between the Chesa-
peake and Potomac Telephone Co.
and the parent American Telephone
and Telegraph Co. in hearings on
the c. & P.'s request for increased
telephone rates in Washington
First witness today was Robert w.
Niche, c. & P. vice president.
Also scheduled to take the stand to-
day was v. A. McElfresh, PUG
auditor. 1t was not known whether
the Federal Government-as the
largest single customer of c. g. P.
in the District-would make known
its position on the proposed rate
increase later today. Representing
the Treasury Departments Bureau
of Federal Supply at the hearings,
which will be resumed Friday. are
Charles NJ Dineen and Byron Hard
ing.
Yesterdays proceedings were
taken up entirely by testimony and
cross-examination of Harry c.
Gretz, assistant controller of A. T.
& T., which in turn owns 100 per
cent of c. & P. stock. He testified
on a number of voluminous exhibits
revealing the inner workings of the
fiscal relationship between the two
companies.
Delves into Figures.
Assistant Corporation Counsel
Lloyd Harrison. delving deeply into
the mass of figures with Mr.. Gretz,
said A. T. & T.'s method of allocat-
ing contract services to it's % SUBJ
sidiary companies was based more
on convenience than on reality.
Hiss s-examination revealed
A. T. & T. maintains huge amount
of cash-much as though it were a
bank-for the % companies includ-
ing c. & P. For use of this money,
C. g. P. pays interest at rate of "a
per cent, the testimony showed. But
in the capacity of a commitment
charge is an additional 11a per cent
annually c. & P. pays for the mere
availability of the cash as we'll as
for other services, such as research.
Company evidence revealed G. & P.
has used A. T. & T.'s services to the
extent of $2,700,258 during the past
10 years under the provision for
license contract services. In 1916,
there were IA cash advances to
c. &, p, and during the past 10
years there were a total of 189,
totaling $82,934,246. At the end of
last year. c. & P. owed A. T. & T.
S., SIS, 900. Because of money bor-
rowed this year, the amount out
standing at present stands at $12,-
AS, 900 because of new advances,
totaling about $11,175,0O0, and re-
payments, totaling only $4,275,000.
Illuminates Relationship.
Mr.. Harrison emphasized he was
not attempting to break down" Mr..
Gretz' testimony but merely was
trying to Illuminate the relations
between parent and subsidiary so
the PUG would understand the issue
better.
AStud11y, ~. O. Z. SCCkS GclcpllUIlG
rate increases averaging about so
cents a month to unlimited phone
users. The proposed scale compared
with the existing scale was pre-
sented to PUG Chairman James H.
Flanagan yesterday by John M.
Howard, general commercial man
ager of C. g. P.
Where an unlimited Scubscriber
now pays $4.20 a month, the new
scale would raise the monthly bill
to $4.75. Two-party line unlimited
subscribers bills would be increased
from $3.50 to 81. Two-party line
customers under the 45-message-a-
month arrangement would pay the
same $2.25 fiat rate but the 4 cents
for each call over As month would
be raised to Az cents. Other in
creases are listed in a complicated
schedule for business and other
types of service. The increases
average so cents a month,