Evening star. [volume] (Washington, D.C.) 1854-1972, 1947-06-01
Pepco Rate Rise
In Depends
On PUG Decision
Action on Rebate
On Excess Earnings
Due by Thursday
By John w. Thompson. Jr.

A possibility that electric rates
here will be increased this year for
the first time since before 1925.
hangs on decisions to be made this
week by the Public Utilities Commits
sion.
The decisions involve disposition
Iof excess earnings of the Potomac
Electric Power Co. for the calendar
year 1945.
These earnings and those for the
calendar year 1945 are being studied
lby the PUG on by now because for
three years the commissions rate
order at 1914 was challenged in the
courts by Pepco. No rate changes
were possible during the litigation,
which ended May when the PUG
order was upheld.
The possibility of an increase
stems from the fact that under the
1914 rate order return of 51s per
cent is authorized for the company.
Rebate Would Cut Earnings.
PUG accountants admit that If the
1945 excess actually is distributed
to consumers in cash or through
credits for lower rates in 1916, the
company's earnings would be only
5.23 per cent for the latter year.
Under the 1914 rate order, based
on Pepcos income during 1913 at
1943 rate, PUG directed that $1,O37,-
600 be returned to the consumers.
This would have resulted in lower
rates to consumers beginning March
l, 1874, but was delayed by the court
action. This rate of reduction carried
through to this year by the now valid
order resulted in a $2,213, sol refund
ordered by PUG last week.
This rate of reduction alone, how
ever, according to PUG Chairman
James H. Flanagan, applied to the
earnings of the company during
l948 would yield only Ssh per cent.
Plllng on top of this the additional
amount of excess from 1945 would
depress earnings below the author
lied level.
Under provisions of the sliding
scale arrangement by which utility
rates now are fixed, the company
can apply Immediately for an in
crease which will bring earnings to
the authorized level.
Disagree on Amount Due.
PUG accountants estimate the
amount due consumers from the
l945 excess is $490,482. Company
officials, however, say it is only
S295, 429.
A commission decision on this la
expected before 10 am. Thursday,
when a detailed investigation of the
1916 Pepco earnings will get under
way.
Under a sliding scale procedure,
PUG annually studies Pepco's earn
ings for the previous calendar year.
ANY rate reductions are effective
during the so-called rate year"
which begins on March following
the calendar year studied.
Thus excess earnings from the
calendar year 1915 would be reflected
normally in reduced rates beginning
March l, 1916 and running through
February %, 1947.
1916 Records Closed.
| Because of the delay due to the
litigation, however, the calendar
year 1916 already is closed and COM
pany earnings are a matter Of
record.
Applying to these earnings ten
/ twelfths of the $3.50, 1872 rebate they
contend is due consumers from 1945.
PUG accountants reached the con-
clusion that this would force COM
pany earnings in 1916 below the
authorized level.
| If this were done, the company
could ask at Thursdays hearings for
rate increase covering the rate
year which began last March /.
Prospects are. however, that the
present l943 rates will continue and
that the 1945 excess will be ordered
into a reserve fund as a cushion
against future low earnings by the
company and thus as a head-oR
of any rate increase.