Evening star., 1947-11-25
PUG Will Hear
Data Tomorrow
Treasury Unit Aides
To Quiz McE|fresh
On SimpIified Rates

~ VIE sNVGIiISSu
On SimpIified Rates
The Public Utilities Commission
will hear further testimony to-
morrow on a plan to simplify city
electric rates by drastically chang
ing the sliding scale system so that
the Potomac Electric Power Co.
would lower consumers bills each
December in years when Pepco
receives excess earnings.
PUG Chairman James H. Flana-
gan said representatives of the
Bureau of Federal Supply OF the
Treasury's Procurement Division
will cross-examine v. A. McElfresh,
the PUC's executive accountant
and author of the plan.
The Government is greatly inter-
ested in the proposed plan to fix
annual electric rates since it Is the
largest single consumer of elec-
tricity in Washington and pays for
its power just as ordinary citizens
do.
Asked Release From Ruling.
The plan was presented to the
PUG yesterday at public hearing
on petition by Pepco for official
release from a ruling which requires
the company to impound certain
funds as cushion against possible
future rate increases.
Should the company earn less
than the rate approved by PUG Mr..
McElfresh proposed that it make
up the loss from the $312,00O reserve
fund the company has set aside
from excess earnings in 1945.
Under the sliding scale arrange
ment established by consent decree
in 1925. Pepco is entitled to a spe-
cific rate of return fixed by the
commission and applied to a plant
value (rate base) also fixed by the
commission. At the present time
the rate is 51a per cent of depre-
ciated base.
Under the arrangement, If the
company earnings exceed the au-
thorized amount. the excess is di-
vided between the company and the
consumers. The share of the con-
sumers is reflected in a rate reduc-
ton if large enough in amount. If
the amount is too small for this, it
can be set aside in reserve against
future rate increases or until it be-
comes large enough to apply to
rate reduction.
At present, annual rate hearings
are held by the commission during
which it studies the earnings of the
company for the previous calendar
year. Any changes in rates result
ing from this study are applied to
the ensuing rate year." which runs
from March l to the end of the
following February.
PUG Order Challenged.
Due to court challenge of a 1914
PUG rate order, which ended last
spring, the 1912 rates are still in
effect here.
The new plan was introduced as
Pepco sought abolition of refunds to
its customers so that the power COM
pany could use as income money it
now must set aside in a special ac-
count for the payment of customer
refunds. The company now has
s667 900 impounded in special ac-
count for refunds if the PUG orders
them.
This amount, set aside at the rate
of 5000 a month since March l, Is
the money Pepco wishes made avail
able to it in its petition. The COM
pany also has the 312,000-the ex-
cess of income Pepco received in
1945-available for reduction of
rates. but which will be used to
prevent a future increase in rates.
Proposal Outlined.
Under the McElfresh proposal,
the consumers bill adjustment in
December would be figured in null
tiples Of 5 per cent of the Septem-
ber bill. The consumer would get
a reduction figured at so per cent
of the surplus as it affects him
while Pepco would keep the other
half for incentive. Now, the consum-
er pays the same electric rate from
year to year and gets no rebate.
Pepco surpluses are being poured
into the fund now standing at
$667 900 for any refunds the PUG
may order.
Mr.. McElfresh said the proposed
plan calls for an adjustment of in
come within and for each calendar
year so that the allowed return of
the company will be either the basic
return-if that income is less than
the basic return-or the basic return
plus one-half of any income in ex-
cess thereof. He said the proposed
plan would not require annual rate
changes but would permit them
whenever conditions indicate they
are warranted.
Mr.. McElfresh said the proposed
change would automatically regu-
late the company's income at the
level of a fair return on the rate
base and restore a proper balance
between various classes of custom
ers by appropriate adjustment of
rate schedules.
Plan Called Improvement.
Mr.. McElfresh told the commits
sion he thought the proposed plan
very definite improvement over
the existing arrangement" and
strongly recommended its adoption.
Earlier, C. L. Carr, assistant con-
troller of Pepco, testified that even
If the PUG granted the relief
sought by the company, Pepco still
will not earn the basic rate of re-
turn to which 1t is entitled under
the present sliding scale arrange
ment.
Horticultural Club
Elects in Tukomu