Evening star., 1948-06-08
PepcoWitnesses
Stress Need Of
Higher Income
PUG to Hear Expert;
Company Treasurer
Urges Rate Boost
By Jerry OLeor, Jr.

The Potomac Electric Power Co.
today was to produce an out-of town
expert to testify before the Public
Utilities Commission to back up the
company's contention that its crit
icar' financial situation requires an
increase in electric rates.
The expert, Edward Hopkinson,
jr., a partner in Drexel g. Co.,, Phil
adelphia, was scheduled to take the
stand in connection with Pepco's re-
quest for rate increases that would
add 43 cents a month to the average
customers electric bill.
Mr.. Hopkinson, according to At
torney James Francis Reilly, has
made an independent study of
Pepco's financial position. The
Pepco lawyer said the witness will
demonstrate the need for an in
crease in the company's earnings.
Treasurer Testifies.
r. Roy Dunn, vice president and
treasurer of the electric company,
testified today that Pepco needs in
creased earnings to attract capital
for a planned expansion program.
Another witness who may take the
stand today to testify for the higher
electric rates is Fischer S. Black,
assistant to the Pepco president. Mr..
Black is expected to limit his testi-
mony to explaining the proposed
rate schedule.
Pepco seeks the increase on two
principal grounds: That it is los
ing money because of increased
fuel and other costs and that it is
not making enough money to finance
its required expansion.
Witnesses yesterday testified Pepco
will have to spend about $50, 500 900
in the next five years to keep up
service to present patrons and pro-
vide service for new customers. Mr..
Reilly described the company's A.
nancial situation variously as "seri-
ous' and critical"
Rising Costs Cited.
Charles L. Carr. assistant con-
troller Of the company. yesterday
told the PUG that Pepco continued
to find itself adversely affected by
spiraling costs, the end of which, he
said, is not yet in sight.
"The cost of fuel has continued
to advance at an alarming rate"
Mr.. Carr testified, "and the costs
of labor, material and other ex-
penses also continue to rise"
He pointed out the company
suffered deficiency of more than
$400 900 below the basic rate of re-
turn Of 51a per cent in 1947 and
that relief Is necessary this year in
view Of the continued rise in costs.
Pepco wants the 43-cents-a- month
average increase to become effec-
tive July /.
Mr.. Carr declared the results Of
operation for the first four months
of 1948 demonstrate conclusively
that Pepco's concern with. respect
to the continued decline in its earn
ings is warranted.
Projects and Costs Listed.
Earlier, w. j. Lank, chief electrical
engineer, described the large num-
ber Of construction projects Pepoo
contemplates for the next five years.
He said Pepco must spend 81 1863 400
on production plant, $3,567 ,450 on
transmission. $3,064, $50 on general
plant and $43,704, 400 on distribu-
ton. OF the later figure, the engi-
neer said, $12,00,000 will be spent
for customer extensions and Gus
toner services.
Mr.. Carr testified the s86 500 900
for construction is two or three
times greater than the amount the
company ever spent in any similar
f1ve-year period in its 52-year his
tory.
Residents of Alexandria and Ar
lington and Fairfax Counties would
not be affected by the proposed rate
increase. Residents of Prince
Georges and Montgomery Counties,
however, are watching the hearings
In the District Building with inter-
est. Pepco filed similar rate increase
proposals with the Maryland Public
Service Commission on May 81.
Representatives of the PSC, attend
ing yesterdays session, speculated
they may not even require hearings
in Maryland, if sufficient testimony
is brought out in the District. In
any event, Maryland will not act on
the proposal until the District PUC
arrives at decision, a PSC spokes-
man said.