The Republican. [volume] (Oakland, Md.) 1877-current, 1948-11-18
RATE INCREASE
BY TELEPHONE
COMPANY SOUGHT
Cites Low Earnings and High
Operating Cost in Announce
ment

The Chesapeake and Potomac Tele-
phone Company of Baltimore City
has filed an application with the Pub
lie Service Commission for an in
crease in telephone rates, declaring
its earnings are declining rapidly and
expenses are at an all time high.
w. G. Morrel, C. and P. vice-presi-
dent and general manager, declal ed
that while the company has not COM
pleted its studies, it was estimated
rate relief producing approximately
$3,600,000 in additional annual net
revenue, after taxes, would be re-
quired to place the company on 4
financially sound basis and to permit
it to furnish adequate telephone SER
vice to the public in Maryland.
The company, which in 1947 was
granted its first general rate increase
in 81 years, reported current oper-
ating expenses, including wage costs
comprising the largest item of eX-
pense, are the highest in history. Re-
cent wage increases to employees
have again added substantially to
the company's already high costs of
doing business. Construction costs, it
was pointed out, continue at record
levels.
The company's application brought
out that rate relief granted last year
was Substantially less than neces-
sary to restore and maintain the COM
pany's earnings at an adequate level"
The petition noted that the impact
of the company's unprecedented con-
struction program has materially AID
continued public demand for tele-
phone service since January |, 1947
compelling the company to make
plant additions totaling $40, 900, 600.
Additions are now being made, the
petition set forth. at current cost
levels of more than $500 per telc-
phone added or more than double the
average investment cost per tele-
phone of less than 5000 in 1947. AS a
result, it was stated, the company's
present rates are "geared to the prio.
low cost levels and not the higher cost
levels now being experienced and
which the company may reasonably
expect to experience in the immedl-
ate future"
In its application, the company's
earnings have rapidly declined until
current earnings amount to less than
312 percent on net original cost in
vestment and are far less than this
rate upon the present fair value of
its property.
The petition declared that 1.-The con-
ditions surrounding the company's
operations in this state, both now and
for the fOreseeable future, afford no
basis upon which the present made
quately low earnings can be expected
to improve under the company's eX-
listing rates" 1t was stressed that the
company's tremendous construction
program is not one-half completed
and the full impact thereof has yet to
be felt.
In its application, the company said
it will be required to spend for con-
struction purposes at current cost
levels approximately $60,000,000
within the next few years in order to
continue to improve and expand tele-
phone service as demanded by the
public of Maryland.
1t was pointed out that under exist
ing rates, the company is earning far
less than a reasonable return upon
the fair value of its property used
and useful in rendering service to the
public and is failing to earn its mini
mum requirements necessary to pro-
vide adequate service and to attract
the additional capital which is es-
scntial if the company is to meet
present and future service demands.
Asking that the Public Service
Commission decide what constitutes
a reasonable return upon the fair
value of the company's property, tie
c. and P. requested in its application
"a prompt hearing upon and an
early decision by the Commission in
view of the company's patiently in
adequate earnings"