Evening star., 1948-06-07
Pepco' o'sLosses
Cited al Opening
Of Rate Hearing
Officials Stress Plans
For Expansion in PIeo
For l0c Weekly Roise

Armed with statistics pointing out
the financial plight of the Potomac
Electric Power Co., witnesses for the
company testified today as Public
Utilities Commission hearingl
started on proposed rate increases
that would add 10 cents a week to
the average Washington electric bill
beginning July /.
Representatives of the Maryland
Public Service Commission were on
hand at the District Building when
the hearing got under way. A SIM
liar rate increase plan was filed May
27 by the company for its customers
in Prince Georges and Montgomery
Counties. No increase has been
sought for its 1000 customers in
Rosslyn and Fort Myer..
Most residents of Arlington and
Alexandria are serviced by the Vir-
ginia Electric Power Co., and are not
affected by today's deliberations.
Attorney James Francis Reilly,
representing the company, told the
PUG he planned to present five COM
pany witnesses today. They are w.
j. Lank, chief electrical engineer;
Charles L. Carr, assistant controller;
r. Roy Dunn. vice president and
treasurer; Edward Hopkinson, jr., a
partner of Drexel and Co., Phila-
delphia. who has made an inde-
pendent study of Pepco's financial
condition, and Fischer S. Black, as
sistant to the president.
Opposition Also Present.
Also present were several wit
nesses who expect to testify against
the company's rate increase plan for
its 247.000 District customers.
Citing the serious adverse ef-
fects" Of spiraling fuel and other
costs, Mr.. Reilly in his opening
statement declared:
This commission has recognized
this situation by restoring the
March /, 1943, billing rates effective
October l, 1947. Unfortunately, cold
hard facts have demonstrated the
iAAoStCAudSy VI IltdG lCllcl.
In 1947 the company's earnings
were approximately s480,o below
the allowable basic return estab-
lished by this commission. The
trend Of the results of operations
for the first four months of this
year and current cost levels clearly
indicate the most critical financial
situation in which the company will
find itself unless the rates proposed
are made effective July l."
Construction Program Cited.
Mr.. Reilly testified that the seri-
cusness of the company's situation
is emphasized by the staggering"
program planned for
the next five years. He said this
construction is necessary if the
company is to maintain adequate
service to its customers and meet
increasing demands from new ones.
The continuous downward trend
Of earnings must be arrested and
the trend reversed, the company at
torney declared, if the utility is to
do any future financing through
ssle of common stock on favorable
terms. He said the amount Of the
increase requested is a minimum
requirement.
Just before Mr.. Lank took the
stand to present data on Pepco's
expansion program, Mr.. Reilly
added:
Il cannot emphasize too strongly
the emergency nature of this pro-
ceeding. Because of the critical
earning situation in which the
company finds itself. this is no
time to devise and present the case
based on any single type of mathe-
natical formulae. The impact of
increasing costs alone have created
such an adverse affect on the COM
oany's earnings as to require the
dollar relief that the proposed rates
will provide
Would Be 43c Raise for Month.
Company Spokesmen said the
rate schedules for the average resi-
Dental bill were calculated at
use rate of 1900 killowatt hours
q year or $50 killowatt hours a
month. He said this would mean
an average increase of 43 cents
4 month to consumers bills, or
about 10 cents a week.
The requests for a rate increase
filed with the Public Service Com
of Maryland splits the sur
rounding areas into three parts.
The urban zone, comprising the
nearest belt of communities such
as Bethesda, Silver Spring and
Hyattsville, would sustain increases
approximately the same as are
sought for Washington. The rates
would be slightly higher in the
next two zones classified as subur-
oan and rural.