Evening star., 1948-06-07
Expansion Plans
Cited by Pepco
Al tRateHearinq
86 Million to Be Spent
In 5 Years; Rise to
Average l0e a Week

The Potomac Electric Power Co.
cited planned expenditures of $685.
478,000 over the next five years in
its testimony today before the
Public Utilities Commission on the
company's request for rate increases
which would add about 10 cents a
week to the average consumers elec-
trio bill.
The company's first witness at
the public hearing was w. j. Lank,
Pepco electrical engineer, who ex-
planned the company's construction
program
Mr.. Lank said the program called
for aggregate expenditures of $685.
ATS. 900, of which $50, 100000 will be
spent by Pepco and s35. IT'S, COO by
its subsidiary, the Braddock Light
g. Power Co.
To Be Record Program.
He said this program Is two or
three times larger than any amount
Pepco has spent in any similar
5-year period in its 52-year history.
During this 5-year period, Mr.. Lank
explained, the company will spend
81 1863 400 on production plant,
So, ,567, ,450 on transmission, S3, ,064 $50
on general plant and $40, 900 on
distribution. In distribution. he
said, $4,000, 900 will be spent for
customer extensions and customer
services.
AS the hearing opened. company
spokesmen were armed with statis-
tics pointing out the financial plight
of the company.
Attorney James Francis Reilly,
representing the company, told the
PUG he planned to present five COM
pany witnesses today. In addition
to Mr.. Lank, they are Charles L.
Carr, assistant controller; E. Roy
Dunn, vice president and treas
urer; 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 companys 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
inadequacy of that relief.
I'm 1947 the company's earnings
were approximately $3.50, 600 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."
Earning Situation Critical"
Mr.. Reilly declared that the seri-
cusness Of the company's situation
is emphasized by the staggering
construction program.
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-
matical formulae. The impact of
increasing costs alone have created
such an adverse affect on the COM
pany's earnings as to require the
dollar relief that the proposed rates
will provide" Mr.. Reilly said.
Would Be 43c Raise for Month.
Company spokesmen said the
rate schedules for the average resi-
dental bill were calculated at q
use rate of 1900 killowatt hours
year or $50 killowatt hours a
month. He said this would mean
an average increase of 43 cents
month to consumers bills, or
about 10 cents week.
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
n 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.
The requests for a rate increase
filed with the Public Service Com
mission 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-
ban and rural