Evening star., 1948-07-07
Auditor for PUG
.Ca||sPepcoRate
Rise Too Large
Federal Aide Agrees
Return on Investment
Would Be Excessive

NStuTH OF investment
Would Be Excessive
The Public Utilities Commission
today received testimony from two
witnesses that the Potomac Electric
Power Co. needs rate increase but
not as large as the one it has asked
for
v. A. McElfreSh. executive &C.
countant and auditor of the PUG,
said his computations indicate that
s., ,633 ,5l9 Of increased gross income
would bring Pepco's net income up
to the authorized 5la per cent return
on its 100000 900 investment.
Pepco seeks rate increases that
will add about 10 cents a week to the
consumers electric bill and
produce $3.l00,0o0 more income.
His testimony was approximately
paralleled by the other witness.
David A. Kosh, chief of the Public
Utilities Division of the Treasury
Departments Bureau of Federal
Supply.
Figures Held Incomplete.
When the hearings began, Charles
L. Carr, assistant controller of the
power company, introduced exhibits
the company's request
for $3,1O0,000 in added gross annual
revenue.
Mr.. McElfresh said that while
Mr.. Carrs figures were sound inso-
far as they related to the company's
financial performance within the last
Is months, they did not include
enough retail on forecasts on the
effect OF increased rates. The
Pepco controller used simple arith-
metical method, Mr. McElfresh de-
clared, instead of including in his
calculations such factors as transfer
of Pepco from one Federal tax
bracket to another as its income
shifts.
A representative Of the Fairmac
Corp, owner of Mclean Gardens
Apartments, also was expected to
testify. The corporation is opposing
lne TdL6 lIlCIGdSe.
The PUCs hearings on the Pepco
petition were resumed yesterday.
after almost a months recess.
James F. Reilly, company attor-
ney, said he would produce today
data on cost-plus contracts Of the
company.
Union Agent Raises Issue.
The matter of cost-plus contracts
was brought up by j. C. Turner,
Hosting Engineers Union business
agent and chairman of the Public
Utilities Committee Of the Wash
ington Central Labor Union.
Mr.. Turner protested the rate
increase, pending an investigation
of the efficiency Of the company in
extending its facilities. He said two
contracting concerns, both non
union, have been given cost-plus
contracts in extending the COM
pany's plant and that union COM
panies, equipped to do the work. are
not given the opportunity to bid on
the jobs.
He asserted the companies that
do not get the work could do 1t at
less cost.
There is not a great deal OF
energy put in by cost-plus en-
ployes," he added.
Data Asked by Flanagan.
Later John O'Dea, peoples coun-
sci, asked whether Pepco would pro-
duce data on the cost-plus contracts.
Mr.. Reilly said it was not his inten-
ton to do so. James H. Flanagan,
PUG chairman. then asked that the
company submit such data.
Mr.. Reilly said he would consult
the company officers.
The commission has not used a
subpoena in all my experience. Mr..
Reilly =" =" Mr.. Flanagan began
in reply.
II observe the Fourth Command
.nent," Mr. Reilly answered. He
quoted later the version saying.
Honor thy father and thy mother
and respect thy elders
Fischer S. Black, company rate
expert, testified concerning the plans
under the proposed new rates to
give users of electric water heaters
discount of a half-cent kilowatt
hour. The present rate, generally,
is is cents, which would be raised
to 1.65 without the discount. With
the discount, the new rate would
be lis cents.
Twice Rate for Gas.
Mr.. Black said it was felt the
present rate for this service Is TOO
high. He said between 1000 and
5000 customers now use electric
power for heating water, despite
the fact the rate is twice that OF
using gas.
Charles J. Bauer, secretary of the
Building Owners and Managers
Associa ton, read a statement say
ing his organization does not deny
Pepco is entitled to some adjustment
in rates. He said his organization
is concerned, however, because the
new rates would mean higher per-
centage increases for apartment
owners than for others.
He said householder now paying
50 % a month would pay $3.50 under
the new rates-an increase OF lib
per cent, or only / per cent more
than that for the individual.
John v. Case Of the International
Association of Machinists, District
A. took the stand to oppose some.
sections of the power company's
petition.