Evening star., 1950-10-25
Pepco'sReasons
For Some Cuts
In Bills Asked
Flanagan Suggests
More Substantial
Explanation to PUG


Electric Power Co.'s proposed
rates include some reductions ir
customers bills, despite the com.
pany's plea it needs more income
AS the hearing recessed yester.
day, PUG Chairman James H
Flanagan said the commission
feels there should be some more
substantial reasons developed tt
show why the reductions"
Mr.. Flanagan said the PUG
finds it difficult to understand why
If the power company needs as
much money as it is asking, re-
ductions in the bills of many
customers would result from the
rates. He said it was not ar
official PUG request for informa.
ton, but a Suggestion" he wanted
to make.
The PUG will resume the public
hearing on the power company's
rate-increase request at 10 am
tomorrow.
go Per Cent Over All Boost.
Pepco is asking for a 9.2 pei
cent overall increase in electric
rates, intended to bring In ar
additional S3,379,0O0 a year. This
additional revenue, it maintains
is needed to attract investors SC
the company can finance expan-
sion of it's facilities.
On the other hand, v. A. Nc
Elfresh, PUG executive accounting
auditor. yesterday testified he
thinks 6.4 per cent increase, to
bring in an additional $2.5 million
annually, would be sufficient to
keep the company in sound f1nan-
cial condition.
Mr.. McElfresh had only a gen.
eral comment to make about
Capital Transit Co.'s fate under
the Pepco proposals. The transit
company faces So per cent in
crease in its rates under the pow
er company's proposed rates.
The PUG staff member said he
feels Capital Transit's proper
tionate share of the new revenues
should be "lower" than recon-
mended by Pepco.
Opposes Any Increase.
F. Gloyd Await, attorney for
the transit company. said Capital
Transit is adhering to it's pre-
viously announced contention that
1t should have no power-bill in
crease.
In fact, Mr.. Await reiterated,
the transit company intends to
show it should have a reduction
in its present bill, not an increase.
He said his case will be built
around the agreement signed in
1888 with Pepco, when the Capt.
tai Transit Co. was formed out of
the merger of two other firms. At
that time, the transit company
turned over to Pepco certain
equipment, buildings and other
facilities on which, Mr.. Await
said, it has been paying taxes
ever since.
The transit company hopes to
begin presentation of its case to-
morrow after the Federal Gov
ernment finishes presenting It's
witnesses.
The question of the reductions
in some customer bills under the
proposed rates has been of inter-
est to all parties concerned dur
ing the lengthy hearing.
Inequities Claimed.
Pepco's stand is that the re-
ductions amount to something less
than 100000. The power COM
pany officials have testified the
new rates it is asking are an at
tempt to adjust inequities among
calsses of customers, as well as
obtain additional revenues.
Consequently, some customers
would get reductions, others In
creases, Pepco has maintained.
James K. Macintosh, of the
public utilities branch of General
Services Administration, also at
tackled this question of reductions
to some customers when he testi-
fed Yesterday. The Federal
Government, one of Pepco's
largest customers, faces an II per
cent increase under the power
company's proposed rates.
Mr.. Macintosh said he feels the
Pepco method of allotting the in
creased revenue needs among its
customers is 'inequitable.
Suggests Formula.
He suggested to the PUG that
formula based on the percentage
of revenue each class of customer
provides would be fairer. Under
his formula, residential customers
would face 81 per cent increase,
instead of the 43 increase pro-
posed by Pepco. The Federal
Government would get only 81
per cent increase, instead of the
II per cent as Pepco advocates.
When Mr.. McElfresh. the PUG
auditor, presented his recon-
mendations, he said 512 per
cent return on the Pepco weighted
rate base would be sufficient to
insure success Of any future A.
nancing. However, he said the
power company proposals would
"tip the scales in favor of the in
vestor."
He recommended the $2.5 mil
lion additional revenues, although
that would be slightly more than
a 51a per cent return. He said
the power company needs leeway
because of unsettled economic
conditions.