Evening star., 1950-02-21
.PhoneConnpany
Rates for
p Million Boost
PUG Grants Increase,
Sets Hearing on
Revised Schedule

The Chesapeake and Potomac
Telephone Co. today was prepar-
ing to submit revised rate sched-
ules to the Public Utilities Com
mission, following the commits
sion's order granting the COM
pany an annual increase in in
come of $2,500,0O0
The rate schedules will deter
mine just how the increase will
be apportioned among various
types of telephone subscribers
here.
The PUG ordered the increase
in the gross revenues of the tele-
phone company late yesterday.
The company had sought an in
crease of S3,249,0o0 through a
long series of hearing held in
November and December.
y The telephone company was
ordered by the PUG to submit its
proposed rate schedule on or be-
fore Thursday. A public hearing
on the schedule was set for 10
am. next Tuesday in the District
Building.
Near McElfresh Figure.
The increase, while substan-
TALLY less than asked, was in line
with the recommendations made
during the hearing by v. A. Nc
Elfresh. of the PUG staff. Mr.. Nc
Elfresh testified an increase Of
$2,227.034 in gross income would
give the company fair return.
An intervening party, David A.
Kosh, public utility chief Of the
Bureau of Federal Supply, rec
commended about 100000 less
than Mr.. McElfresh did. The Fed
eral Government is the largest
single customer of the telephone
company, with an annual bill Of
about $3,500,000 under present
rates.
c. H. Johnson, vice president
and general manager of the tele-
phone company, expressed dis
appointment" over the PUG action
lin granting us 81 million less
than the full amount of the addi-
tional annual gross revenues re-
quested in our application.
"The additional earnings we
sought through increased rates
represented the minimum amount
needed to maintain the financial
stability Of the company and in
sure continuance of our program
OF service improvement and ex-
pansion," he said.
Further Action Studied.
Mr.. johnson said the authorized
increase, even with previous in
creases granted, is approximately
81 million less. than the annual
cost to the company of general
wage increases given employees
since the war.
He said the company would give
study ito what further action the
company should take in order to
raise the earnings to a satisfactory
level"
The telephone company de-
clared, in it's request for an in
crease, that its earnings had
dropped to such an extent that it
is getting only about 3l2 per cent
on its average net investment as
compared with 7 per cent during
the years from 1885 to 1899.
The PUG said yesterday, in it's
order, that it concludes that 6
per cent is a fair and reasonable
rate of return" for the telephone
company.
4.26 Per Cent in Test Period.
The. PUG said it found that the
net operating income of the COM
pany last year was $2,895 ,506,
based on six-month test period.
Such net operating income pro-
vided a return of 4.26 per cent, or
81 1,185,670 less than the 6 per cent
return found fair, it added.
The PUG stated it found an
increase in gross revenue of
S2,118,o71 is necessary to provide
the company with a 6 per cent
return. This figure does not take
into effect the impact of higher
construction costs, future in
Icreases in operating costs or other
unpredictable factors, the PUG
added.
To provide some margin for the
adverse effect of these unknown
factors, the PUG said it would
recommend an increase in gross
revenue of S2,500,0o0.
This amount is necessary to
maintain it (the company in a
sound financial position to to en-
able 1t to attract additional cap
1tal," the PUG stated. Such an
increase, properly apportioned
among subscribers. is just and
reasonable to the users of tele-
phone service in the District" the