Evening star., 1952-06-19
Senatorial Confusion

Senatorial unfamiliarity with local public
utility problems is understandable Not under
standable, however, was the apparent reluctance
yesterday of several uninformed Senators to let
Chairman Flanagan of the Public Utilities Com
ENsSion give them some needed enlightenment.
He ought to be given full opportunity to do so at
later hearing-in fairness to himself and the
P. U. C. and in the interest of orderly legisating
on subject of vital public concern.
Senator Hunt of Wyoming opened the hear
Ing on the Flanagan nomination for fourth
P. U. c. term with the statement: when the
Capltal TranSlD company gets an increase in
its fares the same day it declares a big dividend
for it's stockholders there is something wrong
somewhere" If Senator Hunt was implying that
the P u. c. should have denied the rate increase
because of the dividend payment, he was making
a faulty assumption. Mr.. Flanagan repeatedly
attempted to explain this situation and others
that puzzled some Senate District Committee
members, but he was cut off by new questions or
comments. It was not until the end of the hear
ing that the P. u c. chairman was allowed to file
statement explaining why the P. U. c. could
not consider the recent melon-Splitting in con-
nection with fares. This statement pointed out
that the dividends were paid out of surplus earn
ingS Of the former management and that the
law prohibits the commission from considering
profits or losses of past years in fixing future
rates. And the earnings of past years were far
from excessive. They could have been paid out
in dividends as they accrued, but the conServa-
tive former owners of the company preferred to
put them away for rainy ray. The P. U. c. had
no control of any kind over the disposition OF
these profits then or now.
Senator Case of South Dakota, referring to
an advance copy of the Lands report on the
Capital Transit Company, charged that the
P. U. C. had reported smaller profits by the COM
pany between 1912 and 1945 than the utility
actually received. But the fact is that the rates
of return mentioned by the Senator for those
years evidently were taken from the commissions
own public reports covering retroactive applica-
ton of Federal tax refund for the war years.
Instead of using the $3.3 million refund for divi-
dends, as the company legally could have done,
1t was applied against inflated property values
that had not been included in the rate base The
p U. C.. ruled that this was desirable" The
P u. c. had no way of knowing when it fixed
rates during the war years that such big tax
refund would be available. Even with the tax re-
fund, the average yearly return OF the company
during the 18 years of its existence has been less
than per cent, according to P. U. c. records.
In the heat of the hearing the committee
even reversed it's earlier approval OF bill to
increase school fares from the present absurd
three cent level up to half of the cash fare of
IS cents This bill should be considered on it's
own merits and without regard to the Flanagan
appointment or the transit management. The
three-cent school fare was fixed by Congress in
the good old days of seven-cent fares 1t should
be raised at least to the general half-tare rate
prevailing elsewhere today.