Evening star., 1952-07-08
Capital Transit
Presses 17.Cent
are Plea
Use of $500,000
Claims Reserve
Faces Dispute

Ilc NdpICdI 1IdIlSlI W. COI@
tinued its plea for higher bus and
streetcar fares today. as the firms
use of a $500,000 claims reserve
fund appeared headed for con-
troversy.
The Public Utilities Commis-
sion is hearing the transit COM
pany's plea for fare increases.
which would make the rider pay
II cents cash or buy six tokens
for 95 cents. The weekly pass
would be abolished under the
company proposal.
Robert E. Harvey, vice presi-
dent and controller of the COM
pany, said the new fares would
bring the company a return Of
7.44 per cent on its rate base.
He also testified that, at the
present rates, the company's re-
turn for a 12-month period would
be only 80 per cent on the opera
tions inside the District or 2.15
per cent on the company's over
all operation. This takes into
consideration the wage boost to
employees Of last week. He de-
clared this was inadequate and
that the return actually should
be at least 10 per cent.
Reserve for Judgments.
The reserve fund for claims
rising from damages and injuries
inflicted by transit vehicles came
up as Mr.. Harvey testified yester-
|day as to the need for increasing
that fund from per cent of the
operating income to AZ per cent.
This money-amounting to
something around $l.1 million q
lyear-is placed in a reserve to pay
off people who file suit against the
company.
Mr.. Harvey said the company
has 498 claims and 252 suits.
totaling $8.2 million, still not set
tied. He said that in the first five
months of this year. the firm had
paid out $380,813 in claims which
was $28,992 less than they were
putting aside.
The trend seems to be that
juries are awarding higher dam
ages, he testified.
The upping Of the reserve to,
4A per cent would keep the CON-
pany just about even with thaI
claims, Mr.. Harvey said. Last year,
the company paid out $808, ,697, he
added.
Flanagan Raises Question.
PUG Chairman James H. Flan1
|agan then raised the question on
the $500,000 item. Back in 1945.
this sum was transferred from the
reserve to the surplus where it
could be used as dividends. At that
time, claims were lower. and the
$500,000 was no longer considered
necessary to the reserve fund.
Mr.. Flanagan wanted to know II
this $500,000 should not be trans
ferred back to the claims reserve
now since it was needed.
Mr.. Harvey and F. Gloyd Await.
transit attorney, promised to get
the answer to that one later.
If the $5O0,000 is transferred,
back. it would reduce the operat-I
ing expenses of the company. This
in turn could mean that the COM
pany would need less of a fare in
crease to get proper return.
Indications are that If the PUG
decided this $500,000 should be-
transferred back, it would accom-
Iplish it by not allowing as much
money to be collected in the re-
serve. Apparently 1t is doubtful
that the PUG could actually order
the money transferred back.
No Comment From PUG.
PUG members reserved COM
ment on this question.
Another transit company wit
ness, w. c. Gilman. a financial
consultant from New York City,
testified also that the company's
return on its rate base should
be at least 10 per cent.
The PUG in the past indicated
Ia 7h per cent return would not
be unreasonable. This was dur
ing the hearings that gave the
transit company a 10-cent boost
in the cost of the weekly pass
last January.
Capital Transit has had four
fare increases since 1947. The
rates then were 10 cents each,
three tokens for Is cents and
E$1.25 for weekly pass.
Current rates are is cents cash,
three tokens for 40 cents and
60 IN for. tho rocc