The Republican. [volume] (Oakland, Md.) 1877-current, 1954-07-08
Hidden Interest Is
Claimed In c. and A,
Gas Field Purchase

Gas Field Purchase
Peoples counsel, during cross eX
animation of officials of the Cum
berland and Allegheny Gas com
pany at the rate increase hearing
before the Public Service Commits
sion in Baltimore, attempted las
Thursday to show that the pur
chase price of vast natural ga,
field at Terra Alta actually con
tanned hidden interest.
Thomas B. Finan, city solicitor
of Cumberland, who is battling the
company's rate raise for the citi
zens of Cumberland and vicinity
pointed out that c. and A. pur
chased the Terra Alta field for 81
million with the purchase price be
ing $1,5OO,OOO in cash and So,
100000 in non-interest bearing
notes, payable over a period of five
years.
Along with Joseph Allen. the
peoples counsel for the PSC, Finar
tried to establish that part of the
purchase price actually included
hidden interest with such a device
being used so that the purchase
price would fall within the capita
gains taxes rather than the inter
est on the unpaid balance being
made subject to income taxes
Finan said the purchase price ac
tually included the interest that
would have been paid over a perioC
of years to Snee and Everly, own.
ers of IS percent of the Terra Alta
field.
Validity Questioned
The gas officials also were ques
toned as to whether or not the
Snee and Eberley purchase SHOULD
be in the rate base at all because
it was admitted earlier in cross.
examination that the gas company
had refused to pay the former own.
ers of the field 25 cents per million
cubic feet to allow Snee and Eber.
ley to develop the field.
Instead, it was pointed out, the
company refused to pay on tho
basis of an exclusive contract
which called for 20 cents per mil
lion cubic feet on the entire output
of Snee and Eberlcy holdings.
Fur t h er cross examination
brought out that since and c. anC
A. purchased the Terra Alta field
it is not costing the gas company
25 cents per million cubic feet OF
gas to develop the field.
Finan and Allen then pointed
out that the company would have
been just as well off without spend
ing the S4,000,000 to acquire the
field. They explained that the $4,-
100000 is substantial portion OF
the entire rate base which the gas
company is using to ask for its in.
crease.
Allen requested all copies Of The
minutes and correspondence in the
gas company files pertaining tC
the Terra Alta purchase.
The gas company officials alsc
told the PSC that production il
the Terra Alta field has more thar
doubled since the company bought
it in 1851.
Hearing Is Recessed
The former owners, the company
officials said, refused to drill at :
sufficient rate to keep production
at level needed by c. and A.
In August, 1851, they said, thcr,
were eight producing wells and two
being drilled in the Terra Alt;
field. Now % wells are producing
and three more are being drilled
and production has more than
doubled.
Earlier, L. w. Plasterer, assist
ant treasurer of the Columbia Ga.
System Service Corp, told the
Commission that Columbia Gas re
allies a small saving by filing {
consolidated income tax return fol
its subsidiaries.
Following testimony last week
the hearing on the Cumberland ant
Allegheny request was recessed