Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-06-22
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problem in assuring continuance
Of service.
Foresees No Breach
"Our agreement contemplates
the possibility of the procedures
going beyond August IA, but
there would be a continuation
Of transit service" he said.
He said the service could be
continued under a permit to
bridge any period Of temporary
dificulties.
Capital Transit isn't going to
take its buses on the streets
because Of any time necessary
for the mechanics of the agree
ment to be carried out" he said.
And we certainly don't want
any interruption in the service
we're going to run"
Under present legislation, and
unless Congress takes some kind
of action, Washington will be
without a mass transportation
system SO days from now, on
August Is. House and Senate
conferees, who are sharply di-
vided on several proposed solu-
tons. say Congress undoubtedly
viii accept any solution the con-
ferees can agree upon. If the
conferees and National City
Lines cannot get together on
franchise terms, the company
would accept and the conferees
would recommend, it would
wreck the National City Lines
deal. This would leave etc
free to negotiate with some other
party If it chose to do so.
In accepting the Mcdonald
proposal. the Commissioners
made several changes in their
own position. Despite long oppo-
Sition to freezing any Of the
rate-making variables," the city
heads agreed to write into the
franchise law a stipulation that
q return of 61a per cent would
not be unreasonable"
Flexible Application
Commissioner David B. Kar-
rick insisted this was not a
change of position because the
proposed language does not state
"61a per cent of what" He said
the Public Utilities Commission
could set the company's rate
base" valuation of investment
in public service property at "$8
million or $18 Million against
which to figure the 61a per cent
return.
The compromise language
would substitute for much-dis-
puted provisions of the House.
passed bill to restore Capital
Transit's franchise with tax con-
cessions and notifications of
regulatory procedures. These
provisions would fix 612 per cent
as "the fair and reasonable re-
turn which the company shall
be afforded the opportunity of
earning" in relation to a $780,
256,67S rate base as of last July
81.
The substitute reads, ut is
hereby declared as matter of
legislative policy that the |
Capital Transit Co., in accord /
ance with standards and rules
established by the Public Utili-
ties Commission, should be given
the opportunity of earning such |
return as would make the COM
pany an attractive investment
to private investors. AS an in
cident thereto. the Congress
finds that under present circum-
stances the opportunity to earn
q return of at least 6l2 per cent
on either the system rate base
or gross operating revenues
would not be unreasonable"
Z Years to Drop Streetcars
Mr.. Mclaughlin stressed that
not only was there no valuation
for the rate base, but that the
61a per cent figure would apply /,
only under present circum-
stances" and would not bind the
utilities commission in the fu-
ture
He said the Mcdonald group
and the Commissioners had
compromised on the speed with
which they want the etc street.
car system converted to an all
bus operation. The Commits !
sioners wanted it done in six
years, while the Mcdonald group
favored eight years. They agreed
on seven years.
The Commissioners also agreed
to ask Congress for power to
extend the life of etc five and /
a half months until January 81
If necessary to work out deal.
Ansel F. Luxford, one of the
two attorney-representatives of
the Mcdonald group who con-
ferred with the Commissioners. |
said his hackers we're not con-
cerned about the value Of the
rate base because they want to
shift as rapidly as possible to
having fares set under an "op-
Grating ratio" formula which re-
lates earnings to gross revenues.
He called the rate base method
of setting fares a "built-in source
Of dispute with the community"
Another Provision
Another provision of the
agreement between the Commits
sioners and the Mcdonald group
calls on the utilities commission
to encourage and facilitate a
shifting" to the operating ratio
basis of fare setting "as promptly
as possible and as conditions
warrant"
Another provision said that If
after conversion to an all-bus
operation, exemption from the
gross receipts tax and the Dis
trict gasoline tax are not enough
to let the company earn 6la per