Evening star., 1959-11-24
Transit Fears Ruin
Unless Profits Rise
Asks Earnings
Formula Shift,
Fare Increase
By GILBERT GIMBLE
Star STAT Writer

less the Public Utilities Com
mission changes the profit
making formula so the COM
pany can be allowed increased
revenues, it would be "disas-
trous" for the system.
Transit Vice President James
H. Flanagan testified that if
the company is hurt the riding
public will be hurt in the long
run.
He appeared as the first wit
ness for D. c. Transit at a
public hearing that opened be-
fore the P. U. c. on the conf
pany'S petition for a fare in
crease. The transit firm is
seeking an immediate 25-cent
fare for rush-hour riders. to
become a straight 25-cent
charge effective November l,
1860.
Mr.. Flanagan strongly urged
that the P. U. c., in deter
mining whether the fare in
crease should be granted.
should base that determination
on what would be a fair return
on an operating ratio basis.
Rate Base Now SI4 Million
The profit formula now in
use involves the system rate
base method. The operating
ratio formula is based on gross
operating revenues which
amounts to about $26.5 mil
lion. The rate base figure is
about $l4 million, the value
OF the company's tangible prop
erty.
D. C. Transit in the -
months ending August 81
1853, earned slightly more than
Y per cent of the rate base
figure. The reasonable rate of
return under their franchise is
regarded as 6.5 per cent.
Mr.. Flanagan told the PUG
that if the shift was made to
the operating ratio system.
based on gross operating rev.
enueS instead of the property
value, the estimated net oper-
ating income for 1859 would be
about 2.5 per cent of the gross,
S.5'Per Cent Return Seen
With the new rush-hour fare
increase in the next IL months
the estimated net operating in
come is expected to amount to
about 3.5 per cent of gross
operating revenues, he added,
The figure would amount to
4.3 per cent of the new formula
base in 1861 with the straight
25-cent fare increase effective.
The rate of return in 1862
is estimated to be nearly 3 per
cent Of the new base.
The PUG has indicated in
the past that before it would
switch to the new profit for
mula D. c. Transit will have to
convert more than half of it's
operations from a streetcar to
bus system. Mr.. Flanagan told
the Commissioners that on
January 8, 1860, the company
will end streetcar operations
on the Cabin John, Wisconsin
avenue and Georgia avenue
Seventh street carlines. This,
he said, will mark abandon
ment of 81 per cent of the
streetcar operations, by track
measurement.
Conversion Required by So
The franchise requires COM
plete conversion by 1868. Mr..
Flanagan said the expensive
conversion is one of the prime
reasons for seeking a new profit
formula.
He said the company has
purchased or committed itself
to buy 300 new buses since 1858
and plans to buy 300 additional
in the next three years. The
company will gradually replace
buses that are 16 years old or
older, although some of these
will be held as a standby fleet,
he said.
Opposition to the proposed
fare increase was voiced by a
number of citizens organiza-
tions at the hearing.
Spokesman for the citizens
groups charged that the fare
increase would drive transit
riders out of Streetcars and
buses and into other means
of transportation. They also
stated that the company'S pro-
posals are economically un-
sound.
Defeats Own Purpose"
C. w. Harris, representing
the Congress Heights Citizens
Association, said his group feels
the fare increase will defeat
it's own purpose" What the
company wants, he added, is
increased revenue, and what it
will get will be a reduction in
the number of transit riders.
Mr.. Harris declared that the
increase to be effective during
the rush hours-which D. c..
Transit defines as from 6 to
$50 am. and $3.50 to Z pm.
is unfair and discrimi-
mates against riders who must
use public transportation dur
ing peak rush hours"
Raymond Shibley, represent
ing the Georgetown Citizens
Association. said the proposed
fare increases are "ill-con-
ceived."
He said the rush hour fare
increase is opposed because it
is Illogical" to allow the COM
pany to charge a higher rate
during that portion of the day
when its unit costs are lowest.