STATEMENT OF EVAN H. TUCKER, PRESIDENT OF THE NORTHEAST WASHINGTON CITIZENS' ASSOCIATION

The CHAIRMAN. Mr. Tucker.

Mr. TUCKER. Evan H. Tucker, president of the Northeast Washington Citizens' Association.

The CHAIRMAN. For 33 years.

Mr. TUCKER. Thirty-six years.

Mr. Chairman, I am not prepared to go into the details of this matter. This bill was considered by my association last night, and the association disapproved it for reasons stated at the meeting. We feel that it is not any interest of the citizens of the District of Columbia to pass this bill. This is a matter that we feel should be given very careful consideration.

There are two companies here doing business. We all know it is an axiom in this matter that the question of distribution figures. very largely in the matter of supplying gas to the communities. You can supply thousands of people through a main, or you can supply only a few people through a main. If you have a main that extends a long distance to supply only a few people the cost is very

excessive.

Now we understand-I do not know that we are right in our contention that the Washington company supplies the people within the District of Columbia almost entirely with gas in communities that are well built up, where it can be distributed at a reasonable cost. We understand that the Georgetown company has outlying extensions, even into Maryland and Virginia, to a large extent, and when you consolidate these two companies you are impoverishing the Washington company to benefit the others.

The CHAIRMAN. Have the two companies been competitors?

Mr. TUCKER. No; they are not competitors. They have different territory, I understand. But the situation is that now extensions have been made long distances out into Maryland, and I understand into Virginia, too, by the Georgetown company, the small company. Now, when we consolidate these two companies we have got to keep our rates up here in order to make up for deficiencies in the other company.

The CHAIRMAN. How have the rates of the two companies compared in the past?

Mr. TUCKER. I do not know what the rate is now of the Georgetown company, but, as a matter of fact, I do not believe the earnings of the Georgetown company are anything like comparable to the earnings of the Washington company.

The CHAIRMAN. Well, the consumer has paid the same price whether buying of the Georgetown company or of the Washington company, has he not?

Mr. TUCKER. I do not know.

The CHAIRMAN. I think that is true.

Mr. TUCKER. Well, that might be so. At the same time the earning power of one company may be very different from the earning power of the other, and this company here that is supplying the gas to us is the one that is going to suffer if we consolidate them.

We are not trying to save the company, because they are foreign people, but we are trying to look out for our consumers. We do not

believe this would be to the interest of the consumers in the District of Columbia. Therefore, we are opposed to it.

The CHAIRMAN. I was rather pleased to hear it announced by Mr. Burroughs that he is going to reduce the cost of gas here 10 per cent. Mr. TUCKER. It ought to be reduced anyway. I am a little surprised it has not been done. But after consolidation and these people can come in and show the consolidated company is not making a fair return on the investment, then the natural thing is to keep the price up.

Senator COPELAND. Mr. Tucker, is it not a consequence of urban growth that the original restricted area of residences must always bear more of the cost of the general expansion of municipal activities? Mr. TUCKER. As a general proposition that is so, but I do not feel, and we do not feel, that we ought to extend ourselves out into Maryland and Virginia, and furnish them gas at reasonable prices and keep our prices up in order to pay for it. There is the situation here, and that is the principal reason that we have taken this attitude.

Senator COPELAND. Mr. Tucker, is the situation really changed when you have the new structure proposed here? At the present time the Washington company owns the Georgetown company. Mr. TUCKER. They are separate propositions.

Senator COPELAND. They are separate propositions, yes, but after all, the losses or gains all involve one pocket.

Mr. TUCKER. No. When they go before the Public Utilities Commission and recommend that their rates be increased, they would not. They have got to make a showing on the bookkeeping of that one particular company. The stock they own in the other companies has nothing to do with the equation at all. That is a different proposition. They might go and buy the stock of another company and bring it in here, so far as that is concerned. It has no effect on the figures they will present to the Public Utilities Commission.

Senator GOULD. Now, Mr. Tucker. We will say this is Georgetown over here and this is Washington here. There is a line drawn here. Washington could not get over into Georgetown and do business, and Georgetown can not come over into Washington and do business. If I understand rightly, the price of gas is 70 cents a thousand feet in each division.

Mr. TUCKER. It is $1 in Washington; that is, to the consumer. The street lights, I understand the Government gets at a special rate of 70 cents.

Senator GOULD. I see.

Well, here is one suite of offices in Washington and here is one in Georgetown. Now, can not that overhead of these two companies be condensed there so as to make a material saving?

Mr. TUCKER. It was stated here by one of the witnesses to-day that the saving would be $50,000, but I consider that is a mere bagatelle in the matter of distribution.

Senator GOULD. But that is something. If something jumped up the expenses $50,000 you would think they were justified in going and asking for higher rates.

Mr. TUCKER. $50,000 is a very small amount to be considered in this case.

Senator GOULD. Well, it is something. It is a saving.

Mr. TUCKER. Yes, sir.

Senator GOULD. Now, if this merger should take place we are not giving them liberty to go ahead and raise prices or raise salaries or anything of that kind. They are still subject to the Utilities Commission, are they not?

Mr. TUCKER. Yes, sir.

Senator GOULD. Now, if this merger is a good thing, you are not afraid to leave the rates and the details of this merged concern to the Utilities Commission, are you?

Mr. TUCKER. As a general proposition I would not be, but the conditions would be such that the Utilities Commission's hands would be tied. They will come in here with their figures based on the earnings, or what not, of the consolidated company, taking what loss may come from these extensions out into Maryland, Virginia, and so forth, as part of their figures.

Senator GOULD. A company is foolish to go and buy something that does not pay them as well as their own for the sake of marking up some losses of their own company. That would not be good business.

Mr. TUCKER. We do not know how much farther they will make their extensions into Maryland. We do not know what they may do to increase their expenses so they could come before the Public Utilities Commission to make an upward move and say, "We have got to keep our price up or charge higher rates."

Senator GOULD. That is a little far fetched as a business proposition.

it.

Mr. TUCKER. There is the condition as it exists the way we see I am only presenting the matter as it was expressed last night. I have not had time, as I told you, to study this, but there is the point that was made, and we think it ought to receive careful consideration from the committee.

Senator GOULD. Everything should be considered. In a merger of this kind it is quite evident that a saving can be made in overhead and cutting out expense. This bill does not make any rates or anything of that kind.

Mr. TUCKER. Not at all.

Senator GOULD. The Public Utilities Commission has to handle all that.

Mr. TUCKER. But the Public Utilities Commission has to base the rates on the earnings, and so forth, that are brought in to it by the

company.

The CHAIRMAN. I do not quite understand, Mr. Tucker, how you arrive at the conclusion that the interest of the consumer would be better off with these two companies than with one.

Mr. TUCKER. Because at the present time we are not taking care of any of these extensions in Maryland and Virginia.

STATEMENT OF HARLEIGH H. HARTMAN, VICE CHAIRMAN PUBLIC UTILITIES COMMISSION

Mr. HARTMAN. Mr. Chairman, Mr. Tucker is in error in stating that the Georgetown company has any operations outside of the District of Columbia. Neither the Washington company nor the Georgetown company has any such operations.

The Maryland operations are under a separate corporation organized for Maryland operations. They do not come into consideration and could not come into consideration in fixing the rates of either the Washington company or the Georgetown company, and they could not come into consideration in fixing the rates of the Washington company in the proposed bill if it be enacted into law, because they are separate Maryland corporations and their rates are under the jurisdiction of the Maryland commission, not the commission of the District of Columbia. That is true of Virginia also.

They are the Washington Gas Co. of Montgomery County, and the Georgetown Gas Co. of Montgomery County. The names are somewhat similar, but they are separate corporate entities.

There is one other point I want to make in connection with what Mr. Tucker has said. The Georgetown company is not a producing company. It buys its gas from the Washington company and distributes it, and the cost of production of that gas would have to be figured on exactly the same basis as the cost of the production to the Washington company if we were considering rates of the Georgetown company, so that there could be no addition on the basis of the cost of distribution as Mr. Tucker has pointed out. It is not a question of the cost of distribution alone, but a question of the cost of distribution plus the cost of production, and the cost of production is that in the plant of the Washington company.

Senator GOULD. Well, now, if this merger took place would all that territory be under one jurisdiction and one price?

Mr. HARTMAN. It would. It is one price now. It would all be under one jurisdiction. An artificial line at Rock Creek would be wiped out.

Senator GOULD. That is as I understand it.

The CHAIRMAN. Is there anything else here, gentlemen? Is there anyone who cares to make a statement on this pending bill?

Mr. BURROUGHS. May I make just one explanation? I think that Mr. Tucker's constituents were confused by the Georgetown Gas Light Co. of Montgomery County that served the outlying district. There is no proposal to merge those suburban companies into the Washington situation, but only to consolidate the companies which are within the District. I think maybe they do not understand that. Mr. LAMBERT. They are under the jurisdiction of the Public Utilities Commissions of the different States.

Senator COPELAND. Do you want to take final action to-day, Mr. Chairman?

The CHAIRMAN. We might take final action subject to approval of the other members hereafter, if you want to make a motion.

Senator COPELAND. I move that the bill be favorably reported. Senator GOULD. I second the motion.

The CHAIRMAN. If there is no objection, the bill will be favorably reported.

(Whereupon, at 4 o'clock p. m., the committee adjourned.)