Mr. SISSON. What percentage, if you know, of the expense of running a street railroad is absorbed in the salaries of the motormen and conductors? Col. KUTZ. The platform expenses run between 60 and 70 per cent of the cost of operating the street railroad. Mr. SISSON. That includes the wages of the conductor and motorman? Mr. KUTZ. Yes. Mr. SISSON. You call that the platform expense? Col. KUTZ. Yes. Before the war the laborers keeping the track in repair received 14 cents an hour, and they are now receiving 42 cents an hour. Mr. SISSON Do the motormen and conductors get the same salaries? Col. KUTZ. Yes; they get the same salaries. There is a range of about 5 or 6 cents. They start at one rate, and at the expiration of a short period of time they get a slight increase. I am speaking in general terms. Of course, the cost of coal has very greatly increased. They are paying $9 a ton now for coal which they bought before the war for about $3 a ton. Mr. DAVIS. There has been a very large increase in the volume of business, however. Col. KUTZ. Yes; but the company is earning relatively less than before the war, and the very best evidence of that fact is that in the last two or three years they paid no dividends on the common stock. Mr. SISSON. Are you sure that you are as good bookkeepers as the bookkeepers of these companies? Col. KUTZ. We think we are pretty good bookkeepers, but we want to have a sufficient organization to keep in touch with all their bookkeeping and accounting operations. If we fall behind, there is room for a dishonest utility to take advantage of the commission. I am not implying that these utilities here are doing that, but there is an opportunity for that if we get behind in that work. Mr. SISSON. Not only that, but there is also to be considered the man who is endeavoring to charge up to expenses every single item who would feel, perhaps, that he would be justified in endeavoring to make his operating expenses extremely high. Col. KUTZ. Yes. In connection with replacement work, where you are getting the same weight of rail, the cost of putting it down now is $100,000, whereas the original cost was $50,000, and we took the position that the additional investment of $15,000 ought to be capitalized and not charged to maintenance or as a part of current operations. Mr. SISSON. That becomes a part of the capital invested; it is not a maintenance item, but it is a general repair item. Col. KUTZ. It is an increase in capital. But with our limited force we have not been able to analyze their accounts, their payrolls and vouchers to see if they are doing the fair thing by the public in the matter. Mr. SISSON. Judging the future by the past, we did give you practically what you asked, in the first instance, for all this work. Col. KUTZ. We have not asked Mr. SISSON (interposing). Here is the trouble. Congress is getting tired of appropriating money for this service, and there is a little grumbling about it because they think they are not getting full value. Col. KUTZ. We feel that the public has benefited by the regulatory efforts of the Public Utilities Commission. Take gas, for instance. The price of gas has gone up steadily, and all the action we have taken has been toward increases, up to the point where now the price of gas is $1.32 a thousand. Mr. SISSON. From what price did it go? Col. KUTZ. From 75 cents. But we have granted increases only in proportion to the increased cost of manufacture and we have held the company down to the earning of a 6 per cent return on a fair valuation of its property, as we determined it. I do not believe this commission would be justified in fixing any lesser rate because its decision would at once be contested in the courts as being confiscatory. Mr. SISSON. Unquestionably, if your figures are accurate, and there has been no watering of any stock, or if you have squeezed that out. Col. KUTZ. We have disregarded it. Mr. SISSON. I think unquestionably, a man would be entitled, with that sort of a hazard, to a 6 per cent dividend on the investment. If they are not making more than that, if they are scientifically manufacturing gas by modern methods, they are entitled to a reasonable return. Col. KUTZ. Most of the gas here is made out of oil and the price of oil has risen from 3 cents to 123 cents per gallon. Mr. SISSON. That is crude oil. Col. KUTZ. Yes. Last spring there was an advance from 6 and a fraction cents to 123 cents. But that will not continue. I feel that there is bound to be a return to a normal price, possibly never as low as 3 cents, but with the drop in the cost of manufacture we propose to regulate rates downward. Mr. DAVIS. What is the total valuation of the gas plant? Col. KUTZ. I think their fair valuation now, taking the two companies together, is about thirteen or fourteen million dollars. Now, to show you how really big a thing this is to the community, the people of this district are paying to the regulated utilities approximately $26,000,000 a year for service, and this Public Utilities Commission is the guardian of the public, so far as those service charges are concerned. Mr. SISSON. Can you tell us roughly what all of those utilities are. reasonably worth? Col. KUTZ. You mean the fair value of all of them? Mr. SISSON. Yes. Col. KUTZ. I should say roughly $60,000,000, as we have valued them. Mr. SISSON. And the public pays on $60,000,000, $26,000,000; that is, those utilities get that amount on the valuation of $60,000,000 in gross receipts? Col. KUTZ. It is a little more than $60,000,000. I will put the exact figures in the record. Mr. SISSON. I wish you would, and also put in a statement showing the gross operating expenses and the net profits, because by that table you will be able to let the committee ascertain what they are making. VALUATIONS OF THE PROPERTIES OF THE PUBLIC UTILITIES WITHIN THE DISTRICT OF COLUMBIA, AS ASCERTAINED BY THE PUBLIC UTILITIES COMMISSION, WITH NET ADDITIONS TO PROPERTY Made Since the VALUATIONS OF THE COMMISSION WERE ANNOUNCED. POTOMAC ELECTRIC POWER CO. Fair value, Dec. 31, 1916.. -$11, 231, 170. 43 479, 747.96 1,664, 187. 24 1,607, 227. 48 1,042, 804. 68 16, 025, 137.79 THE CAPITAL TRACTION CO. Fair value, June 30, 1919. Net additions, July 1, 1919, to Dec. 31, 1919.. $14, 270, 495. 51 251, 003. 11 503, 510. 42 15,025, 009. 04 WASHINGTON RAILWAY & ELECTRIC CO. AND ITS SUBSIDIARY RAILWAY COMPANIES. Tentative fair value, as of Oct. 1, 1919 Grand total, Washington Railway & Electric System.... $62,000.00 16, 682, 675. 45 $6, 783, 932. 48 1,632, 568.64 6, 038, 998. 18 118,941.00 14, 336, 558. 30 |