The D.C. Public Service Commission yesterday ordered the Washington Gas Light Co. to show cause why $2.7 million the utility collected in an out-of-court settlement last year should not be "flowed back" to the company's customers rather than held for stockholders.

The commission, according to a spokesman, is not suggesting the money be refunded to the utility's customers. The concern instead is that the full sum be reflected in the utility's profits so that future rate increases can be held to a minimum.

"Frequently rate payers are asked to bear the cost of projects that fail," said D.C. Commissioner William [WORDS ILLEGIBLE] [WORDS ILLEGIBLE] "Here's a case where they should [WORDS ILLEGIBLE] on a gain."

at present, the money is being carried on the utility's books as an extraordinary gain," meaning it is [WORDS ILLEGIBLE] counted as part of the utility's [WORDS ILLEGIBLE] profits. Instead flows [WORDS ILLEGIBLE] to the stockholders of Washington Gas Light.

A spokesman for the utility said the handling of the money is in accordance with generally accepted accounting standards, and the company does not intend to change its accounting practices.

he money in dispute resulted from [WORDS ILLEGIBLE] the utility had four years ago to [WORDS ILLEGIBLE] a natural gas conversion plant [WORDS ILLEGIBLE] Point, Va. At the time, the company contracted with the Atlantic [WORDS ILLEGIBLE] Co., for a supply of naphtha, [WORDS ILLEGIBLE] derivative used in the [WORD ILLEGIBLE]process.

The project was subsequently scrapped but the utility still expected to [WORDS ILLEGIBLE] the naphtha. Atlantic [WORDS ILLEGIBLE] balked, and Washington Gas Light sued for breach of contract. The [WORD ILLEGIBLE] settled out of court last November.

[WORD ILLEGIBLE] the $2.7 million settlement, the [WORDS ILLEGIBLE] is suggesting utility users [WORDS ILLEGIBLE] district alone are entitled to a [WORDS ILLEGIBLE] of $708,000 representing the [WORDS ILLEGIBLE] customers Washington. Gas [WORDS ILLEGIBLE] serves in D.C. The utility also [WORDS ILLEGIBLE] areas in Maryland and Virginia.

[WORD ILLEGIBLE] of that $708,000, a spokesman [WORDS ILLEGIBLE] commission said, can be [WORDS ILLEGIBLE] charged against litigation costs [WORDS ILLEGIBLE] tax payments the utility has [WORDS ILLEGIBLE] That still leaves a credit of [LINE ILLEGIBLE]