Washington Gas Light Co. says it would be insolvent if it had to depend on its current operations in the city alone.
Only because the company has fared better in Maryland and Virginia is it able to remain afloat, the utility argues.
But the D.C. Public Service Commission says that all of a utility's operation should be considered when a rate increase is requested. And last week, the PSC rejected a $6.5 million interim rate increase for WGL.
This week, the fight over Washington Gas rates took an unusual turn, when the company asked the D.C. Court of Appeals to overrule the regulatory decision and approve the rate request.
"By withholding relief, the commission has confiscated the shareholders' capital," Washington Gas said in tis petition to the court. "The constitution prohibits this.
"Since WGL is losing money in the District of Columbia, earnings from shareholders on Maryland and Virginia operations must be used to subsidize service in the District. This is not fair or legal."
Not in the company's 131 years of business in Washington has it "been in such a grave financial condition," the petition said. "Extraordinary conditions prevail and extraordinary measures are required."
In another move to get the short-term relief, Washington Gas also asked the Public Service Commission to reconsider its decision.
At issue is the question of WGL's rate of return on investment in facilities to seve customers -- which under regulation is set at a maximum of 9.25 percent. Consistently, the company has earned less than that. m
In light of those earnings and an accompanying problem of raising capital the company says it faces, WGL asked for a $17.8 million annual rate increase, to cover the upcoming home heating season. The interim request followed the filing of the annual rate hike request.
The D.C. People's Counsel has fought the request arguing that the company's overall health from operations in all jurisdictions does not warrant an interim hike.
Yet, Washington Gas says it will lose about $4 million in revenues during the five-month peak heating season without interim relief.
"If we are to receive any realistic benefit for the rate relief, the rates must be in effect during the current heating season, which has already started," said Donald J. Heim, president of Washington Gas.
But People's Counsel Brian Lederer has argued that the gas company's return has been rather stable. The utility counters that increasing costs raise the possibility of reduced service to city customers.
The company has emphasized, in messages to its stockholders, that "regulatory lag" is to blame for a decline in stock performance. In 1978 the company reported earnings of $2.51 a share of common stock, a decline of 30 cents per share from 1977.
And WGL argues that it is paying more for gas than ever before. Over 60 percent of its operating expenses in 1978 went into gas purchases, an increase of 15 over 1977.
WGL had fared better in Virginia than in Washington. In 1978, Washington Gas was granted almost $13 million in rate increases by the State Corporation Commission. The company also was granted a rate increase of $3.6 million in October 1978 by Maryland regulatory officials.
However, critics note that the company's Washington sales reprent less than a fourth of the company's overall volume.