Potomac Electric Power Co. Chairman W. Reid Thompson said yesterday the delay by the D.C. Public Service Commission on its request for a rate increase was "the most crucial problem" facing the company.
Thompson told the company's stockholders yesterday that the utility's rates haven't kept pace with inflation, and he called for "responsible regulation" to recognize the need for "additional rate of return."
Thompson said a decision is expected soon on the company's 15.4 percent rate-hike request, which is equivalent to $48.1 million.
Meanwhile, another energy-related firm, Pargas of Walford, may face difficulty in the second half of this year because its principal utility consumer has said its coal needs will be nearly cut in half.
N. L. Langley, president of Pargas, a distributor of liquified petroleum gas which also engages in coal mining and sales, said "the outlook for coal through 1980 is good. However, our principal customer, Kentucky Utilities, has notified the parent company it intends to exercise its option to reduce shipments in the second half of 1980 by about 40 to 45 percent."
"As shipments are reduced by nearly one-half, it will be difficult for River Processing (the company's coal division) to show a profit in the second half of 1980. The company will make every effort to moderate the impact on coal company operations by selling coal to other prospective purchasers," Langley said.
Last year the coal side accounted for $38.5 million of the company's 182.7 million in revenues.
The company also reported increased first quarter earnings yesterday. Profits rose from $4.4 million ($1.20 a share) to $4.7 million ($1.32). Revenues increased from $50.4 million to $74.7 million.
To better handle high interest rates and inflation, Pepco's Thompson said the company has been cutting its construction budget while attempting to use more coal rather than oil. The company plans to spend $180 million on construction this year, Thompson said, but that figure may be cut to $160 million.
The utility's stock is selling at 76 percent of its book value, evidence of the poor financial climate, Thompson said. Dividends have improved "steadily but slowly," he added.
Pepco stockholders, according to a company survey, are mostly older and middle-income with 78 percent of them over age 55, and 59 percent of them earning $30,000 or less.
At another stockholders meeting yesterday. Avemco -- one of the nation's largest aircraft insurance firms -- predicted an "excellent year" for the Bethesda-based company.
For the first quarter Avemco repoorted earnings of $1.1 million (43 cents a share), up from $630,000 (25 cents).
In Baltimore yesterday Arundel Corp. President Francis Knott told the firm's stockholders that because of high interest rates and cash needed for current operations, acquisitons or major projects in the near future are unlikely.
During the first quarter the company lost $1.3 million, Knott said, but he added that he expects business to improve. Knott didn't say, however, that would mean a return to profitability in the near future.
Another Baltimore firm, Mercantile Bankshares, will have "narrowing or negative net margins" during the remainder of the year, despite a 16 percent increase in earnings during the first quarter, according to H. Furlong Baldwin, the company president.
Baldwin added that an increase in loan losses is inevitable, and he blamed losses partly on inflation which has eroded credit quality and increased credit risk.