The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1914-03-10
AClever Game.

A Clever Game.
In letter filed February 18th G.. H. Olney,
New York attorney for the Light Heat and
Power Company, writes to the Public Service
Commission, in part, as follows:
at might however, not be unreasonable that
some consideration also be given to the LOWEST
RATE at which the private corporation (signify-
inc his own company could sell electricity with
a reasonable return upon the amount invested
as determined by the commission itself, CON-
sIDERING THE AMOUNT OF SECURITIES
OUTSTANDING TO REPRESENT THE IN
VEsTMENT AS ONE ONLY OF THE NUMER-
GUS ELEMENTS TO BE CONSIDERED IN
SUCH DETERMINATION"
The Light, Heat and Power company has
shown it's hand!
1t united with the city in petitioning for low
cred rates but now insists that these rates to
which it agreed are too low to pay profits on its
own plant. 1t therefore asks the Commission to
make new adjustment of rates.
It believes that if the Commission will make
investigation it will discover the new rates TOO
LOW FOR THE LIGHT, HEAT & POWER COM
pany It therefore urges that the Commission
should so adjust the rates as to yield reason
able return on the Light, Heat and Power COM
pany's investment
But on what basis can the Commission adjust
these rates? Manifestly only on the basis of &C
tual valuation. And this valuation as Olneys let
ter plainly indicates must include "outstanding
securities
How shall the Public Service Commission de-
ternine this valuation? The usual method is to
make Investigations on the premises to determine
Just what the concern is actually worth plus its
going concern value.
But the Light Heat and Power company was
afraid that if the Commission did this it would
fix the company's valuation too low, so it planned
a scheme by which the COMMISSION WOULD
PLACE A VALUATION ON THE PLANT BE
FORE INVESTIGATING 1T. This plan and the
manner in which it was carried out was one Of
the cleverest ruses ever pulled off by corpora
Hon.
The Company had number of notes out
standing and soon coming due; it had numerous
other obligations to meet. Therefore it planned
to float a blanket bond issue of $85O,O0O
Representatives of the Company appeared be-
fore the Commission at Indianapolis to ask that
body to O. K the bond issue. The Commission
authorized it and thereby, according to the law
tacitly admitted that the valuation of the Light
Heat and Power company cannot be less tina,
Ss5O,OOO
But how much of the Indebtedness covered b,
this bond issue was due to watered stock to BAG
management and to buying off competition? No
body knows because the Commission did not in
vestigate. 1t may be that 100000 of tina
amount is purely fictitious value
After getting the Commission to admit ;
minimum valuation of $850OOO on it's plant the
Light, Heat and Power company now comes for
ward to ask that the Commission adjust rates
on the basis Of this valuation.
In other words, the company insists that thu
citizens of Richmond pay electric lighting rate
basis Of valuation, nobody knows how much
of which is inflated.
Mr. Olney's request amounts to nothing les
than this that it permit the Light, Heat ant
Power company to fix rates in Richmond NJ
matter how much more efficient how much mor
economical how much better managed the MUM
cipal Plant may be the public is to have no ad
vantage from it but is to continue paving rate
based on the LIGHT, HEAT & POWER COM
PANY'S VALUATION, valuation as aforesaid
that contains nobody knows how much water.
One Year of Democracy.
President Wilson has so captured the admira
SC 49, I H..