The Kennewick courier-reporter. [volume] (Kennewick, Wash.) 1914-1938, 1915-12-30
CUT in RATES is
Big HANDICAP,
SAYS MANAGER
Public Service Commissions De-
cision Makes Electric Ex-
tensions Impossible
CANNOT INTEREST CAPITAL
Longmuir Says il Will be Impossible
to Borrow Money on Property
Earning only 81 Per Cent

That the recent decision Of the
Public Service commission in the Pa
cific Power & Light case is going to
materially retard the extension Of
electric lines in this territory is the
belief of G. ID. Longmuir, local mana
ger for Kennewick and Pasco. In dis
cussing the decision Mr.. Longmuir
said:
Prospects for additional power
line extensions in the territory served
by the Pacific Power G. Light COM
pany seem to be remote in the face Of
the decision just handed down by the
Public Service commission Of Wash
ington i'm the electricity rate case.
This decision is the result Of rate
hearing held in North Yakima last
May and it materially reduces num-
ber Of the company's service rates.
The reduction is so pronounced that it
seems apparent from study Of the
decision that no more transmission
and distribution lines will be built in
this territory.
Paragraph 13 Of the commissions
order states that the rates established
by the order will bring in to the COM
pany a return of 5.796 on the value
Of the property devoted to the public
service as found by the commission
itself. The commissions value Of this
property is considerably less than that
which was claimed by the company.
Interest Rate High
"At the time the rate hearing was
held the power company contended
that in order to borrow the money
necessary to extend its business it
was absolutely necessary to compete
with various industries that were pay
ing higher interest rate than the
commission seemed to feel would be
sufficient. 1t is well known fact that
thruout the entire Inland Empire
country people were willing to pay
eight per cent and even more for
money, and in addition, frequently
paid a discount at the time the loan
was made. 1t seems doubtful that
anybody would be willing to invest
money in public securities at $50 and
accept the risk incident thereto when
the same people could go out and get
first-class real estate mortgages with
absolutely no risk, on an S9o basis.
The commission has apparently dis
regarded the contention of the COM
pany on this point and has ruled that
the company's electrical properties
should be entitled to earn 5.79o, which
is more than two per cent lower than
the current rate of interest in the
Yakima valley. This will put an ef-
fectual stop on any future line extern
sions. The company will not be able
to build line extensions out Of its net
earnings because there will be none
left after paying the bond interest.
"The company states that it has
cost it approximately 7So to borrow
money and the probabilities of the
company borrowing money at 79o and
investing it in risky business pro-
ducing a return Of 5.796 seems doubt
full.
Business Increase Not Possible
"The commission has stated that
there is a possibility that the business
would be increased to produce larg-
er earning, but the company contends
that in order to secure any additional
business more lines have to be built
and inasmuch as it cannot secure mon
ey to build more lines no larger earn
ings can be expected on the present
plant.
ain addition to the fact that the
company is now earning but 5.790
consideration must be given to the
question of the reduction in earnings
that the company will have to stand
on account Of the state going dry. 1t
is estimated that this amount will be
in the neighborhood of $4,000.
"The commission has argued that
if the rates are reduced the business
would be materially increased but
the company contends that to increase
the business will require great deal
more plant, and in addition to this
IN r,ama ainhfl