The Barre daily times. (Barre, Vt.) 1897-1959, 1916-02-21
But the Montpelier & Barre
Light & Power Co. May
Issue 100000 Bonds
WATER RIGHTS VALUE
BONE OF CONTENTION
Public Service Commission
Finds Fault with Com
pany's Method

Authority to issue 100000 bonds ha
been granted by the Vermont public serv
ice commission TO the Montpelier & Barr
Light & Power company, with the ex
press purpose of acquiring the Water
bury Light'& Power company, hearing
on the petition having been held al
Moatpelier one week ago to-day. OF this
amount sl05,000 is to be spent for tn,
stock of the Waterbury concern and
Sl05,0o0 to be exchanged for the sl050Oo
first mortgage FIVE per cent. bonds of the
same company. Another hearing will be
| held To authorize the sale of the Water
bury concern to the other.
The Montpelier & Barre company pro
poses to operate the Waterbury plant as
a part of its own plant and will shortly
! make application for the consolidation.
The commission found at the hearing
that on Oct. /. 1914, the Montpelier s.
Barre Light g. Power company "made a
mortgage of all its properties, rights,
privileges and franchises then owned and
thereafter acquired to the American
Trust company of Boston, Mass, TO Sc
cure the future issue of first refunding
mortgage five per cent. 30-year eonverti-
BILE gold bonds TO an amount not exceed
ing sI,500,000"; also that under the pro-
visions of the mortgage S250,000 par val
ne of these bonds had been issued, leaving
S2,250,000 unissued. The proposed issue
of $4,000 would leave 81 ,950,000 unis
sued bonds of the Montpelier & Barre
company.
In giving authorization for the issue
of $500, 600 bonds, the public service com
mission took occasion to criticise the
company's method of determining the
value Of the water rights of the Water
bury Light & Power company, as based
on the annual saving of water power
production of the eompsny's two plants
over the next best method of obtaining
that power. The company figured the
saving would, at five per cent interest,
amount to d capitalization of Sl05,000.
In this connection, the commission ex.
presses itself as follows: ''The state in
troduced no evidence tending TO dispute |
the accuracy of the computations above
set forth, nor did it introduce evidence
which in any way controverted or criti- |
,ised the method used in arriving at this
valuation of Sl05 900. The commission
however, entirely disapproyes of this
method of determining the value of these
water rights, because in our opinion it
reates a value which may be largely in
sxeess of the actual value of the rights
Ind because this method. if applied TO
4 L., |
" of anv of the benefit to which he is
Untitled by reason of having these nat
lral resources at hand. In other words,
his method puts a consumer of current
generated on coal on an evener basis as
o rates with a consumer using current
rem hydro electric plant, without re-
ard to cost of production by the latter
METHOD By this we do not mean that 4.
he producer should be deprived of all
eneft accruing by reason of low cost
( production of electricity by water
over, but we do mean that this benefit
hould inure to both the producer and the
onsumer in question involving the fix :
lg of rates"
The commission goes on to say that Q
no evidence was introduced by the peti. y
oner or the state from which we are u
BILE to determine precisely what would e
E fair valuation of these water rights n
ut from what we are able to determine Z
ON the case we must conclude that
400. 900 is not an excessive valuation on b
1 the properties, rights and franchises h
and as this is the capitalization n
NIT asked for by the petition, we are \
the opinion that the petition must be I
-anted." h