The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1920-04-08
EXPLANATION REGARDING
RAISING OF ELECTRIC
LIGHT RATES

1t was recently announced that the
South Dakota Light and Power Com
pany was obliged to raise it's rates be-
cause the price Of fuel, labor and ma
terial had so increased that it could
not longer operate at profit at the
present rates.
It would seem that as all are aware
of these conditions which exist in ev-
cry line of business, no one would
question the necessity of the Com
pany's act, and probably no one would
think of questioning the right, were
it not that this Company operates I'M
der franchise in which maximum
rate is prescribed.
Inability to See All Councils.
Because of the fact that regular
council meetings in all except one of
the towns which the company serves,
are held on the first Monday of the
month, it would have taken practical
ly year to see all of them and Sc
cure favorable action.
Necessity of Immediate Action.
Further explanation regarding the
necessity of this increase, and the
reason for its immediate enforcement
it thought advisable, and is given
herewith:
Assuming that the present rates
are not sufficient to give adequate
return upon the investment in view
of the present high prices of labor
and material, and assuming that the
Companyis doing all that can be ex-
pected Of it in the way of efficient
operation, then it follows that it is
entitled to higher rates, if it is en-
titled to fair return on the invest
ment, which no one can deny. The
Company stands ready to prove that
the above assumptions are facts.
But still another matter of equal
- Tie public must be con-
sidered, And in this fact is the rea-
son for the immediate necessity of
raising the rates.
Enlargement Of System and Need of
New Capital.
The continual increase in the de-
mand for electricity means continual
enlargement and betterment Of the
system, and this requires new capital.
This is not provided for out Of the
profit from operating, but is provided
from the sale Of securities, both bonds
and preferred stock. In the bonds it
is stipulated, that they can be taken
down and sold only when the earnings
Of the property are one and one-half
times the interest on all the bonds
which are out, and those which are to
be sold. It now happens that increas-
ed cost Of manufacture has SO reduced
the net profits that they fall short Of
this figure, and therefore the Com
pany is not able to provide further
capital for its upkeep, extensions and
improvements from the sale Of bonds,
until this condition is corrected, and
this correction can only be accomplish
ed by the proposed increase. II also
goes without saying that any other
form Of security cannot be sold unless
the Company is making q fair re-
turn on the investment.
An Argument Refuted.
The argument has been advanced
that the Company was doubtless MAX
ing excrbitant profits Under the old
rates when material and labor were
ct q low figure. But this is not the
case. We win explain that the reason
the Company could continue to serve
I the old
was because the insre ssing volume 81
business helped to OFFSET what would
otherwise have been loss. The HELM
due 70 increased volume became ii.
when prices went over Ger.
figure and increased capacity
S6f The pIsnt was also required. The
gomrany continued to serve Ut ths
BE- postponsng an advance ii
!!s.a sasss=4 e assssTssz
labor would drop ana maintained
e lenger tia II should IS