Evening star., 1926-06-20
Regulating Electric Carriers
BY FREDERIC J. HASKIN.

Regulation of its issues of secuFi-
ties will be one of the experiences
of the new electric power transmits
sion industry, If any lesson has been
learned from what has gone before
in connection with other public utii-
tiles. Such regulation has been the
latest innovation of Government IN
connection with public servants, AL
though some years have passed since
Federal, state and local governments
have visited strict regulation upon
rates and practices of railroads, teie-
phone. telegraph. steamship lines ana
other common carriers, these com
nan,es until comparatively recently
we're permitted TO do as they pleased
in respect to issues Of stocks ana
bonds. They could issue practlca4iy
whatever they wished and what the
naonIa would buy. This policy not
ipf,aonently has led 10 dlsastei
through overc:lpita1iZauon.
The entering wedge to regulation
of security issues was driven "heh
tha courts took the position that the
saaIvn,a ~ outstanding securities con-
sf,tI,ted a. factor in determining Wnat
,.ates should be allowed to pay fair
return. Utilities took the posltloh
that thev were obligated to the pup
Iic through stock and bond issues
however large or unwisely made 10
nav a return on this Indebtedness
Were this position to be accepted II
,nust then become the duty OF tue
regulatory authorities TO see 10 II
that properties were not oNefloadeo
with obligations.
Regulatory Laws Enacted.
e,,ct a. state OF affairs has resulted
in the enactment Of laws giving ftsu-
Ia+ou-v hDdies power to control seour1-
~, ;ss,,es in "a States and in the DIS
tr;ct of Columbia. The transportation
o.. otves the Interstate Commerce
T,orpmissfon power to regulate tne rs
c,,ea Of railroads engaged IN ihter
state commerce.
In general, the regulations OF aiio
severaI commissions can De ciassiileu
In turo sections. Some or theln mercy
,,aouire that approval OF the author1-
+isS he piyen to the issue. Sucn ap'
n,,oxral is based on the general nllan
cial condition of the company. wheth-
o,. q already is oyercapital1zed or not
Ie annrnved. the utility companies can
40 about as they like with the pro,
aaoSs ~ the sale of the authorized
stocks or bonds.
A eacond class is handled more spe-
o;acaIly. The commission presCIipes
nracise]v what the money siial ue
srent Tor. For instance, a puonc seTV-
tca commission might autnorIAe %
,nil1ion-d dollar issue for utlhts a
definitely prescribe that ,;s,r~ .us ad.
should be used for acquit IN, le oo,.
ditionai needed properly, io roUe.
..r,,c+iop for extension, Tor l1hPioHe
$50 81 ~, addition to existing plant
sne a,scbarge OF obligations, 1or re-
~, ;,1',,,rsernent of money expended from
tInon,a oy- for improvement ana n'a,n-
.a.once ~ service. In such cases .ne
,,tiIjtv may use the funus loh so
otha, purnose, and any other oo0
,,,a,,Id nullify the authority. ar-
WIN '.,,,i therefore be seen that supel-
- 10 nsnoission lines crossing seV-
poTo c.ota lines are likely TO run lii.U .
-ar,,,atIons as TO security ISSUES "
hoeh ciasses. unless, OF course q
s.sI Federal statute has NOT Al
go ntime been enacted into law
s,pervise General Financing.
THE commissions also fix the raees oeS
=. which the securities may oe o, solu
az a. General. supervise the genera
ana ana ncinS plan proposed by tne .;pS ap,
living utility. II the plan Oh hnanTs aaI;na'
pSrasarded as unsound. the applca'
tsor I1iI be denied. Many nave peer; ~
'iU" ~rsa+ aid in the reguiatloh oL
.hase security issues has neen .ne
sat.,ne snHs up of a practically UNIFORM ac. S.
oe,'ntinp throughout the country py
.So several state commissions. An put
II III states have given their otate CON, 3he
roissions authority to lnspec, NJ sn0
hooks Of public utilities, ana tne va va
t;onai Association Of Railroad ana
17t,I;ties' y7 Commissioners has worked
ont the national system OF UNIFORM
accounting in use. ,.a,,
Tbe new and growing power nous,
t,v Is finding itself born into q woflo
" rsguJation, ready made. The IN
Sustrv is surrounded by precedents
and the framework OF a machinery
especially adapted to its control IN the
public interest.
The state of Pennsylvania probably
has gone farther than any other
state in planning for power transmis-
son regulation. Pennsylvania COM
prshensive plsns would provide Tor Q