New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1927-03-26
sJPERPOWER SPECULATION
ON REPRODUCTION COSTS

LNlucnCe is multiplying lHdt I'M
contro! OF superpower is becoming
one of the most pressing problem
before the American people. Specu
lators are buying up plants every
whore upon the strength OF the L
S. Supreme court decision in the In
! diana polls water case recently, i1
which ii vas ruled that reproduc.
ton costs should be a governing
consideration" in the fixing of pow.
or rates. II applied generally. rates
on reproduction costs would mat r.
:ally increase the charges for cleo
tricIty. Local companies are well
satisfied 10 worry along with rates
based upon actual investment, bu,
when the power plants get into the
hands OF large outside merger in
tcrests" such economies are soon
thrust aside. How can one explain
a situation like the following:
The Cambridge Electric Light
company. Of Cambridge, Mass. re-
Gently was purchased by outside in
tercs,s for s1l,7o0,00o. The com
pany had a paid-in capital OF only
sl,500,G0o, and a book value Of only
q ~, 30
willing to pay so high a price for
the company if 1t were not possible
in the future to profit by an appli
cation Of the Supreme court ruling?
The idea, of course. is through court
action to bring about return Of Z
or S per cent upon inflated values:
l. e., the present Reproduction
costs"
The superpower plans Of the big
concerns, in which the insults are
leaders. are particularly easy to exc
cute at the present time because
there Is no regulation concerning
them between the states. The states
are perfectly capable OF regulating
power rates within their borders;
but the day when power remained
within a state is past. except in
Maine, where exporting power Is rtill
contrary 10 the law. 1t was the l.
S. Supreme court which ruled quite
recently that the Rhode Island pub
lie utilities com mission had no con-
troll over the rates charged for pow
er in Athol. Mass, by the company.
These interlocking power inter-
csts know what they are doing;
while public attention Is focused
upon states rights they know they
have little to fear from the indi-
yidual states so long as the govern
ment does not control the power
situation between the states. These
big interests are the most grasping
we now have to contend with. Their
game is country wide. and they o
not conceal their object. They wish
to obtain the power rights TO Mus
Gle Shoals; they are out after the
power rights along the ST. Lawrence
river; they are fighting for control
Of the vast resources incident to the
construction OF the huge dam and
reservoir at Boulder, along the Colo
rado-where the Southern California
Edison company wants control or
no dam and was the chief opponent
of the Swing Johnson bill. The stake
is the control OF the water power
and coal power resources OF a La
ton; merger plans are OF almost
daily occurrence: purchase Of exist
ing plants. at inflated prices. are
constant. Ultimately the public will
be shown that the only correct rates
for power are those based upon re
production costs.
The same theory underles the |
efforts of the railroads to increase
their rates: it is partly the basis Of |
the recent speculation In rails. Tho !
railroads contend they should have
rates based upon reproduction costs,
which would add $4,000, 900. 900 to |
: heir present value The Interstate !
Commerce Commission. which has I
taken seven years to arrive u til" I
actual Investments OF the roads, !
the plan. Ultimately the
railroads will seek to settle the con-
troycrsy in the Supreme court.
The indianapolis water case de-
cision did not attain much publicity
a, the time II was given. 1t was only
che Of those little rate cases"
brought before the high court from
time TO time, with merely local
But 1t will be a long
time before its effect ceases TO func-
i on in the minds Of those who pro
f.ss an ability 20 see in it the chance
0 base rates on reproduction costs.
Observation