Evening star., 1933-08-30
State and Federal Control
Creates Utilities Confusion

Adoption by American utilities COM
panies of N. R. A. codes brings COM
mendation from the country. At the
same time there are expressions of re-
gret that the powers of State public
service commissions are such that their
DEGREES may work hardship on the
! companies. This is exemplihed. par
ticularly, in the case of New York
electric and gas concerns. The State
! commission has ordered per cent
rate reduction for the period of year
and critics hold that this is contrary
| to the spirit of the recovery act
1t is pointed out by the Baltimore
Sun that the chairman of the New
| York commission introduced some
ideas which are quite opposed to the
conventions of public utility regula-
ton" The head of the commission
| is quoted as stating that lit seems only
| reasonable that the utilities shall con-
tribute from accumulated surplus earn
ingS, if necessary, to assist in the ma
tional recovery" The Baltimore paper
concludes: "As a broad ethical propo-
sition the question whether fat utility
surplus should have a major bearing
on present utility rates can probably
be argued pretty well either way But
in the course of public utility regula-
ton. as it has been developed in the
! United States. the state of the surplus
does not seem to have been given a
controlling place in rate making
! though Chairman Maltbie now would
have it So"
Confusion in the East is emphasized
by the Topeka Daily Capital, with the
comment that "the contention of these
companies is that State commissions
trI,S .ofH to saf -,
increased rates. on the ground that,
being outside of Federal jurisdiction
they could not be obliged to sign up.
and their higher costs. therefore. were
unjustified.' The Capital sees more or
less uncertainty as to how the codes
will work out"
X X
"The chairman of the New York
commission" in the opinion of the New
York Sun. lis out of step with the Fed
eral program; his action might we'll
await the code and an analysis of the
expenses entailed in its operation"
The Sun argues as to the effect on the
companies and their stockholders: AN
order to reduce rates 6 per cent, pro-
mulgated by the State commission
would mean 100000 to consumers
in New York City. What would it
mean to the companies? Chairman
Maltbie of the Public Service Commis
sion admits that the basis for the cut
is to be found in the reserves that have
been accumulated by the corporations.
President Cortelyou is well supported
in his position that such an arbitrary
order from the State Public Service
Commission should not be issued until
the Government at Washington has
fixed its demands. President Roosevelt
is pressing for higher wages and higher
prices"
This is rate reduction" according to
the Danbury News-Times, founded on
| a different principle from that upon
| which the commission has hitherto
acted. Ordinarily, rate reduction fol-
lows only when it has been shown that
rates yield more than a fair return on
the value of the property used for the
public. The decision in this case is not
| founded upon fair return. 1t asserts
that the companies must take some OF
the losses Of the workless period. with
out regard to fair return" The Co.
lumbia Is. c. State refers to the New
York companies as slump proof" or
even better than that, perhaps. for
"they fatten on slumps." The State
quotes figures from report by the New
York commission During the 10
years from 1928 to 1882. both inclusive.
says the report, the Brooklyn Edison
Co. paid uniformly per cent dividends
on the stated value of its common
stock and increased its surplus from
s5.577, 900 to $33.316 900. Between De-
cember 81, 1929, and December 81,
1882, the surplus increased $12.230. 900.
During the same period the reserves de-
c,ined less than $500, ,00o'"