Evening star. [volume] (Washington, D.C.) 1854-1972, 1937-11-12
Unfairness Dams Money
More Reasonable Attitude of Administration Would
Release Utilities Millions.

the basis of the actual prudent in
vestment, as against a rate calculated
on the cost Of reproduction, which,
he says, has been the basis accepted
by the Supreme Court in the past.
That last statement needs qualifica-
ton. The Supreme Court never has
accepted reproduction costs as the
sole basis for calculation. And If one is
familiar with the bases for rate estab-
lishment used in other countries, which
apparently have been more success
full than we in working out settle
ment between Government and utili-
ties, one will find that no such simple
formula has been used anywhere.
The question of what should consti-
tute the basis for the rate is an old
fight in American politics. The re-
production theory was invented, I be-
lieve, by William Jennings Bryan, in
order to reduce the railroad rates, and
recognized in the Ames case, handed
down in the COS. In the wake of
declining price levels, the radicals
always tried to substitute reproduce
ton costs for historic investment.
In the wake of the imitation of en-
modify prices during the great war,
the utilities demanded increased rates,
and the upward trend of growth in
electrical development actually threat
ened to bankrupt them at the old
rates. The utilities demand, in face
Of the fact that commodity prices had
doubled, seemed Just, and after years
of litigation was granted-at a time
when war imitation was declining and
prices had become stabilized around
$50 per cent of pre-war. This gave
the utilities a break, because they
were also in dynamic phase of power
development due to chronological
genius and new financing methods.
Then came the deflation. and the
radicals again asked adjustment to
the new level of declining commod-
ity prices.
Price Level Ratings.
All Of which simply means that
whether the radicals want rates based
on prudent investment" or on re
production costs" is entirely a matter
OF the price level-they want which,
ever will give the utilities the worse
break, or, as they think, whatever will
give the consumer the best one. And
their attitude of the utilities is the
same
AS for the basis of prudent in
veStment." Would the T. v. A. want
to be investigated, and have its rates
fixed on that basis? Or, for that mat
ter, on the basis of reproduction costs?
II it did. either way, it would be pro-
ducing, 1 wager. the most expensive
power on the face of the earth.
No Simple Formula.
There isn't any simple formula
for an equitable settlement. And yet
settlement. and fair one. can be
arrived at, provided the approach Is
objective. A conference similar to
the one which broke up in childish
pique some months ago needs to be
reconvened. with utility executives,
economic authorities in this field and
officials of the interested Government
agencies sitting at the same table.
They need to determine a fair method
for the sale of power from Federal
projects to existing public and private
agencies, without ruthless competition;
amendments to the holding company
laws to permit utility financing while
fully safeguarding the public against
recurrence of past abuses, and, finally,
measures to stimulate utility invest
ment and building.
There are over 81 900 900 900 ready
tomorrow if such a settlement can
be reached.
(Copyright. 1877