Evening star., 1937-06-27
OBSERVERS HAIL
UTILITY CONTRACT
F0R.T.V.A.POWER y.
Arkansas Deal May Mark
Change in Attitude of
Administration.
MARKET is PROVIDED
FOR SURPLUS OUTPUT
Electric Bond G. Share Subsidiary
Will Be Able to Extend Service
With Less Expense.
BY J. G.. DONLEY.
,ectal Dispatch to The Star.

"A -. ~. DoA>Au
Special Dispatch to The Star.
NEW YORK, June 26.-A little
more than a month ago two good
reasons" were discussed in this de-
partment for thinking that eventual
ly the T. v. A. will come to terms
with some distributor of power at re-
tail which happens to need more
juice"
And it was said further that. "if
any such deal is made, it will be good
news for three or four power outfits
and it ought to dispel some of the
gloom which has been hanging over
the entire industry"
Yesterday the official announce
ment of the signing of contracts was
made in Washington Now it may be
told that the three or four berefitting
concerns are the Arkansas Power &
Light Co., which signed the contract;
the parent company, the Electric
Power g. Light Co., which, in turn,
is a member of the Electric Bond g.
Share group. The fourth beneficiary.
in a manner Of speaking, is the Com
monWealth g. Southern which seems
likely to find little pressure OF COM
petition lifted from it, now that the
T. v. A. is finding an outlet for It's
power outside the formers territory.
Rates to BE Reduced.
A fifth beneficiary of the deal
might be listed as the consumers N
the Arkansas Power g. Light Co.'S
territory. for coincident with the an
nouncement Of the signing OF the con-
tract the Arkansas utility indicated
its intention of cutting rates by $780,
900 annually
Whether or not the deal marks a
change in the attitude of the admin
istration toward the utilities in gen.
eral. from one Of competition to one
OF cooperation, remains to be seen.
Utility men are very hopeful that it
may. and they are particularly i'm
pressed by the fact that the first real
honest-to-g goodness contract for q
workable distribution OF T. v. A. now
er has been made with an operating
company in the Electric Bond Il Share
aggregation, for the reason that all
along it has been thought that rela-
tions OF that holding company with
the powers that be have been partic-
ularly strained since the passing of
the holding company act with It's
death sentence" clause.
Test Case Provided.
To the uninformed, such get
together may look something like
John L. Lewis and Tim Girdler Sit
ting down for a friendly snack and
pot OF tea. But those in the
know believe that, when Electric Bond
q Share refused to register as the
law required, there was in its act a
deliberate purpose Of providing a test
case which was not unwelcome to
both sides at dispute.
AS to the interests OF both parties
In the contract just made, it NAV
be said that necessity played an i'm
portant role. The T. v. A. has made
some 20 small deals with municipaIi-
ties, one OF which has produced much
IN the way Of revenue. Early con-
tracts with Alabama Power and Ten
nessee Electric Power went up later
IN the smoke of court battles. Ap.
preparations of money for purchase
or construction Of distributing sys.
TENS were not forthcoming once Con
eress got the economy bee in its
bonnet, and it was and is highly de.
slrable for T. " A. to show something
on the income side after months and
months during which all has been
| outgo.
Expenses to Be Cut.
ana the logic of dollars -and- cents
also operated on the Arkansas Power
d Light Co.'S side of the deal. In
that State there is a demand for
more power than is currently being
produced. To put in the generating
plants. transformers. distributing lines
and what-not would involve. it was
estimated, capital expenditure OF
around $40,000,0O0. And that is q
pretty good-sized sum for a public
utlllty to raise In new money" these
days, when the industry is under q
cloud.
But purchase of power wholesale
from T. V. A. eliminates the capital
investment for dams and generating
plants and leaves only the distributing
lines and equipment. Under the set
up arrived at, Arkansas Power g. Light
Will have to spend not more than
Sl0,00O,O00, and, with favorable
contract in its pocket, that sum will
come easily, and it will be able to
give its customers cheaper rates with
out taking beating in revenues.
Copyright, 1877