Evening star., 1941-01-01
Expansion Of Power
Plants Expected 10
Be Moderate
Increased Efficiency
Meets New High
In Consumption
BY Cambridge Associates.

BY Cambridge Associates.
Although expansion has been un-
dertaken in power producing faclli-
ties in certain areas, there is by nc
means a boom in electric generating
equipment, nor from all appearances
is there likely to be during l94l
Here and there during the last Il
months, new plants have been erect
eed, mostly operated by steam, and
mostly along the Atlantic Seaboard
The net increase, however, is only
small percentage of the total ca
pacity of the industry.
This s14,000,000,00 industry ar
rived at the year 1880 with a SUBJ
stantial excess of capacity, and for
few years this remained a prob
lem. The recovery for this indus
try, however, was much more dy-
manic than that of industry as a
whole, and a new all-time high
in power consumption has been
chalked up in each of the last four
years.
Efficiency Increased.
Ten years have passed since over
capacity first became evident, and
in that time the industry has gone
far in increasing the efficiency of
the units already in service. In
many cases it has been necessary
only to modify equipment slightly
in order to step up capacity by i'm
portant percentages. Thus, while
the margin of safety is now smaller
than it has been in the recent past,
there is little doubt that the indus
try will be able to meet all the
demands that are to be placed on
it under the defense program.
The question of the power grid has
been raised again as part of the
national defense survey, but it is not
being stressed at the moment be-
cause of lack of urgency. Undoubt-
edly such interconnections as will
be made in the next II months will
de dictated by eXpediency of the
moment rather than long-term plan
ming. And although progress has
been made in distance transmission,
l,000-m mile power lines are not re-
garded as economically justified as
yet. AS a practical operator once
remarked, The cheapest way to
transport power is in a coal car"
Rate Cut Movement Slows.
Rate reductions are not as fire.
quently made as in the early years
of the recovery, and those which are
announced are generally small. The
margin of profit has been narrow
ing for several years, and as long
as this trend has been offset by
large increases in consumption of
electricity, particularly for residen-
tial use, profits have continued to
mount. Nevertheless, a shortage of
water in the Northeast section of
the country in the first half of 1910
demonstrated the vulnerability of
the power business to relatively
small changes in conditions. If the
cost of coal should rise materially
the effect would be quickly felt.
Rate increases, to compensate for
increases in COST are hardly to be
expected, at least on a widespread
scale.
Fortunately, demand is still strong
ly in the ascendant, and the i'm
proved industrial use will frequently
balance the call for power over the
hours of the day for more efficient
employment of machinery. And at
the same time most utility operating
companies have taken advantage of
unprecedented demand for their
senior securities to put financial
houses in order.
This has been accomplished
through funding debt into long
term low coupon issues, and through
provision for systematic retirement
of the debt through serial maturi-
ties or sinking funds. For the year
l941, problems of the utility COM
panies are not as complicated nor
as serious as those facing many an
other industry.