The people's voice., 1959-08-28

| COL ly oCCIoIOIl VIII IOllOW IOCe
Economists dedicate a whole life
time to utility rate-making; profes
sors spend semesters teaching utility
rate processes; the utilities have ex
perts who dedicate their lives to util
| lty rate matters.
For us as mere consumers to
understand everything involved in
rate case is folly and it is for that
reason the virtue of having con-
sumer rate experts represent us
becomes more evident at every rate
increase hearing.
Attitudes toward utility regulation
vary, even today after many years of
experience. There are those who
would eliminate it entirely because
they feel it has been ineffective.
There are those who would eliminate
regulation and supplant it with COM
petition from publicly-owned utilities.
After experience has proven the rate
setting yardstick of publicly-owned
utilities the private utilities have
spent more time promoting the idea
that Regulation is a substitute for
competition.
SOUND BASIS NEEDED
The rate-making process will con-
tinue for sometime to be controver-
sial issue, and the public generally,
feeling little confidence in the pres
ent procedures, is becoming aware
that something needs to be done to
put it on a sound basis. Consumer rate
experts are becoming an accepted ad-
dition to rate hearings.
Utilities in Montana that have had
clear sailing over the years have not
accepted the consumer rate expert
with graciousness. 1t is probably be-
cause of the action by consumer
groups to bring in their own expert
that there was no obvious opposition
in the last legislature to an appro-
priation allowing the commission to
hire experts as they deemed neces-
sary and advisable.
have hope for rate regulation
becoming an effective and
more understandable process of state
We are still wandering
in a netherland of controversial meth
DDS and technicalities in this process,
but awareness of the consumers in
protecting their interests can not help |
but bring about improvements.
My own personal opinion is that
Commission experts will never re-
place consumer experts until changes
nave taken place in several areas: by
way of laws governing the methods
IF arriving at the rate of return for
Utilities; by people becoming suffi-
,iently aware of the great financial
;take they have in the Public Service
Commission, and by certain proceed
Tres within the commission in the way
# records required of the utilities.
SNAPPEN, THATCHER THEORIES
MUCH THE SAME"
DR.. Laurence Knappen, Washing
on, D. c. utility rate consultant, and
)r. Lionel Thatcher, professor of COM
nerce and economics at the Univer-
ity of Wisconsin, made tremendous
contributions to the recent rate case ,
efore the Commission. Their basic
heories were much the same. DIR.
hatcher was inclined to be more
enerous with the telephone COM :
any than DR.. Knappen. ;
DR.. Knappen has been accused 6
of never having recommended a T
rate increase for the telephone COM
pany. | asked him what he thought
of such an accusation and he re-
piled that he had never appeared
in a case where they needed one, ,.
but he also added that If his theory q
of rate-making were established n
there would undoubtedly come a q
time when they would be entitled q
10 one, and he would be the first r
% recommend it.
POINTS ON Il
COST OF CAPITAL" ii
Below are DR.. Knappen's IA points II
npointing his basic views on the d
st of capital as the rate-making base u
r utilities: g
tai accidents increased 100 per ,
MT from six to 12