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Show THE SEARCHLIGHT W alter Dilworth Nebeker--Investment Counselor Dear Dil: We want to save you a lot of worry and fret We know you feel very keenly your responsibilities as the self-constituted guardian of the preferred stockholders of Utah Power & Light. We realize that violent shudders strike your sympathetic soul every time an intimation comes out of Capitol Hill that the take of Utah Power & Light Company may be sealed down by $1,600,000. So just in case Mr. Gadsby hasn’t given vou an inside tip, we will. The preferred stock isn’t going to be hurt a particle. Indeed, it is probable that for the next two or three vears it will continue to rise, or will remain steady on the market. Here’s why. The Company near-capacity will continue during that to operate period, or at longer, and the earnings will be correspondingly heavy. The proposed rate reduction of $1,600,000 to Utah consumers will have only a negligible influence on the preferred stock. Indeed, in the long run, in a dehydrated Power Company, the preferred stock may hecome an attractive investment. The explanation of why the preferred stock will not be touched by a_ $1,600,000 rate reduction is given in the report and findings of the Public Service Commission in the merger case just completed. We quote: “Mr. Gadsby stated (in testimony under oath) that if earnings were reduced $1,600,000 there would be a net reduction of income to the Saving about Company of in and income $1,330,000. only $270,000, excess This due profits indicates a to taxes net a of de- crease in earnings of only $180,000 assuming a reduction in revenues due to reduced electric rates amounting increase in earnings bond interest to $1,600,000, and as a result of savings in the amount of $532,000. an in Mr. Gadsby further testified that those proportions and relationships would exist so long as the Company had taxable income subject to the 1942 Federal excess profits tax. “It is obvious, on the basis of Mr. Gadsby’s testimony, that a controlling and limiting factor on the income of Utah Company (CTPALCO) will be the Federal income tax laws, and that such matters as refinancing and reduction of rates will not be of major importance upon the net earnings of the Company so long as the 1942 excess profits tax rates apply.” There you have it, Dil, in black and white. The rate reduction of $1,600,000 will merely lessen the amount of excess profits taxes here- tofore paid by the Company. The preferred won’t be hit. The Power Company will merely stop collecting a lot of excess profits from the people which it has had to turn over to the Federal Government. So it appears, Dil, that your righteous concern in behalf of the preferred stockholders is wholly unwarranted, and you may so advise your investment clients—if any. And you may also tell them that none of the regulatory commissions—PSCU, SEC, and FPC—want to injure Utah Power & Light Company and its preferred stockholders. In fact, nobody wants to do that—not even the Searchlight. The goal is to force the kilowatt nobility to get down to earth, dehydrate itself, tell the truth, quit skinning Utah rate payers, stop trying to subvert democratic processes, stop prostituting newspapers, and generally behave itself in a cleaneut merchandising operation. And that goal is going to be realized in spite of the strenuous opposition of the Power Company and Bond & Share. So rest easy, Dil, and next time you stick out your neck be sport enough to come into open hearings where vour connection—if any —with the super-smooth Dr. Gadsbv and the kilowatt germ ean be explored under cross- examination. Affectionately yours, THE EDITOR. HAW! HAW! HAW! Eixeerpt from the ‘‘Spotlight’’, - official monthly organ of the Snipe Hunt: (The Deseret News is its daily organ) ‘The facts are they (the Company Union) can bargain and are still in the bargaining seat, and are the only ones that the Utah per recognize’’. Maybe Doug & Nels body else does, and 7em up at Bingham. even recognize Doug Cop- ’em, but no- and Nels pass | |