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Show 6 THE SEARCHLIGHT Conditional Approval Given Utility Mergers by Public Service Commission Western Bond & in Share Corporate Consent to Affiliates Must Structures Eliminate Before Inflation Gaining Final Consolidations. _ In what is perhaps the most momentous decision in the history of utility regulation in Utah, the Public Service Commission has given its conditional approval to a plan of Utah Power & Light Company to merge with Utah Light & Traction Company and Western Colorado Power Company. In issuing its order on July 17th the Com- mission set up two requirements. First, the three concerns must be completely dehydrated. Writeups millions and inflation aggregating nearly 36 must be eliminated. Second, the ac- counting entries used to reflect the consolidation or merger must be submitted to the Commission, and must have its approval before final consent of the Commission is given. Jurisdiction is retained by the Commission until the program shall be completed. The findings, report and order of the Commission make it clear that writeups, inflation, manipulation, fictional book values, and other devices for milking Utah consumers, must be eliminated. The Commission indicated it will enforce a policy of a fair return to the Company on legitimate original plant costs under a prudent and economical operation. The wild promotional days are over. Financial joyriding at the expense of Utah rate payers will not be tolerated. While there seemed to be some question about the technical right of the Utah Commission to pass upon any acquisition, or merger, of the Colorado Company by Utah Power & Light Company, the Commission, as a measure of protection for Utah rate payers, prescribed the system of accounting entries it will require, which, in effect, gives the Commission veto powers over any merger that might affect the public interest adversely. It is fortunate took that stand. that the Utah Commission The corporate strucure of Colorado per cent water, Power is more than fitty and its property is approaching obsolescence. In addition, the Colorado Company is located in a sparsely populated region where operating eosts are higher than in Utah and Idaho areas served by Utah Power & Light. Without precautions Utah rate payers might be maneuvered into a position where they would have to make good any default aris- ing from operations of the Colorado Company that might continue to be unprofitable. The Commission appeared to feel that consent to the merger with the Colorado Company was a matter for the Securities & Exchange Commission to decide. At any rate it refrained from interference in that phase of the mergers bevond setting up accounting safeguards that must be followed before consent is given to the merger plan. One pany in Light & saving eosts. with the final reason advanced by the Power Comits application to merge with Utah Traction Company was a _ purported of $11,000 a year in administrative The Commission brushed that aside following observation: “There is doubt in the minds of the members of the Commission whether the estimated savings in administrative costs outweigh the disadvantages which are likely to flow from the merger or consolidation, and which will make the task of regulating the consolidated company more complicated and difficult.” The Power ently, Company claimed, rather insist- that a complete merger of all Traction and Power Company properties was a necessary preliminary to refinancing. While a certain amount of skepticism was evident the Commission nevertheless gave its conditional approval to a merger of the transportation system of the Traction Company with the electrical system of Utah Power & Light. The Commission showed great reluctance to sanction a consolidation of unlike utilities. It said: (Continued on following page) |