vm RepoJ%s Oiifcalff
Operations; President Re-Elected
The Board of Directors of
Pennsylvania Power & Light
Company, meeting after Mon
day’s annual meeting of the com
pany, re-elected Chas. E. Oakes,
president of the company.
The following officers were re
appointed by the Board;
A. D. Boot, Vice President, Fi
nancial; H. Ferguson, Vice Pres
ident, Operating; Geo, M. Keen
aq, Vice President, Engineering;
E C. Swartz, Vice President,
Commercial; Jack K. Busby, Vice
President and General Counsel;
G. Whittier Spauling, Vice Presi
dent; E. L. Palmer, Vice Presi
dent, Public Relations; D. J. Con
nell, Vice President, Scranton Di
vision; J. S. Davidson, Vice Pres
ident, Harrisburg Division; M. S.
Lawrence, Vice -President, Luz
erne Division; E. E. Mensch, Vice
President, Susquehanna Divi
sion; F. C. Mueller, Vice Presi
dent, Schuylkill Division; H. M.
Schelden, Vice President, Lehigh
Division; G. T. Storb, Vice Pres
ident, Lancaster Division; L. C.
Pursell, Second/ Vice President;
F. H. Markley, Treasurer; R. R.
Fortune, Comptroller; IT. J.
Flood, Secretary; M. T. Peters,
Assistant Treasurer; L. H. Heine
man, Assistant Treasurer; R.
Merritt Knoll, Assistant Secre
tary and C. R. Collyer, Auditor.
193$ Progress Outstanding
Mr. Oakes told shareowners at
Ihe PP&L annual meeting that
1955 was a year of outstanding
progress for the Company and
that the Company expects “a,
Satisfactory level of business to
continue in Central Eastern
Pennsylvania.” the area served
by the utility.
More than 80.6 per cent of, all
outstanding shares of PP&L
stock were represented at the an
nual meeting, a near record in a
10-year period in which repre
sentation has been continuously
above 70%, despite the fact that
the number of shares has more
than doubled in this period.
Summarizing the progress of
the Company in providing for
continuing growth, Mr. Oakes
said, “PP&L will spend $32.8 mil
lion on new facilities in 1956 and
$157 million in the next five
years as a positive indication of
its belief in the economic growth
of Central Easterd Pennsylvania.
Completion of the second gener
ating unit at Martins Creek in
mid-1956 is expected to add 160,-
000 kilowatts of capability.
Another 100,000 kilowatts was
acquired as a, result of. the merg
er with Pennsylvania Water &
Power Company. This additional
capacity, now being sold to
neighboring utilities and which
becomes available to the Com
pany in 1957 and 1958, was paid
lor by the issuance of securities
at the time of the merger. This
capability of 260,000 kilowatts
will be available for growing cus
tomer needs in the immediate
future.
No New Financing-
“The financing done in 1955
left the Company with $lB mil
lion which, with cash generation
from 1956 operations, will more
than meet the Company’s cash
and construction requirements in
1956. No new financing will be
required this year.”
The last ten-year period hag
produced remarkable growth.
Total “original cost” electric
plant account increased from
$lBl million in 1946 to $528 mil
lion at the end of 1955. Gross
revenues for 1946 were $5l mil
lion and gross revenues Sor 12
months ending this March were
$125 million. Peak load increas
ed from 656,000 kilowatts to 1,-
275,000 kilowatts.
Benefits,*meanwhile, have ac
crued to customers, employees
and security holders. Customers
rates on a weighted average basis
increased only 4.6 per cent since
1946 in spite of an 86 per cent
increase in the cost of coal and a
105 per cent increase for other
materials and supplies.
Meanwhile, operating employ
ees have enjoyed a 74 per cent
increase in wages and benefits
in the same period.
For shareowners, there has
been an increase in dividends’
from $1 00 to $2.40 in the 10
year* since 1946.
“The Company’s tax bill in
1955 reached $22.4 million.
This is more than the total
net income of the Company
and is nearly 1.3 times as
much as the dividends paid.”
In. reporting on the tax situa
tion as related to the Company’s
operation, Mr. Oakes said, “One
of the problems in talking about
taxes is that people think of cor
porations as something apart
from people. It must he realized
that the services furnished the
public are services performed by
people, that the money received
for such services is money earn
ed by people and that the taxes
levied on a corporation are
therefore taxes impoesd on
people ”
He pointed out that at the pre
sent time “A substantial amount
of the financial resources of the
people are being diverted and
soaked up by taxes. Instead of
finding their way, through in
dividual savings and investment,
into the productive channels of
commerce and industry, theag re
sources are being appropriated to
provide subsidies for certain
minorities at the expense of the
taxpayers at large. They are
being appropriated to finance
government entry into the field
of proprietary business in direct
competition with the citizens,
themselves 'And finally are being
appropriated to engage in a vast
duplication of work on the part
of governmental departments
and agencies not in accord with
businesslike, methods.
Cannot Estimate Savings
The recent Hoover Commis
sion set out to find out how much
of present-day government costs
to taxpayers are unnecessary.
Adoption of the Commission re
commendations would result in
net savings of 5Vz billion year
ly. It could mean a balanced
federal budget, reduction in the
national dept and reduction in
taxes. t
“The Hoover Commission’s
findings on water regburcej. and
the competition of the Federal
government with private citizens
in the production of electric
power, for example, were so ex
tensive that it was impossible to
estimate the savings to taxpayers
by elimination of waste and the
adoption of sound policies and
practices.
“A study by Senator Martin of
Pennsylvania showed that the
government appropriated nearly
$2 billion from taxpayers for its
Tennessee Valley electric pro
ject (TVA). Taxpayers from
every state help subsidize the
project. Pennsylvania’s taxpay
ers have had to pay $145 million
as their proportionate share—an
investment from which they get
no benefits.
“Meanwhile, federal power ag
encies such” as TVA pay no feder
al taxes and little, if any, state
or local taxes. They are also free
of state/and local control. Signi
ficant in this direction, exemp
tions from tax charges and other
uneconomical rate making prac
tices caused revenues from Fed
eral power sales in 1953 to fall
about 40 per cent below the val
ue of the power. Business losses
of the-federal power agencies are
recovered by further drains on
the federal treasury. *
Further Unfair Advantage
“Not only do all taxpayers out
side government power areas
have to pay for this so-called
“cheap” power, but also face
stiff competition for their in
dustries from government power
areas which flaunt the subsidized
power costs as the drawing
cards.”
The PP&L president explain
ed that a further unfair advant
age in the federal hydroelectric
scheme is the use of so-called
“preference” clauses in the sale
of Federal power in areas where
government has pre-empted the
rights of power generation.
“These clauses provide certain
power bodies already enjoy
ing tax advantages over investor
owned utilities first claim in
buying federally-generated pow
er,” said Mr. Oakes.
, “Thus, where private electric
companies logically expect to
purchase their fair share of this
Federal power for their own cus
tomers, they must take the re
mainmg power, if a,ny, after the
requirements of the preference
customers have been satisfied,
i Furthermore, the investor-owned
utilities may even 'have to give
up this small share of the power
if the needs of the preference
customers increase.
“What this means,” Me. Oakes
declared, “is that about 20 per
cent of the people in this country
are receiving under-priced feder
al power, while the - other 80 per
cent pay part of the bill in
taxes ” The local utility head
went on to offer a solution to
the “preference” evil stating that
the available federally-generated
power at wholesale, should be at
uniform rates and upon equal
terms to both local public and
private citizen organizations al
ready in the business of distnb
tmg and selling electric power
This would- “insure equality,
without unfair discrimination, in
the disposition of any federal
power for all citizens”
Board Relected
Mr Oakes asked for a firmly
established national policy by
which government should not
enter into any proprietary busi
ness, in any field, except where
taxpaying, business-managed in
dustries could not undertake it.
Such a policy would be consist
ent with the histone pattern for
this nation which has produced
so much for the general welfare,
and has always proved to be in
the best public interest.
“The electric industry faces a
period of growth that dwarfs
even its unprecedented past ex
pansion. The industry is more
than able to meet any challenge
of the future. An example of the
eleetnc industry looks ahead v and
moves ahead is its work on the
development of atomic power for
electric generation. This is an
integral part of the everyday
activities of our industry, and in
less than two years since the
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The following members of the
utility’s board of directors were
re-elected by the shareowners
The re-elected directors are D
H- Bnllhart, chairman of the
board of directors of Union Bank
and Trust Company of Bethle
hem; Percy A. Brown, president
of Percy A. Brown & Co, Wilkes-
Barre; Philip H- Cooney, finan
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George R. Lamade, president and
general manager of Grit Publish
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F Nagle, director of The First
National Bank of Scranton, Chas.
E. Oakes, president of the Com
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