1978-08-02 Regular Meeting - Laserfiche WebLink

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The Li _ vva«~~u~~r Houston Li hti &Pbwer ~ ~ July 14, 1978. Honorable Mayor and Board of Commissioners City of La Porte La Porte, Texas Gentlemen: In April of 1976 the Houston Lighting & Power Company instituted a general increase in our rate schedules. It has been more than two years since this change was made effective and during that period, due to cost increases not within our control, our rate of return has dropped below the level necessary to provide sound financing of our Company's business. The deterioration of our Company's return on investment has • been caused by such factors as general inflation, increases in state and local taxes, environmental protection costs, and similar items, which do not provide additional generating capacity or efficiency for our system. It should be noted, however, that the primary factor in onr Company's declining financial position has been the high cast of new construction. In the past three years, 1975 through 1977, our generating capacity has been increased by more than 16$ from an expansion program amounting to $1.1 billion, and the energy needs of this area's growing economy are exerting an even greater demand for reliable electric service which must be met in the immediate future. In addition, we must continue the gradual transition from gas and oil-fired generators to more abundant energy sources such as coal, lignite and nuclear fuel. Just looking forward to the next three years, 1978 through 1980, we are already com.~nitted to spend $1.6 billion to support our ongoing plant expansion. The result of this is that within the six-year period, 1975 through 1980, plant expansions will be more than double our total investment in plant and other facilities in 1974• An expanding entity, whether it be a municipality or an electric company, must be kept in healthy financial condition if it is to operate successfully. So far our Company has been able to do a better job of keeping its rates down because its securities have carried a good rating among electric utilities. • •• P.O. Box 597. 2000 Nasa 1 Seabrook, Texas 77586. (713) 474-4151