[BETA] Fortnightly

Knowledge Gained

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In spite of ample arithmetical examples, the basic point made by Lawrence Kolbe and William Tye in "The Cost of Capital Does Not Compensate for Stranded-Cost Risk" (May 15, 1995) is simply wrong. The authors claim that "even if the cost of capital [reflects] full knowledge of the risk of stranded costs," it will not compensate for that risk.

Three representatives from Wisconsin's electric industry have asked Wisconsin commissioner Scott A. Neitzel to give highest priority to investigating the proposed $6-billion merger of Wisconsin Energy Corp. and Northern States Power Co. to create the nation's 10th-largest electric utility, Primergy Corp. In a letter, executives from Madison Gas & Electric Co., Wisconsin Public Power Inc.

Northern States Power Co. (NSP) and Wisconsin Energy Corp. (parent company of Wisconsin Electric Power Co., WEPCO, and Wisconsin Natural Gas Co.), have announced plans to merge, a move NSP says will create the tenth-largest investor-owned utility in the United States, based on market capitalization. The new company (em Primergy Corp. (em would operate as a registered public utility holding company and parent company of NSP and WEPCO, with the gas subsidiary perhaps spun off to comply with the Holding Company Act.

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 09/30/94 12/30/94 Change High Low Rate Yield Value Ratio 12 Mos. Electric Utilities AEP Company Inc. Midwest 32.88 31.75 3.42 35.75 27.25 2.40 7.56 22.68 12 2.71

Unicom Corp.

Annual Annual EPS

Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last

Company Region 09/30/94 12/30/94 Change High Low Rate Yield Value Ratio 12 Mos. Electric Utilities AEP Company Inc. Midwest 31.38 32.88 4.78 37.38 27.25 2.40 7.30 22.68 11 2.94

Unicom Corp. Midwest 22.25 24.25 8.99 28.75 20.63 1.60 6.60 24.39 - -0.31

Union Electric Co.