GAS AND ELECTRICITY
Shareholders in gas undertakings need not worry about the rises in selling prices just announced. The increases, an which range between 3 and 4 per cent., have been made inevitable by the rise in coal prices, but should not endanger dividend rates. Under the sliding-scale arrangements gas companies' profits are divided as between shareholders and consumers in such a way that the rate of dividend may be raised slightly as the price of gas is reduced, and vice versa. I think it is safe to anticipate, however, that the increases now being effected are too small to call for lower dividends, as the companies, for the most part, have kept their dis- tributions well within available earnings. At the same time, it does look as if the reduction in costs through which the gas companies have achieved a remarkable stability of profits in recent years, is now encountering big difficulties. In my view gas shares are still worth holding as reasonably safe investments to yield from 41 to 5 per cent., but have no particular attractions from the standpoint of capital apprecia- tion. Even in relation to the lower average yields obtainable I prefer the electric supply group, with its obvious long-term expansion possibilities. The rise in coal prices, I gather, is not likely to mean higher electricity prices, the increase in working costs caused by dearer coal over the past year having amounted, in the case of the larger generating stations, to about one-thirtieth of a penny per unit. This increase is fully offset by the reduction in costs resulting from the gradual increase in the percentage of power generated from newer and
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