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<br />Fram o���� �ew AD� Div�sion
<br />Rr�yal's r���r :�naio�t Digital Systerns Division
<br />t�rc;�iuces �ontro! anci �o�,�:�ring equipment
<br />... �nclu�ding a full line of soiic� state annunci-
<br />;�:or�. remote reporting annunciatorsystems
<br />,r,c� r_c�;ntact sensing devices.
<br />�t t�f��� ;�r� products that fully deserve the
<br />�<:,r _�I n��me. Typical are the series A2 annt�n-
<br />c� �tt.r�, shown. 6Nith all soiid state construc-
<br />t�;n, these modern conti�uous duty
<br />.arnur�cit�tors have individual plug•in point
<br />mc�dult: s�nd tcrminals loc.ated directly be-
<br />t,i��ci th�3 �ssociated visual display.
<br />P�"axim�m fiexibility is provided by a wide
<br />ti•ar�;;y �f �amplet�ly encapsulated plug•in
<br />ur3�ts, C�il compati�ie, which may be inter-
<br />mixti�c4 i�� �any sy5tem. O�eratin� costs over
<br />ttie I�te �f tt�� equipment are k�etotv conven-
<br />tional systems. Power consumption is
<br />ex�rem�iy 1���.° ... less tnan three watts per
<br />��aint in the alarm state.
<br />M��.�torin� systems are offered
<br />Ifl 21 Wit�@ V��i�ty Qi combinations,
<br />with cabin��s for:�ack, panel orwal!
<br />mountinE�. ��{�Ided lexan winciows
<br />�ame in 'three sizes.
<br />E's;r complat� iniar�natian, w�rite
<br />f�d�y.
<br />�� �► � �I ��.�+�i���
<br />MANUFAGTUt3iN& !Cl7ti 1»c.
<br />tf� �st BTth Str�ret • Cfiicapa. lilinol� IS�t3
<br />�
<br />�lectri��l
<br />I�'orlc�
<br />A McGrow-Hili weekly
<br />Editor
<br />paniel T. Braymer
<br />Maeagin� Editor
<br />Herbert R. Frankei
<br />Engineer�ng
<br />Seni�: �diMr.
<br />leanard M. Oimsted
<br />Syst�m Enyinacrin� Edttor:
<br />Walter 0. Brown
<br />Distribution idltor.
<br />Jattus Bieiwels
<br />Methods Editor.
<br />Mlchasl G. McGraw
<br />Associate F.ditars:
<br />Georga Sw�ft
<br />�Iliam 8. Puya
<br />southeastern Edltor:
<br />Edrvard AI{en. Atlenta
<br />Mid�reftem Editna
<br />Franus J. Kov� �cik, Chlcaflo
<br />Westam Editor:
<br />Paul H. Leach, San Francisco
<br />Tecfinical EdiWr� Austratla
<br />Dr. 4N. Diesendorf
<br />Nev+�s
<br />5enio� Editor.
<br />Jesse A. M�ck
<br />News E,�itor.
<br />Wiltiam G. Flanegan
<br />ProwremeM & Purthasinq Edltar.
<br />George E Williamson
<br />Waxhingta�f Conas�ooderrt
<br />tV. Burkey Musse�man
<br />Manufatturors [Vaws �titor.
<br />Gtarpe E. Willlemson
<br />M.n�e�nent Nter+a�etbsr Eanoe:
<br />Hefbect A. Cavanaugh, Jt.
<br />��r ��� �m�
<br />John fD. Damon
<br />ftesearc►i Msnsper:
<br />Artfiur J. Steyeman
<br />Art and Prode�ctio�
<br />Art DteseLor:
<br />Frank C. Stockman
<br />AsElstaM dut Wt�m4tor:
<br />leanare /i Cerwlck
<br />As�sistant Editor:
<br />Arthur C. Miller
<br />Pubiisher
<br />Warren W. Shew
<br />cira,taticn Mana�er:
<br />Danale K. �tts
<br />�tnacla!
<br />Code ?.12. 971-29?A
<br />�a��. ��.���
<br />Code 212,�97I-2489
<br />Sub��t�bn s�x
<br />Cads 212. 972•�7
<br />ffMc�: �o�ia4 � � �
<br />Summer job opportuniiies
<br />�
<br />To the Reader:
<br />In the March 6 editorial, El�ctrical
<br />Wordr! offered to carry at no charge a
<br />listing of summer job openings in
<br />electric utilities for e�gineering under-
<br />graduates. Lists of �uch openings were
<br />cazri�d in subsequ�nt issues and these
<br />l:sts were sent to directo�s of place-
<br />ment hureaus in ECPD-accredited en-
<br />gineering schools. Following are ex-
<br />cerpts from a few of tha replies of the
<br />ptacement directors:
<br />"You may be assured that this list
<br />wili be helpful in guiding our young
<br />undergraduate engineers into meaning-
<br />ful and challenging summer employ-
<br />ITSeIIt . . ."
<br />Geargia lnstitutG of Technology
<br />"We arc always glad to hear of op-
<br />portunities such as these for our stu-
<br />dents. I will be giad to see to it that
<br />qualified and interested candirlat� are
<br />informed of the positions."
<br />University of Pennsylvania
<br />"We appreciatc evcry eR'ort of this
<br />kind. . . ."
<br />Rutgers—The Stntc Univcrsity
<br />"We feel that one of the most im-
<br />portant functions af our office is to
<br />givc professional exposure to our un-
<br />dergraduates through summer em-
<br />ployment. We look for�vard ta your
<br />continucd interest and information."
<br />California Sta;c Coliege
<br />Revenue requirements, cost
<br />T� the Eslitor:
<br />On reading the Ma�agernent Lette; in
<br />Electrica! World for May $, it was
<br />Sratifyi�g to see the term "revenue re-
<br />ra
<br />quirements" used thraughout, and cor-
<br />rectly defined as "thc annual awning
<br />costs". Congratulations to the author.
<br />Minimum revenuc rec�uirements [or-
<br />dinarily abbreviated to "revenue re-
<br />quirements"] is not a�ynonym for
<br />"annual costs". In fact, the expres-
<br />sion was speciflcAlly coined to makc
<br />that distinction. The essential differ-
<br />encc is that revenue requirements in-
<br />c[►sde only ti�e barebones threshoid-
<br />of-confscation cost of capitaI.
<br />How much return u incladed in
<br />"annual costs"? Most utility �nalysts
<br />include antieipated earnings of the
<br />project or company, which is greater
<br />than cast of capital by thc margin of
<br />pr�oflt-inceniive. A�thoriti�s do .;�ot
<br />agree as to the appropriate s:mo;� of
<br />return to include in "annual c�st�";
<br />at least ien differc�t figures a� pro-
<br />posed. Professor £u�enc Grant sug-
<br />8�� [lI "oPl�rtun:ity cost", or carn-
<br />�.��i wa�a, .�un. �a, i�a�
<br />, - –
<br />_ � ,`
<br />�
<br />L � �t�rs � .
<br />ings foregone by adopting A proposal;
<br />or [2] cutoff rate, which he cAlls "min-
<br />imum �tiractivc return;" or [3] antici-
<br />pated earr,ings irom naw inve��tments.
<br />Al! three are di�'erent; all greuter than
<br />cost of capitul by difierent amounts
<br />of profit-incentive.
<br />How important is the difference in
<br />return?
<br />Well, af coUrse it affected estimates
<br />of depreciation and taxes; and it h�s
<br />substantial effect on all calculAted
<br />present worth and anncities. As a rc-
<br />sult, selecting cconomic alternatives
<br />by comparing their "annual costs"
<br />sometimes m�kes the wrong choice,
<br />and atways overestimates or underes-
<br />timates the diffcrencc between com-
<br />peting proposals. Profit-incentive is the
<br />only plrt of "fair return" that is com-
<br />mission-regulable; cost of capitul can-
<br />not be dictated to investors. 1t is the
<br />profit-incentive that enables a com-
<br />pany to increase its earnings per sh�re
<br />without hiking its percentage return.
<br />The most striking diffcrencc �e-
<br />tween "minimum revenue rcquire-
<br />ments" and "annual costs" arpears
<br />when comparing government versus
<br />investor ownership of the same faci�i-
<br />ties. A compurison of rcvenue �,equire-
<br />ments deraonstrates that cost o€ the
<br />same outpui from the same faciiities
<br />is identical, regardless of o�vnership.
<br />Thc "annual cost" analysis, which is
<br />actually a comparison of revenues and
<br />not of costs, makes it appear that thc
<br />same outgut would cost less with gov-
<br />ernment ownership, thus eres�ting the
<br />widcly-accepted myth of chcAp gov-
<br />ernment power.
<br />The explanation is that the cost ot
<br />c�pital, which is readily estimable, is
<br />the same for either ownership; it is
<br />not represented by acival earnings of
<br />either.
<br />Cost of capit�l for government pro-
<br />jects includes the risk element, which
<br />is substlntialiy identi�al fnr any own-
<br />ciship. If tax ftnanced, it is t:txpuyers
<br />—not investors—who incur the risk
<br />of having to continue interest pay-
<br />ments i" the prajeci loses its murket,
<br />becomes �anexpectedly obsotete, is
<br />blown up by sabot�urs, or is destroyed
<br />by accident. Tuxpayers are relieved of
<br />t}�at hurden if investor-owned. The
<br />amouni of such costs docs not changc
<br />�viih change in ownership; it merely
<br />hecomes more reAdily apparent that
<br />thcy ure a part of the cost of cApitAl
<br />not covered by interest on debt,
<br />whether botne hy investors ar Uy tax-
<br />p�yers.
<br />Paul H. 7aynes
<br />61 Undercli�i Road
<br />Millburn, Naw Jersc�r 07041
<br />Departure of Pe�go Pete
<br />In Apri! Gearhnrt-Owen Inductrtes nn-
<br />nortnced t/tat it ha�l secured an option
<br />to ri�rcnnse all orrtsrn�iciir:g shares of .
<br />Petersen Errgi�:eering Co cind Pe�:�o
<br />Manufacturin� Co o} Sttnnyvdle,
<br />Culr}. I�: a letter tivl:idi accompnnied �
<br />th�r nn�:ounce�rzent to crtston:ers,
<br />Grrald A. Petersen, tvidely known as
<br />"Pe�rgo Pete" explai�red that he wordd
<br />be leaving his post as prexidei:t of
<br />Peterseri Engi�:eeri�tg tivitlii�t thc �text
<br />yr.ar and i��ould livc in Paris, thortglt
<br />l�e. would rontirtue to k�ep in touch
<br />�t�i?h tl�e Suiu:yvale fr�rrx ►ultich nt�ke
<br />cc�rth borin� nugers, te�tsiv�i .rtrr�tgirig
<br />eqr�ipme�tt, nrtrl earlh-diggi�tg teetl�.
<br />Witli this as hackgral�nd liere is a re-
<br />cent camnucnicntiat frnm Petersen:
<br />To the Editor:
<br />In response to my lettcr of informa-
<br />tion, I have received the mast m�rvel-
<br />ou, letters fram muny of our custom-
<br />ers, nnd an cspecially clevcr one from
<br />Henry Mycrs, who calls himsclf "thc
<br />S��ect singer of Grcenwich Vil]Age,
<br />N. Y.•'
<br />[ thought you might hc interested.
<br />Gerald A. Petersen
<br />Petcrs�n Engincering Co
<br />9S0 Kifcr RoAc�
<br />Sunnyvalc, Calif. )408G
<br />Follo►��i�ig nre e.xce►•pJs Jra�t rl�e Mye,•x
<br />��lerrcr'�:
<br />Oh �vh�t, oh whnt tivill Pcngo bc
<br />Without its Pengo Petc7
<br />A st�eer inereclibility,
<br />:� story incomplctc.
<br />[ hear � wail
<br />From Sunnyvale
<br />'�hat rings from street to street
<br />"Oh what, oh what will Pengo bc
<br />Without its Pengo Pete?"
<br />* * �a
<br />For Pengo Pete �vill cross the fonm
<br />.And lcuve thc Pengo helm
<br />And sin� and dance
<br />in distAnt Francc
<br />Afar from Reagan's re�lm.
<br />With Mrs. P
<br />Iij �;ay Parce
<br />He'll whoop it up, touto suitc,
<br />But whflt, oh what, will Pengo be
<br />Withaut its Pengo Pet�7
<br />� * �
<br />Of wires highly, tenscly strung
<br />He'll hAve n memary dim,
<br />Hig}a-tension once intcnscly sung '
<br />Wiil bc pnst tensc to him.
<br />The handlincs, blocks, and dropaff r '
<br />hooks, � � �� ;�, �>,�� ; a�,��'
<br />� 'ihosa toais of �t1ie elito, . ' a�'���'� �;
<br />Wi11 droop and stoop nnr� lo�e'it��,��'�'
<br />� loaka ���.:� `�e�` ��
<br />Withaut their Penga Peto. h e� ';� �
<br />t, �t 't-
<br />;, S �M�•-rs
<br />�i �
<br />F, d Ak
<br />. . . 1 . � x tj�� 9x ' ..
<br />. � _ . - . . . .. s. i �14".:.}Xo� _�+fi��'{9 . .
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