-11

Just how serious the industry's financial plight has

become is pointed up by three searing facts:

Credit ratings are falling

statistics compiled

by Data Resources, Inc. indicate that since 1970, of 44

utilities surveyed, 26 had their bond ratings lowered by

Moody's and Standard and Poor's, while only four were able to

improve their ratings.

Utility shares are selling below book value

a

review of a composite of 64 utilities shows that in 1979

their ratio of market to book valué had dropped to 81

percent

a striking contrast from ten years earlier when

their market value was 235 percent of book.

When utilities

are required to sell common stock below book value, they are

caught on the horns of a dilemma.

The sale of stock only

further weakens their book value.

Yet, they must continue

to do equity financing to meet capital requirements.

Perhaps most dangerous of all, a number of utilities

are paying out more in dividends than they take in in net

-12

to work their way out of their financial plight.

Relief is

needed, and it must be timely and generous.

This is a

Unlike many industrial nations, we have it within our

balance of payments problems, create jobs here at home,

permits, and programs to the "front burner" so that these

objectives can be achieved.

The coal industry is blessed

with an unparalleled opportunity.

We dare not let it slip

through our fingers because of inaction, red tape, and lack

APPENDIX IV

Competition in the Coal Industry, Report of the Justice

Department

Competition in the Coal Industry

Report of the U.S. Department of Justice

Pursuant to Section 8 of the Federal Coal Leasing Amendments Act of 1976 for Fiscal Year 1979

November 1980

REPORT STAFF

This Report was prepared by the Antitrust Division of the Department of Justice, Sanford M. Litvack, Assistant Attorney General. Gregory J. Wer den (Economist, Economic Policy office), Nancy H. McMillen, and Thomas A. Balmer (Attorneys, Energy Section), arafte, the Report with the assistance of John W. E. Bowen (Attorney, Energy Section), Judith E. Retchin (Attorney, Transportation Section), and Lee Sparling (Economist, Economic Policy Office), under the supervision of kobert Fabrikant, Assistant Chief of the Energy Section; Donald A. Kaplan, chief of the Energy Section; Elliott M. Se iden, Chief of the Transportation Section; Peter R. Greenhalgh, Assistant Director of the Economic Policy Office; Bruce M. Owen, Director of the Economic Policy Office; and under the general supervision of Richard J. Favretto, Deputy Assistant Attorney General. This Report was typed by Susan Feirson, Carolyn Berens, Helen L. Freitag, Joyce L. Marison, and Rose S. Walsh.

iii