into that; that is true. But I think there is plenty of demand, more demand than we can furnish power for.

Senator BONE. May I suggest that we will supply some load estimates here later on which will show all of that.

Mr. DONDERO. I think that that is pertinent to the issue here. Senator BONE. I had intended to present to the committee some of these more technical aspects of the problem later.

Mr. DONDERO. Can we have public power and also have private enterprise?

Senator BONE. Certainly.

Mr. HILL. It is not my purpose, and it never has been, to destroy private enterprise. All I want them to do is to be decent, particularly in the charging of rates. That is all that I want. And they have not been in our States. The records will prove it.

I think you for the opportunity of appearing before you.
Senator OVERTON. Who is the next witness?

STATEMENT OF HON. HENRY M. JACKSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. JACKSON. Mr. Chairman and gentlemen of the committee, I hope that the Congress will pass this bill at the present session. I speak not only for the people of my district in asking for this bill, but also from my deep personal conviction that this bill is very important to the Nation's war effort.

The Northwest has been made responsible for an ever-increasing portion of the aircraft, warships, and merchant ships which this country is building to win this war. In addition to these major industries providing the machinery of war, we rank high in production of lumber, paper, and pulp products, cellulose, and other materials directly related to war production.

But great as our present participation is, we could do more. We have the labor supply, the raw materials, and the experienced management in the Northwest which would permit us to take on an even greater role in producing war materials. It is a curious fact that the power-conscious Northwest finds itself limited in the part it can play in the war effort by the insufficiency of its existing power facilities. Atlhough we have rushed the installation of generators at Bonneville and Coulee dams, this new capacity has been used for aluminum, magnesium, and other heavy power-consuming war industries new to the region. Existing privately owned systems of the region have not been able to meet their own expanding needs. Transmission and other facilities are uncoordinated and much valuable capacity in lines and transformers is not used to the best advantage. To do a better war job we must rush the installation of new power capacity and coordinate and expand the transmission and distribution facilities of the existing utilities.

I am convinced that this power development and rationalization of facilities simply cannot take place until the inevitable change from private to public ownership is made. A fair examination of the situation in which the existing private utility systems find themselves would lead any reasonable man to the same conclusion.

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In the first place, all through the State of Washington the people have voted for the creation of publicly owned power distribution agencies with the power to condemn the properties of private systems. Most of the privately owned systems in the area are controlled by holding companies and are subject to the Public Utility Holding Company Act and its provisions requiring divestment of ownership by the parent companies. These holding companies will undoubtedly be required in the course of the next few years to dispose of their properties in the Northwest.

In view of the fact that the people of the Northwest have repeatedly expressed their desire that the private utilities turn over their properties to public bodies and in view of the fact that the law may require a change in management, it is neither realistic nor feasible for the existing utilities to undertake any substantial expansion.

The classic illustration of this is the case of Puget Sound Power & Light Co., the largest utility in the State of Washington and the one which operates in my district. The New York holding company which controls the Puget Sound Co. has been ordered to get rid of its interest in that company by July 23, 1942; that is, next month.

Senator OVERTON. What is the name of that New York holding company that you mentioned?

Mr. JACKSON. That is the Engineer Public Service. No one can predict what the status of the company will be or who will be in control of it after that date.

Moreover, the company is saddled with heavy overcapitalization. It has sold preferred stocks to its customers, employees, and others throughout the Northwest and those stocks are more than $17,000,000 in default. In 16 of the 19 counties served by Puget, the people have created public-utility districts for the sole purpose of taking over the company's properties. In two of the remaining counties the great municipal systems of Seattle and Tacoma serve the people.

The company's credit is so impaired by the combination of these circumstances that it is not in a position to undertake any major expansion. Yet the company has the responsibility for serving a great deal of the Northwest's war industry. It has aircraft and shipbuilding plants, steel and other war industries in its area. In addition its lines reach sources of raw materials that require low-cost power for their extraction. I contend that the ability of Puget Sound to serve war industry has reached its practical limits and that we cannot look to the company for any activity calculated to increase the war potential of the region.

Yet we must face the fact that it is necessary for the company's properties to be expanded. The company is not generating enough power to supply its own load at present, and there is no surplus power in the region. In fact, the entire region is going to have a tight squeeze to meet existing commitments in the critical years of 1943 and 1944.

There is one way in which this prospective power deficiency can be avoided. The Puget Sound Power & Light Co. owns several hydroelectric projects in which the full capacity is not yet installed. At its Rock Island Dam the company has a place for eight additional generators, which would produce 110,000 kilowatts of new prime power. Senator OVERTON. Where are those generators?

Mr. JACKSON. Are you referring to the Rock Island Dam?

Senator OVERTON. Are they on the Columbia River?

Mr. JACKSON. Yes.

Senator OVERTON. Between the two Government dams?

Mr. JACKSON. Between Bonneville and Coulee Dams just below the Coulee Dam.

Senator OVERTON. Not on the main stream of the Columbia?

Mr. JACKSON. On the main river, near Wenatchee.

Senator OVERTON. On the main river?

Mr. JACKSON. Yes. Just below Wenatchee.

One additional generator could be placed at the Baker River and one at the White River plants of the Puget Co. They would add a total capacity of 40,000 kilowatts. The dams are built at these places so that only the installation of new generators is required to get this new power.

The generators for these three plants are fairly small in size, much smaller than those at Bonneville and Grand Coulee Dams. It is for that reason that these three projects of the Puget Sound Co. offer the most feasible source of obtaining additional power in time to meet the critical emergency in 1943 and 1944.

Generators for Bonneville and Coulee Dams are going in as fast as possible, but it takes 2 years to finish them, and the next 2 years are particularly critical. Only a couple of plants in the country are equipped to build Bonneville and Coulee generators, and those plants must also build shafts and power plants and cannons for battleships. But there are 15 or 20 plants which can produce the smaller-size machines for enlarging the Puget Sound Co.'s plants. These smaller machines could be finished and in place in a year to 15 months as against the 2 years it takes to build the Bonneville and Coulee generators.

In the present situation this obviously necessary expansion at Rock Island, Baker River, and White River is vitally important. But I want to stress again my firm belief that it cannot take place unless the properties change hands and these plants are made a part of the existing Federal system.

You may say, "If this must be done, why does not the Government loan the private companies the money for this new construction?" The answer to that is that no Government lending agency could, consistently with its statutory mandate, lend substantial sums of money to a company confronting such a fiscal situation and with so uncertain a future. Any loan to these companies or any other action by the Federal Government, based upon the assumption that these companies will continue in existence, is both unrealistic and impractical. This expansion can only be carried out by the Federal Government as owner of the properties. The present bill provides the most economical and expedient means of securing this additional power.

There are many other advantages to the war program which would result from the enactment of this bill. Seattle is the principal city in the Northwest. In it and around it are most of the important war-production plants. A portion of the city outside the city limits is in my district.

Seattle has a municipal electric plant with an excellent record of low rates and successful operation. But the Puget Sound Co. also operates in Seattle, and competition between the two has long been

intense. The lines of each system run up and down practically every street and alley in the city. They have duplicate distribution lines, duplicate substations, duplicate transmission lines, and large sales forces competing against each other for customers. For years the city has been trying to buy out the Puget Co.'s Seattle properties, but the company has refused to sell them except in connection with a sale of its entire system. And a sale of the entire system has been impossible for the want of an over-all agency to effect the acquisition.

If a fair system-wide acquisition could be arranged, the city of Seattle would immediately take over the portion of the Puget Co.'s properties inside the city limits. Duplicating facilities could be torn down and the precious copper salvaged. I am told that the Seattle system could salvage 5,000 tons of copper. I am told, in addition, that many transformers could be saved by the consolidation of existing substations, and the use of only one transformer as a spare; where, under existing conditions, each utility must keep a spare transformer to serve the same area. Transformers are a bottleneck in the electric-utility business today, and saving these would make the delivery of great quantities of power possible elsewhere in the country.

The consolidation of the two systems in Seattle would also release skilled labor for the war effort. If the systems were operated as one, not nearly so many men would be needed to maintain the properties and to install service facilities. As it is, many crews have been engaged in tearing down the service facilities of one system and putting in the facilities of the other, simply because a customer, as his whim dictated, desired the other utility's service in place of the one already installed on his premises.

In 1936 the late J. D. Ross, who was then in charge of the Seattle City Light system, estimated that the elimination of competition in Seattle would save the people of the city more than $3,000,000 per year. I am told that this figure still stands and has been reaffirmed by Mr. Hoffman, the present superintendent of the Seattle plant. I would be glad to make Mr. Ross' break-down of this estimate available to the committee in the record. A savings of $3,000,000 a year is not to be sneezed at.

(For the break-down referred to see appendix E, at end of hearings.)

Senator OVERTON. When you speak of the acquisition by the city of Seattle of that portion of the system that serves that community, what would they do with those transmission lines? They would not dismantle them, would they? They would continue their use, would they not?

Mr. JACKSON. Some they would and others they would not. You mean the transmission lines in the city of Seattle?

Senator OVERTON. Yes.

Mr. JACKSON. I think that the plan is to tie it all in. Under the present set-up I believe that they are able to use every bit of their power from their own transmission lines from the Skagit River. They have a power plant up on the Skagit River. Of course, with the number of industries that they have there at the present time, they need all the power that they can get.

Now, with regard to the Puget Sound Power & Light Co. transmission lines, the purpose would be to harmonize this whole set-up and to interconnect where feasible and spread it out throughout the surrounding territory.

I am not acquainted with all the exact engineering plans as to just what would take place.

Senator OVERTON. I imagine that they would not completely dismantle any of those lines.

Mr. JACKSON. They might in some places where there is a complete duplication.

Senator OVERTON. You mean where there is an unnecessary duplication?

Mr. JACKSON. Yes.

But in the city of Seattle proper, where they have duplicating service lines in the city, of course, obviously there would be an opportunity to save that waste. I mean, where you have a privately owned utility running down one alley and the city running down the same alley, there is an opportunity there, as I have outlined, to save a substantial amount of the distribution facilities as contrasted with the other.

Senator OVERTON. What was that figure that you mentioned? I did not get it.

Mr. JACKSON. I was saying that the amount of money that they could save would be $3,000,000 a year. Those figures are available and can be supplied for the committee.

Senator BONE. May I suggest to the committee that this will give them some little idea of the situation there:

The private company, as I recall, has somewhere in the neighborhood of 35,000 meters in the city. Of course, that statement is not very revealing, because it applies to industries and the commercial and domestic loads. The city has about 107,000 meters. And precisely the same comment applies there. That load is divided three ways, as anybody knows who has had something to do with the city of Seattle. That will give you some idea of the relative positions of the two systems.

Mr. JACKSON. It would permit the people of the city to enjoy substantially lower electric rates. It would reduce the cost to the Government of all of the airplanes and ships and other war materials that are being built in the city on a cost-plus basis.

Another benefit from these acquisitions should be pointed out to you. The existing private companies have certain power plants which are not prime power plants; that is, their power is not available 100 percent of the time. Some of these are hydro plants in which the water is not dependable the year around. Others are steam plants, for which full supply is lacking for year-around operation. At the Bonneville and Grand Coulee Dams a certain amount of the Government's capacity is also not prime power. At Bonneville, high water in the river reduces the prime capacity by as much as 50.000 to 200,000 kilowatts. At Coulee a shortage of water may also affect the dependability of some of the power.

The plants of the private companies which I have described complement the Federal plants. Their hydro plants are at their highest level when the Federal plants are at their lowest level. Their steam plants could be operated when the Federal plants are at their low level.

You can see what I am driving at. Under existing conditions neither system can sell all of its power as prime power. Even if the systems were fully interconnected, neither system could rely enough