Mr. KIZER. I am not a prophet. I try to deal with the problems of the past and of the present. Senator BURTON. It seems to me that if you are going to have a municipal or district public operation of the distribution systems, then you will need some act like this in order to obtain the transmission lines, because otherwise they would separately try to operate sections of a single transmission system. If you do not have municipal local operations, but do have a private company furnishing the power at fair rates, you would not need this act. Mr. KIZER. There has been quite a growth of P. U. D.'s and R. E. A.'s in that territory, and there is no reason to suppose that that growth will not continue in the future. An example is the city of Tacoma, as well as the city of Seattle and numerous smaller municipalities like Cheney in my own county, which has owned its own plant for a dozen years. Senator OVERTON. Does not this bill reflect the philosophy underlying the R. E. A. legislation? Mr. KIZER. I would rather that Senator Bone expressed that than I. It is parallel to it, at least. Senator OVERTON. It does so far as the Government coming in as an agency to see to it that the people are provided with electric energy. Mr. KIZER. Yes. Senator OVERTON. I think that there is quite a similarity of principle between this bill and the R. E. A. legislation. Mr. KIZER. Probably so. Senator BURTON. Physically, the same amount of power could certainly come in through private companies as through municipally owned companies, and the same amount of power could be bought from the Grand Coulee and the Bonneville Dams, but I gather that you feel that it could be obtained more cheaply and therefore a greater use of it could be obtained through publicly owned operation? Mr. KIZER. I think that that is true. Senator OVERTON. And you would have a better distribution, too? Mr. KIZER. Yes. Senator OVERTON. Through public management? Mr. KIZER. Yes. Since the R. E. A. has developed in that territory, there has been a service to the farmers that we never had before. Senator BURTON. I take it that if the Washington Water Power Co. came in and your local companies finally took over all of their operations, those people would be paid theoretically at a fair rate? Mr. KIZER. Yes. Senator BURTON. And you feel under those circumstances that you would get power at a lower rate than now? Mr. KIZER. Yes. Senator BURTON. Why? Mr. KIZER. I am not a rate expert. I do not undertake to be. Mr. KIZER. Because public money is much cheaper than private money, because you amortize your public money and you never pay off private money. One has only to lay the interest, dividends, and the reserves of the Washington Water Power Co. side by side with those of the Tacoma Municipal Co. to see the tremendous difference, and I am talking about the legitimate sums that the Washington Water Power Co. must maintain in order to sustain its entire capital structure. It never diminishes. Senator BURTON. The publicly owned plant cannot operate more scientifically, but the private one has to pay a return on a watered capitalization, is that it? Mr. KIZER. Not necessarily watered, but the rate of return is much higher on the money that it uses. It pays 5 and 6 percent for the money it borrows, and probably 8 or 9 percent as dividends upon that legitimate capital. The public money you get at much less, and the principal cost of the distribution of power lies in the cost of the money rather than the actual day-by-day expenditures. Senator OVERTON. In other words, the consumers get the benefit of the interest payments and the dividends? Mr. KIZER. Yes. Senator Bone put that so happily this morning that I do not want to review it. Senator BURTON. But the people of the United States would lose the Federal taxes now paid by the Washington Water Power Co.? Mr. KIZER. Yes; unless they saw fit at some time in the future to reimburse themselves out of the operations of the company. These are creatures of the United States, and the people can make them do what they please. They may levy a tax upon the producer of the power, or upon its own creature. It is always at your hands to do that. I hope that it won't be so, but the right exists. Senator OVERTON. I want to ask about another matter. Have you made any investigation as to the constitutional authority of Congress to enact this legislation? Mr. KIZER. May I say that I listened with the utmost interest this morning to the discusstion that was had on that point? I have read the Ashwander case and two or three other cases that relate to it, and the thought on the matter, but I am not adequately prepared to deal with the situation after I have heard the very satisfactory discussion between you and Senator Bone this morning. It seems to me that all that I can say on that subject is that I am in entire agreement with the conclusions that you gentlemen reached in your discussion. I think that they point to the sound and the correct legal answer. Mr. ANGELL. Mr. Kizer, may I ask if, in your belief, the constitutional power is lodged in this agency, if it is created under this law, to condemn these utilities, not as a part of the operation that they are carrying out at Grand Coulee and at Bonneville, but for the sole purpose of reselling the properties piecemeal to municipalities or P. U. D.'s. Mr. KIZER. I would not say that the sole purpose was to sell the properties piecemeal. Mr. ANGELL. But assume that it is. Mr. KIZER. I have not given sufficient thought to that subject to express an opinion. Let us assume that this act is passed, and a condemnation suit is instituted to condemn some private utility. I take it for granted that the able engineers and lawyers who will represent the Bonneville Administration, then the Columbia Power Administration, will lay a complete factual web or background. They will show that by acquiring this private utilities distribution system, it will very largely increase the outlets for the power which they have. They will show that it is necessary for them to have that in order to dispose of their power, and if they make that kind of a showing, I think there can be no doubt about what the decision will be. But the first thing is to lay down a complete engineering background, to show the usefulness of the utility and the propriety of the acquisition for the purpose of enabling the Federal Government to sell its power, and on that basis an extremely strong case can be built up, one that I think could not be overcome. Therefore, for that reason, because I assume that that complete engineering factual background could be set up, I think that the act would be sustained. Senator BURTON. I am interested in your perspective on this, and I want to get this clear. As you understand the purpose of the bill, it is that the Columbia Power Authority would not operate the distribution systems? Mr. KIZER. That is right. Senator BURTON. If it acquires them, it would only be for a short time, and then they would be turned over to the local distribution agencies? Mr. KIZER. That is true. Senator BURTON. And this bill would not come into operation unless there was a demand for local distributing agencies to take over those agencies? Mr. KIZER. That is true. Senator BURTON. Is there such a demand in the Washington waterpower area? Mr. KIZER. Yes; there is considerable demand. I think it will first be used in the Puget Sound area, before it comes over there, but I do not doubt that it will come there sooner or later. Now, gentlemen, if you have no more questions to ask me, may I make a brief statement? Senator OVERTON. Yes, you may. Mr. KIZER. I want to express my complete indebtedness to this joint committee for having joint hearings. We live out on the periphery of the United States, which is a long way from here. It is extremely difficult for us to come back, and two hearings would have been out of the question for me, since I have come on my own, and it would be out of the question for many men who will be here. By arranging these joint hearings, you have done us an inestimable favor, and I hope that this starting out with joint hearings will be followed up in the future, so that we, out on the Pacific coast, may have more of an opportunity to be heard here than we have had in the past. Senator BONE. May I ask him one question! Do you care to comment on the general purposes of the bill? Do you find yourself in harmony with them? Mr. KIZER. I certainly do. I am speaking purely as Ben Kizer, and as nobody else. I am wholly in harmony with the purposes of the bill. Senator BONE. Mr. Seufert, one of Oregon's prominent businessmen, residing at The Dalles, Oreg., is present and would like to address you on this bill from the businessmen's viewpoint. STATEMENT OF JOSEPH F. SEUFERT, OF THE DALLES, OREG. Mr. ANGELL. Mr. Chairman, Mr. Seufert and I come from the same locality in Oregon. I have a high regard for his judgment. Mr. SEUFERT. I have come a long way to say very little, and if you and Senator Bone and others will give me a chance, I will say what I have to say and get out of town. I have been here a week and the seat of my pants has been worn out listening to this discussion. I am in the salmon and fruit-packing business at The Dalles, and one of the directors of the northern Wasco County people's utility district, and I have been told to come here and express their views out there, and here I am, so that I can give you a few short stories of our district out there and the need for this legislation. I will not try to tell you about tax problems and different things, because I am not a lawyer, and I do not belong to the brain trust. I will just give my version of what I think of it, and of what we need out there. We have a district there which was formed in 1939, and I have brought along a certification of the district, to show that the people in my district really want this, and this is a certification of the county clerk of the vote in favor of revenue bonds. Those voting "yes" numbered 2,288, and those voting "no" 1,888. Then I have brought along a resolution of the district, adopted on the 28th day of May 1942, and I will also file this with the committee, so that you can look it over at your leisure. (The certification and resolution referred to are as follows:) Mr. CHARLES ROTH, Sr., WASCO COUNTY, OFFICE OF THE COUNTY CLERK, Secretary, Northern Wasco County Peoples' Utility District, The Dalles, Oreg. In accordance with section 56-3431, Oregon Laws, 1939, I am transmitting herewith, abstract of the votes cast in the Northern Wasco County People's Utility District, at the general election held in the county of Wasco, State of Oregon, on November 5, 1940, showing the result of the vote cast on the proposed bond issue of $475,000, and the election of directors of the Northern Wasco County Peoples' Utility District, as follows: In testimony whereof, I have hereunto set my hand and official seal this, the 9th day of November A. D. 1940. H. W. SCHERRER, County Clerk. RESOLUTION Whereas Senator Homer T. Bone, of the State of Washington, has introduced into the Congress of the United States, Senate bill No. 2430 providing for certain changes in the existing Bonneville Power Act; and Whereas our board has adopted a resolution favoring and requesting the enactment of said bill in its present form; and Whereas we are of the opinion that it is to the interest of the people of this district that the invitation of Senator Homer T. Bone to testify before the Senate Committee on Commerce and the Committee on Rivers and Harbors of the House of Representatives, meeting jointly at a public hearing to be held in the near future, be accepted: Now, therefore, be it Resolved by the Northern Wasco County People's Utility District, That W. J. Seufert, one of the directors of the Northern Wasco County People's Utility District, attend said public hearing to be held in Washington, D. C., in the near future to testify before said committees if called upon so to do, and to represent us in all matters which in any way apply to the welfare of the people living within the Northern Wasco County People's Utility District. Duly adopted this 28th day of May, 1942. NORTHERN WASCO COUNTY PEOPLES' UTILITY DISTRICT. By C. E. FOSTER, President. By CHARLES ROTH, Secretary. Mr. SEUFORT. One reason why we are not in business today in our district is on account of the laws of the State of Oregon. To show you what we have had to go through in order to get into business, first you form a district, or sponsor it, and then you circulate petitions for voters' signatures. Then you apply for investigation and certification by the Oregon Hydro-Electric Commission. Then the hydro commission will set a date for hearing, and then they will report on the advisability of it. They will make a survey and tell you if you can put certain electric rates into effect. There is no use of forming a district if you cannot lower the rates. Then you have your election. Then you elect your county or district directors. In the State of Washington, they call them commissioners, and in Oregon, directors. Then you have your election on your proposed district and then, after they have created the proposed district, at the next election you have to subdivide it. We do not go by counties, but by districts. The hydroelectric commission makes a survey and go all around the district to see if your district will put those rates into effect. Then you subdivide it according to the taxation problems, and there is one director from each subdivision in the district. Next you try to go into business. When you come to do it, you will find out that the validity of your election was not just right. The electric light company will come in and contest that, so you have to go into court. When you are through with that, and have that all strightened out, then you find out that your bond issue has to be certified. You take that to the circuit court. Finally, on the last day, you are given notice that they will appeal it to the higher court. So today our bond election and certification are in the supreme court, and in the course of a few months we will be in a position to find out whether those bonds are valid or not. Senator BURTON. You are referring to the supreme court of Oregon? Mr. SEUFERT. Yes. These are revenue bonds. Senator OVERTON. When did you start forming this district? |