Mr. DONDERO. Did you take into consideration or did you figure in taxes in computing the figures you have given to us? Mr. MARLETT. I did not include taxes on the Government's own operations. In the figures which I have prepared giving the effect of the acquisition of certain properties, I have included the tax equivalent as set up by the proposed legislation. Senator OVERTON. I think we may as well adjourn now. We will meet again tomorrow morning at 10:30. (Whereupon, at 5:10 p. m., an adjournment was taken until the next day, Saturday, June 13, 1942, at 10:30. m.) COLUMBIA POWER ADMINISTRATION SATURDAY, JUNE 13, 1942 JOINT SUBCOMMITTEE OF THE COMMITTEE ON COMMERCE OF THE SENATE AND THE COMMITTEE ON RIVERS AND HARBORS OF THE HOUSE OF REPRESENTATIVES, Washington, D. C. The joint subcommittee met, pursuant to adjournment on Friday, June 12, 1942, at 10:30 a. m., in room 135, Senate Office Building. Present: Senator OVERTON (presiding), Senator Burton, Representative Smith, Representative Dondero, and Representative Angell. Also present: Senator Bone. Senator OVERTON. Shall we come to order? Before we begin with the testimony, I will read some telegrams that I received, which I answered. I will have my answers in a few minutes and will read them. The first is a telegram from Paul B. McKee, of the Pacific Power & Light Co., Portland, Oreg., addressed to me, reading: Have just received your wire 12th. Greatly appreciate your courtesy and consideration. John A. Laing, representing Northwestern Electric Co., and I, representing Pacific Power & Light Co., will be glad to appear before your committee when you resume hearings. It would be very much appreciated if you could give us 1 week's notice. And another telegram from LeRoy A. Grettum, president and general manager of the Eastern Oregon Light & Power Co., reading: Replying your wire June 11, we would like to be heard on this matter but cannot be ready June 17 or 18. Required traveling time makes this impossible. Would respectfully suggest that your committee fix later date at your convenience. We thank you for your wire and sincerely hope that in view of present national emergency plenty of time will be allotted for consideration and investigation of all angles of this important measure. And another telegram from the Mountain States Power Co., also addressed to me, reading: Your telegram of June 10 reached me this morning due to my absence yesterday. We appreciate your notice and opportunity to be heard but the short time to prepare and appear will not be adequate to make showing commensurate with magnitude of issues involved. Transportation also acute. We have assumed that these hearings would continue until a much later date. We have important board meeting locally latter part of June. My presence here and other officials demanded until approximately July 1. Could not hearings be continued until after that date? I will insert at this point my answers. Generally I told them that the subcommittee had determined to resume hearings after June 19 at a date to be later fixed, and that they would be given due notice, and that probably the joint subcommittee would not agree to a further postponement and would hope that they would be ready on the second notice and be present. I will hand the copies of my answers to the reporter, to be put in the record. My answer to the Eastern Oregon Light & Power Co. reads: Retel subcommittee has concluded to resume hearings after June 19 to some later date after July 1 in order that representatives of private utilities companies may appear. You will receive at least a week's notice. It is improbable that a subcommittee will grant a further postponement and we trust that you will be prepared to be present on notice. My answer to the Mountain States Power Co. reads: Retel hearings will be resumed some time after July 1 in order that representatives of private power companies may be heard and you will be given notice of the time of resumption at least 1 week in advance. The subcommittee will probably not permit a second postponement. All right, Mr. Marlett. You were on the stand at the taking of adjournment yesterday. STATEMENT OF D. L. MARLETT-Resumed Senator OVERTON. Have you finished with the general revenues? Mr. MARLETT. Yes; I have. Senator OVERTON. I want to ask you this question. How does the production of Bonneville and Grand Coulee when developed, say by 1944, compare with the T. V. A. production? I mean by that the T. V. A. with the properties that it has acquired and the Columbia Power Co. with the properties that it expects to acquire? Mr. MARLETT. I would not know the respective investment and installed capacity at T. V. A. by 1944. My impression is that our installed capacity will still be somewhat under T. V. A.'s installed capacity, although not a great deal. Our installed capacity by 1944 will include the full development of Bonneville Dam for 10 generators, totaling 518,400 kilowatts, and at Grand Coulee Dam 7 main generators of 108,000 kilowatts each, plus 2 generators from the Shasta project which we are transferring up there for temporary installation during the war period, of 150,000 kilowatts each. Mr. ANGELL. They are larger than those at Grand Coulee? Mr. MARLETT. I am sorry. It is 150,000 kilowatts total, 75,000 kilowatts each. That makes a total installed capacity by June 30, 1944, of a little over 1,400,000 kilowatts. Senator OVERTON. Do you happen to know what the present thought about the T. V. A. is? Mr. MARLETT. I do not happen to know that, Mr. Chairman. Mr. MARLETT. I believe it is in the neighborhood of 1,200,000, but I would not be sure. Senator BONE. I have seen some figures recently, Senator Overton. I think it was a newspaper story, well illustrated, saying that they had somewhere between 800,000 and 900,000 kilowatts of installed capacity. I am only referring to those news yarns. I am not cer tain. Senator OVERTON. My attention was diverted for a moment. What did you say? Senator BONE. Somewhere between 800,000 and 900,000 kilowatts. Now, that may be just a newspaper yarn and it may be in error. Senator OVERTON. It was my understanding that the present operating gross revenues of T. V. Å. are 36 million. Mr. MARLETT. Is that their present gross? Senator OVERTON. That is my understanding of it. I may be wrong about it. Senator BONE. We will call up the T. V. A. office on the phone. They can give that to us. Mr. MARLETT. I do know that the T. V. A. has a rather large installation program under way at the present time, because I attended a meeting of the War Production Board recently in which the generator schedules of the T. V. A. and Bonneville and Grand Coulee and all of the other projects of the country were referred to, and T. V. A. does have a rather large installation program. The House hearings on the Second Supplemental National Defense Appropriation Act, page 54, shows as follows: Actual (end of 1941): Hydro____ T. V. A., installed capacity Total (of which 661,000 is continuous firm power)_. Projected (1944):' 1 Kilowatts 834, 553 215, 000 1,049, 553 Hydro Steam Total (of which 1,550,000 is continuous firm power) –– 1 Subject to securing priorities. 1,898, 553 436, 000 2, 334, 553 Senator BONE. The figure that I gave may be erroneous. It is just a vague recollection that I have of a news yarn. I want to verify it. Senator OVERTON. I was wondering why there should be such a discrepancy between the operating revenue of T. V. A. and the operating revenue of the Columbia River when the present installed capacity of the T. V. A. as compared to the contemplated installed capacity of Bonneville and Grand Coulee in 1944 would be, if not nearly the same, at least there would not be any very wide difference. Mr. MARLETT. I am not familiar with the $36,000,000 figure. Mr. MARLETT. Of course, the T. V. A. rates are higher than our rates per kilowatt, and that will account for some of the difference. But just what the full explanation of it is I am not prepared to say. Mr. ANGELL. Do you know what their comparable rate is to your $17.50 rate at Bonneville? Mr. MARLETT. I do not know the exact figure on that, Mr. CongressI believe it is around $28, but I am not sure. man. Mr. DONDERO. Are you the assistant director at Grand Coulee? Mr. DONDERO. Can you give the committee any reason why the Government should not sell this power at the switchboard to private utilities as well as to public utility districts without any damage to the Government or anyone else? Mr. MARLETT. The principal reason, Congressman, is that it would be contrary to the basic policy of the Congress for the development of the Pacific Northwest region. The basic policy of Congress, as is set forth in the Bonneville Act, states that in order to insure the widest possible development of the region and the greatest possible utilization of the electricity, public agencies and cooperatives should be given preference and priority in the distribution of power, and authorizes our Administration to construct transmission lines throughout the region so as to establish a uniform price throughout the region for the power. Mr. DONDERO. Suppose the Public Utilities Commission in Oregon and Washington fixed the same price for the private power that you fix for Grand Coulee or Bonneville. Then would that not meet your reason for asking that all competition be destroyed at the public will in order that you may establish uniform rates? Mr. MARLETT. Our experience is that it would be impossible for the privately owned utility companies to adopt as low rates as public agencies. That is the basic philosophy, in fact, behind the provisions in the Bonneville Act. Mr. DONDERO. Why can't they do it? Mr. MARLETT. Primarily because of the economics of the situation. The privately owned companies cannot attract capital at as low interest rates as public agencies in the first place. Secondly, the public agencies operate on a strictly self-liquidating non-profit-making basis. Mr. DONDERO. You mean they do not have stockholders to pay dividends to? Mr. MARLETT. That is correct. They operate solely for the benefit of their local people in the communities or districts that they serve. Furthermore, public agencies have adopted a more liberal rate policy. They have been willing to reduce their rates and to recover revenues by increasing the sales of energy. In addition, the policy of the privately owned companies has been to require the customers to earn a reduction, to require the customer to increase his consumption before they will decrease the rates. And that results in a slower developing period and a slower growth of the consumption. Because of those factors the market for our power as a wholesaling agency would be more restricted on the policies and costs and operation practices of the privately owned companies than it is under those of public agencies. Mr. DONDERO. If that policy was carried to the extreme throughout the United States, the profit motive or the profit system of government would disappear from the United States. Isn't that right? Mr. MARLETT. Granting your assumption, that would be correct, I presume. I do not know that your presumption would follow from the fact that municipal services such as electric light and power are operated as municipal enterprises. Mr. DONDERO. I recognize that we do not have Columbia Rivers in all States of the Union. Therefore that would not come about. In other words, the purpose of this bill, as I understand it, is not only to bring the two dams under one head, which I approve-I think it is a sound and wise administrative policy-but it is also to give |