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croachments of absentee financiers, representatives of the critern moneyed group, as they have gathered in the franchises and ab sorbed the power sites of our favored region. I have seen numerous corporations organized to corner that wealth. They have been capitalized for many times the actual money invested, in the box tlist the inflated watered values would ultimately be made up by the natural values created by the people. As Governor of Oregon, I did everything I could do to promote public development of bctric energy. "For the past 10 years in Congress, I have spokon, written, and planned for the fullest and freest use of Columbia River power, Naturally, I am intensely interested in all legislation afturting its control and use.

ONE ADMINISTRATOR OR A BOARD?

Fundamental and enduring legislation must be built on principles rather than on personalities and emergencies. It is our duty to throw around such legislation every possible protective clause. This in fune damental, and in proposing, such clauses I mean no reflection upon those who will be the administrators of the project, in the immediate future or in years to come.

I do not regard it as fundamentally important whether you commit the administration of this act to a board of three or to a single administrator. If I were to decide the matter today I would provide for a board of three members—a businessman, a lawyer, and an engineer of training and experience. The engineer and lawyer should perform their duties as members of the board and also each should head the engineering and legal departments of the board or authority. I would require that such a board should be appointed by the Presi. dent and confirmed by the Senate, the appointment to include the name of a chairman. I believe the Board would be more pleasing to the people of the Northwest than a single administrator.

In my argument, I shall refer to the chosen administration as the Authority, meaning always the individual or group oper power projects at Bonneville and Coulee. I realize that í stes man can always be found, the single administrator more effective in a crisis. I believe, however, that the bring more talent to the project and make it croce I. '. 4 the United States is conducted by a board of directions with a post seems to have done quite well with a board." Mostra base

It is right and proper that, whether it be a single administrator or a commission or board, the appointment should be made by our Chief Executive, for a definite term, and with confirmation by the Senate.

As I read the bill I find there are no checks or reviews of the ar of the administrator except by the Secretary of the Interior. La administrator, the Secretary is to appoint the genuse

by the chief engineer and the assistant administrator. are not confirmed by the Senate. I do not beli

od to any administrator, nor that it can be sucre nar

d. that those serving the project must be an to the board or Administrator.

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THE IMPORTANCE OF HOLDING THE PRESENT WHOLESALE RATES

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The State of Oregon is living under a longe-range economy of exhaustion. Its principal industries are built around its enormous stands of timber. Under present destructive practices, this resource will, in time, be exhausted. Oregon exports its bulk resources in the form of raw materials, and imports the finished products it uses. This means that its cost of living includes a two-way transportation charge. For Oregon to hold a favorable economic place in the federation of States this trend must be reversed. Bonneville is the means to this end.

Decisions of men in emergency agencies, unacquainted with the region and its natural and local economic aspects, have resulted in unbalanced war industries being placed where they will add little to the future prosperity of Oregon. Unfortunately, after the emergency, Oregon must look for further and different industrial development. This will depend entirely upon cheap power. Nothing must be done here which will increase Bonneville's wholesale rate as fixed by its first Administrator, Mr. J. D. Ross, who was a competent engineer, capable of making that important and far-reaching decision. These rates were, according to law, approved by the Federal Power Commission.

Money will not be put into new industry unless there is assurance that the wholesale rate will not be raised after the investment is made. I long ago covered this phase with industrialists who cited to me what happened at Niagara. There, a large increase was made in wholesale electric rates after the initial industrial investment, thus limiting development and creating monopoly. This led to the monopolization of the power of that great natural resource by Alcoa.

Future possibilities in steam development, as well as the use of package Diesel and aircraft power units, will force industry into other regions, closer to an assured market, unless the Bonneville wholesale rate be protected to the point where the power cost differential will offer added transportation costs. This is one of the most important of the problems before this committee. Bonneville is Oregon's future industrial hope. This must be preserved by throwing safeguards around the rate structure, providing for wholesale rates

for energy.

RATES

It is fundamental that rates charged should be sufficient to liquidate the cost, with interest, within the time limit as fixed by law, after extended discussion. Rates for electric energy marketed by the Authority must continue to be approved by the Federal Power Commission, and must not be raised except by consent of the Congress. It is my contention that there should be no broad grant of authority which should in any way sidestep the Congress and its prerogatives. Such would be contrary to the long-established precedent on which this Government is founded. Certain responsibilities must rest with the duly elected representatives of the people. This bill should be carefully checked to make certain that it is consistent with this conception.

When the cost of the power project as allocated by the Federal Power Commission has been returned to the United States Treasury,

then the citizens of the Northwest should have the full advantage of their natural resources and surroundings. Then the rates charged for electric energy should be reduced to the lowest possible point which will pay the operation and upkeep and extend improvements of the property.

POWER AND RECLAMATION

Definitely and most emphatically, the Bonneville and Coulee rate payers must not be required to take up losses which may come in the laudable and important effort of the Reclamation Service to irrigate lands under the Columbia Basin irrigation project. Under many irrigation projects in the West, the farmers are finding it almost impossible to milk off the debt created when water was put on the land, even where gravity water was available. The Columbia Basin irrigation project is dependent on pumping, generally far more costly than gravity water. If there should be any loss on the irrigation p'roject, the electric rate pavers should not bear it. I am assuming that the Columbia Basin project will remain part of the Reclamation Bureau and will never be linked to the power project under the Columbia River Authority.

I consider it important that there be included in this bill and proposed to the Congress a section clearly declaring such policy. I hope the bill will be carefully studied for that particular purpose.

As a Representative in Congress from Oregon, I am in duty bound to see that this proposed legislation leaves no loopholes through which such charges could be made a burden or a responsibility for the users

a of Bonneville power.

WAS GRAND COULEE INTENDED FOR POWER OR RECLAMATION ? On August 19, 1935, in the Seventy-fourth session of the Congress when the House had under consideration the bill authorizing till construction of Grand Coulee Dam, Representative Samuel B. 1: coming from Spokane, Wash., representing the congressional distries in which the dam is situated, used the following words, found on an 13725 of the Congressional Record, volume 73, part 13; ILI

This is not a reclamation project. This is a power dam and thus i reclamation in the program for its construction at this time,

He made it very clear that the project was started as a power project. Reclamation was afterward added when thr: was decided upon by the President.

COCLEE COST ALLOCATION

I regard it as of fundamental importance that, at !!, subcommittee provide clearly and explicitly that the from per Commission be the governmental agency given the allocate to each of the several intere-ts involved the the cost that should be paid by each. Bonneville costs ;** cated by the Commission between navigation and ponsor have not yet been allocated between reclamation, control. Certainly surh allocation should be provin ily made, so that the Columbia River Authority ::

start how much it is supposed to reimburse the Government for the investment made at Grand Coulee. In the light of present-day events, the Government interest charged to Bonneville is certainly too high, but the President, when he fixed the rate at 312 percent, based it upon very different money market conditions which then prevailed. Interest has constantly been lowering in our country for almost a century. I ask for the very lowest possible figure for the interest rates on Grand Coulee investment for power, as found by the Federal Power Commission.

RECLAMATION CONGRESS OPPOSES THE BILL

It is my firm conviction that the pending bill does not in any way interfere with nor affect irrigation rights. Nevertheless, as the

. Oregon Reclamation Congress has gone on record in opposition to the bill in its present form, I recommend that a section be added disclaiming any intention to curtail in any way, or to interfere with or to limit irrigation projects, in any manner.

THE ACQUISITION PROGRAM

The heart of the pending bill is the private utility acquisition feature which gives and grants to the Authority the right and privilege to purchase existing private utilities in Oregon and Washington. It is expressly provided that this purchase shall be financed by the sale of revenue bonds.

Revenue bonds have demonstrated their adequacy when applied to agencies which are subdivisions of the State, but so far as I know, it is a new Federal procedure. I am strongly in favor of such financing, provided that, in so doing, Congress can retain the functions delegated to it by our Constitution.

The buyers of revenue bonds must be assured that they will be liquidated and that interest charges will be met. Rates are the security upon which such bonds rest. Naturally, the first concern of the lenders will be the rate base. In marketing some municipal issues of revenue bonds, it has been argued that they were more secure for the holders than general obligation bonds because they usually carry a provision that if the income is not sufficient, rates may be raised. This may be done by agreement or by court order. It is quicker and more easily accomplished than a general property levy to meet any deficiency.

This history shows the imperative necessity of protecting the established Bonneville wholesale rate, as well as the Federal investment in the power project. You cannot get away from the fact that the inclusion of rate provisions is standard procedure in indentures covering the issuance of revenue bonds. You must legislate to protect the public interest.

HANDLING THE FUNDS Section 11a covers the creation of a separate fund in the Treasury to be known as the Columbia Power Administration Fund. Ex. perience to date indicates strongly that there must be a separation of funds, according to the derived sources, rather than lumping these funds together. It would seem that public interest, as well as sound financing, requires an accounting separation of funds so that the status of the project can be determined from time to time by the appropriate congressional committees. Without such separation, the Budget and the Appropriation Committees of Congress have no gauge to measure the use of appropriations. Section lle covers the permanent appropriation of unsegregated funds.

Senator OVERTON. Will you kindly repeat that last sentence?

Mr. PIERCE. Section 11c covers the permanent appropriation of unsegregated funds. The effect of such handling of finds, as is included in this bill, is to subordinate the Federal equity to that of the holders of the revenue bonds. I will explain that more in detail a little later.

It must be borne in mind, in this connection, that the existing Bonneville Act requires that returns, with interest, be made to the Treasury on that part of the Federal investment allocated to power. The appropriations to date have been made on this basis and it would appear that the same provision should be included in the proposed bill, inasmuch as funds were definitely voted on the theory that a full return would be made to the Treasury. We may assume that, after the Coulee allocation is made, the same obligations will exist there.

PLEDGES AND OBLIGATIONS The first large appropriation for Bonneville and Coulee was allotted by the Public Works Administration in 1933. Since that time, the wise and far-seeing Appropriations Committees of the House and Senate have poured millions more into these dams, close tric equipment and transmission lines. In all this expenditiru hearings, when seeking appropriations, and in statements o floor of the House, the people of the United States have her our sacred pledge that the money invested in the power 1 should be put back into the Treasury of the United Sta** interest. That pledge must be kept in its fullest detail. to keep that pledge and promise, and al:o to conduct t. in an orderly manner, we must have a definite outline (,4 for the whole river. Bonneville is operating under ita* fully worked out; Coulee power project is compertat Executive order. The period of 40 years for a 11!4;*** declared a reasonable period by the President, w" interest rate at 31, percent.

Under this bill the entire power income of Coulos " generating plants is pledged to pay the interesop ' on the revenue bonds sold to acquire the public utilit

If I am wrong on that, I want to be correct!).

These charges may come in ahead of the origine and Coulee. It was never intended that anything the aforesaid repayment. The primary coisas power rates at these dans les actual patt" bound to be taken to pay internet and ammort,

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