NINTH ANNUAL REPORT OF THE PART I The electric-power industry of the country continues to maintain ' an amazing growth. The rate of expansion during the past decade has been equaled by but few of the major industries. The generation of electrical energy by the municipal and privately owned plants serving public-utility purposes reached a total of practically $8,000,000,000 kilowatt-hours in 1928. This represents an increase of 126 per cent over the annual production 10 years ago. Ever since the close of the war the consumption of central-station energy has been steadily mounting. In every year except 1921 a new record has been established. Electric power is one of the most vital factors in modern industry. Probably no single element has contributed more to the unparalleled commercial expansion of the past decade. The electric age has come upon us so quickly that its possibilities are still beyond human conception. It is not difficult to foresee, however, that the economic progress of the future will be founded in a large degree upon a low-priced, abundant, and reliable supply of electric energy. Nearly all other industries are already more or less dependent upon the electric industry, and in the constantly extending application to uses on the farms, on the transportation systems, and in household service electricity has become almost indispensable. And yet much wider use may be anticipated when it is realized that 90 per cent of the farms of the country are still without service from central-station systems, that one-third of the population lives in homes lacking electric service, and that only 2 per cent of the railroad mileage has been electrified. 1 The statistical data presented in the following table graphically illustrate the rapidly increasing use of electricity and the division of production between water power and steam plants. TABLE NO. 1.—Electric power production, public-utility systems of the United States, in kilowatt-hours 1 From data assembled by the U. S. Geological Survey. During the past 10 years the proportion of the country's requirements generated from hydro sources has fluctuated between 34 and 40 per cent of the total. There occurred a constantly decreasing proportion during the first 5 years and then an increasing proportion during the 5-year period ending with 1928. Preliminary figures indicate that the increase of production in 1929 will exceed that of 1928, but the proportion generated by water power will be sharply reduced. This is due largely to the prolonged drought affecting the northern section of the country, which has required the substitution of steam-generated energy to meet the deficiency of the water-power plants. A similar situation was responsible for the reduced ratio of water-power production in 1924. On the whole it may be concluded that the past 10-year period has developed no definite trend toward either steam or hydro. The division of the total production between the two sources remains about the same as it was 10 years ago with only a little more than one-third of the requirements being supplied from water power. Unquestionably it was the purpose of Congress in passing the Federal water power act in 1920 to encourage and stimulate the development and utilization of the Nation's latent water-power resources. Many large projects have been constructed and brought into operation under the provisions of the act, but in view of the fact that water power has barely maintained its share of the vastly expanded market in competition with fuel power there may be some question as to whether the objective of the legislation has been achieved. This period, though, has seen the wide production of great quantities of cheap fuel. UNEVEN DISTRIBUTION OF WATER-POWER RESOURCES The water-power resources of the United States are unevenly disributed. There exists a great concentration of potential developnent in the Rocky Mountain and Pacific Coast States, where present narket requirements are comparatively small. These 11 States posess two-thirds of the available water-power resources, but consume nly 172 per cent of the electric production of the country. On the ther hand, the Central States account for 38 per cent of the total equirements, but have only 11 per cent of the potential water power. Water-power sites without a market are of no practical value, and lthough within the past decade great strides have been made in the irt of transmitting power for long distances at low cost the limit of >conomic transmission is now about 300 miles under normal condiions. It is apparent under the circumstances that the disproporionate distribution of the water-power resources in respect to availible markets may be overcome in only very limited degree by longlistance transmission. Consequently those sections of the country with abundant resources will derive their needs mainly from hydro plants, while the other regions lacking in favorable water-power sites must depend primarily upon energy produced by fuel-using stations. HYDRO VERSUS STEAM GENERATION Another factor of far-reaching importance affecting water-power development is the improvement of steam-plant design. In recent years substantial advances have been made in the design of hydroelectric projects. The great expansion of the market has permitted larger and larger units to be installed and vast water-power projects to be constructed. These have resulted in much higher efficiency in the extraction of the potential energy from the falling waters and lower operating costs. During the same period, however, the improvement of the efficiencies of the steam-electric stations has been even more remarkable. By the use of higher pressures, higher temperatures, larger units, improved types of boilers, and other mechanical improvements the thermal efficiency of the modern steam station has been so increased as to produce twice as much useful energy from a fuel unit as was possible a decade ago. Modern water-power machinery is now so close to the theoretical limit that there is little room for improvement. This is not true, however, in the case of steamelectric plants, and further gains within economic limits are authoritatively predicted for the immediate future. The substantial reduction in the cost of steam generation by stations of modern construction has greatly narrowed, if not overcome, the margin hitherto enjoyed by water power in many localities. With the most favorable water-power sites already in service it is obvious that new projects must undergo the most critical comparison with equivalent steam capacity, particularly in regions where cheap fuel supplies are available. The altered conditions have led to frequent expressions to the effect that henceforth hydraulic power will be of diminishing importance, and development of most of the remaining sites will be found economically impracticable. The facts available do not warrant any such general conclusion. Admittedly water power is faced with much keener competition than it has ever had to meet in the past, but in many situations it will be found to be clearly advantageous. The problem is complex, and the solution which will produce the lowest cost coupled with the most reliable service may be found only by searching analysis of each individual situation. Systems depending primarily on hydro power are finding it desirable to provide a substantial proportion of the needed generating capacity in steam plants as protection against periods of abnormally low water supply. On the other hand, those systems deriving the major part of their requirements from fuel power discover that the most economic arrangement includes some water-power capacity, particularly for use on the peak of the system load. A system served with generating capacity properly balanced between steam and hydro in most cases offers more favorable costs than if dependence is placed entirely on one source or the other. In other words, a combination of steam and hydro is more economic as a general rule than either one alone. PUBLIC COOPERATION A third factor that has considerable influence upon the trend of water-power development is the matter of public cooperation. Water-power utilization imposes no drain upon the natural resources and, therefore, as a conservation measure has long been considered preferable to fuel power from the standpoint of sound public policy. Moreover, water-power development usually creates important incidental benefits. In the arid regions of the Western States the regulated water supply discharged from the power-storage reservoirs in the mountains is used through the generating stations and then flows out upon the valleys, where it is used for irrigation and domestic supply. The power developments on the rivers of the central and eastern sections of the country serve to improve and promote navigation. Many of the reservoirs constructed in connection with power projects are being largely used for recreation purposes and provide flood control in greater or less degree. With all these public advantages resulting from water-power utilization, it might be expected that new developments would enjoy the utmost public encouragement. This, however, is not the case. On the contrary, the difficulties which must be overcome appear to be constantly increasing. As the population increases in arid or semiarid regions water becomes more valuable and more sought after. There is much litigation of water rights which should be determined on sound engineering and social principles instead of through the stretching of many inapplicable laws and court decisions over this troubled field. The control of certain abuses has led to unnecessary handicaps for legitimate enterprises. The existing taxation has at times been unfair, and regulation is still seeking for the guidance of generally acceptable policies and principles. These obstacles will no doubt be overcome so that further progress may continue. REGULATORY JURISDICTION OF COMMISSION In the eighth annual report of the commission the regulatory jurisdiction conferred under the act was discussed at considerable length. It was pointed out that to attempt the exercise of regulation over rates, service, or security issues in a limited number of isolated cases scattered throughout the country would quite likely involve unreasonable expense and delay. Very wisely, Congress by the act subordinated the regulatory powers of the commission to the jurisdiction exercised by the several States. It expressly provided in section 19 that this commission might undertake control over the rates, service, or security issues of public-utility licensees engaged in intrastate business only until the State concerned had authorized a commission or other agencies to exercise such regulation. Relative to licensees engaged in interstate public-utility business section 20 of the act authorized the commission to perform regulatory functions only when one of the States concerned has not created proper regulatory authority or when the States are unable to agree between themselves. It seems clear, therefore, that Congress thought of the control of electrical utilities as a local problem and that the imposition of a superior authority would be needed only in the event of disputes between States. Doubtless it was recognized that electric power must of necessity be used in the immediate vicinity of its produc |