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Mr. MERRILL. I can not tell you positively about that.
Senator WHEELER. How was that?

Senator BROOKHART. I was tracing the control of the Montana Power Co.

Senator WHEELER. Well, it is my understanding that it is controlled by Electric Bond & Share.

Senator BROOKHART. You have answered about control of rates through capitalization. Now, let us see how about if a license is issued to the Rocky Mountain Power Co. on a Federal site as to rates to be charged based on capitalization. Will the Federal Power Commission be able to protect the public in those cases? Is that any different from the other cases?

Mr. MERRILL. It comes within its authority.

Senator BROOKHART. The authority you have described in general applies to this Flathead proposition the same as to the others?

Mr. MERRILL. Yes, sir.
Senator WHEELER. You say they would have authority to fix rates?

Mr. MERRILL. No, not in the Montana case, because you have a State utilities commission there.

Senator BROOKHART. But the authority would be the same as you have described in general.

Mr. MERRILL. The authority to determine these expenditures, and so forth, is independent of the authority to regulate rates.

Senator BROOKHART. Is there any difference in the authority as it relates to the Rocky Mountain Power Co. or to the Montana Power Co. than if a license had been issued to the other applicant, Mr. Wheeler?

Mr. MERRILL. No, there is no difference there.

Senator BROOKHART. Do you know about this Rocky Mountain Power Co. filing a prelicense cost of $183,000?

Mr. MERRILL. I am not certain. I think they filed it before I left but of course I do not recall the details. Senator BROOKHART. Did you approve it? Mr. MERRILL. No, I did not approve any of it. Senator WHEELER. You disapproved some of it, did you not? Mr. MERRILL. I do not think the matter had come up for decision.

Senator WHEELER. I think the record showed that you disapproved some of it, and that it was afterwards approved.

Mr. MERRILL. I can not recall the details, there were so many

Senator BROOKHART. Now, the actual structure of the Montana Power Co. carried on its books, generating plant, $27,000,000, transmission plant, $6,000,000, for electric property, $5,700,000, and for nonelectric property, $5,483,000, making a total of $45,746,000, do you remember those items in a general way?

Mr. MERRILL. No; I do not.

Senator BROOKHART. Well, then, do you remember their claim for water rights contracts, franchises, and so forth of $51,491,000?

Mr. MERRILL. Of the Montana Power Co.? Senator BROOKHART. Yes. Mr. Merrill. With whom were they making any such claim? They were not before the Federal Power Commission.

cases.

Senator BROOKHART. I understand that it was in reference to this Flathead permit.

Mr. MERRILL. Well, they were not parties there.

Senator BROOKHART. Well, they were in there in some way as I understand.

Mr. MERRILL. They may have filed certain information, although I do not know, for the purpose of giving the commission information upon which to determine the situation.

Senator BROOKHART. You do not remember specifically about that?

Mr. MERRILL. No.
Senator BROOKHART. All right.

The CHAIRMAN. I believe Senator Hastings wants to ask a question or two.

Senator Hastings. I will not take up any more time now.

The CHAIRMAN. The committee will now stand adjourned subject to the call of the Chair. Then about next Wednesday, Secretary Wilbur and Mr. Lawson will be heard.

(Whereupon at 12.40 p. m., Wednesday, February 26, 1930, the committee adjourned subject to the call of the chair.)

INVESTIGATION OF FEDERAL REGULATION OF POWER

WEDNESDAY, MARCH 5, 1930

UNITED STATES SENATE,
COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C. The committee met, pursuant to adjournment on February 26, 1930, at 10 o'clock a. m., in room 416, Senate Office Building, Senator James Couzens presiding.

Present: Senators Couzens (chairman), Pine, Brookhart, Glenn, Kean, Smith, Dill, and Wheeler.

Present also: William C. Green, special counsel to the committee.

The CHAIRMAN. The committee will be in order. Mr. Secretary, will you please be sworn?

(The witness was duly sworn by the chairman of the committee.)

TESTIMONY OF HON RAY LYMAN WILBUR, SECRETARY OF THE

INTERIOR AND FEDERAL POWER COMMISSIONER, WASHINGTON, D. C.

The Chairman. Mr. Secretary, this meeting is held for the purpose of considering a bill before it providing for the reorganization of the Federal Power Commission, to provide for full-time commissioners rather than having Secretaries of the several departments act as commissioners. I wondered if you cared to make a statement before the committee examines you?

Secretary WILBUR. Just as you say, Mr. Chairman.

The CHAIRMAN. You may proceed with any statement you care to make.

Secretary WILBUR. In so far as I have studied the bill, Mr. Chairman, it seems to me to be along the right lines. It does present one considerable difficulty, and that is that the Federal Power Commission has jurisdiction over the public domain and over navigable streams and practically nowhere else. The result of that is that in the public domain you have immediately the Department of Agriculture and the Department of the Interior concerned, with primary functions that they must carry out. In so far as navigable streams are concerned, you have the War Department and its responsibility which in no way can be abrogated.

So that unless representatives of these three departments are brought into immediate contact with the operations of the projected Federal Power Commission, it is inevitable that there will be many conflicts both of jurisdiction and of duty.

I hardly see how, unless there is to be a very large organization created, the commission could carry on its functions unless it called upon the existing personnel of the various departments for such duties as are now exacted by the Federal Power Commission and obtained without any difficulty.

There are two elements, though, that are important in so far as a commission of an independent character is concerned. One is its imposition upon members of the Cabinet to spend the amount of time requisite to carry forward the full duties of the Federal Power Commission at its present stage.

The other is that in connection with the work of the Power Commission we are approaching the necessity of careful valuation of those who have been granted licenses or who are seeking licenses, and the valuation question has a somewhat different basis from the other problems, in that it will form the basis, necessarily, when once established in regard to a license, for many future considerations in which the National Government and the State governments are involved.

So I think that there will have to be a central accounting organization such as exists at present. The extent of that accounting organization is a subject, I think, upon which there should be very careful consideration.

When the present members started in under the chairmanship of Secretary Good we at once became aware of the fact that in so far as accounting was concerned the commission was far behind. immediately to ask the officers of the commission to give us reports so that we could come to decisions as to policies to be adopted in connection with accounting. At our first meeting Secretary Good brought this up and we all insisted that something definite be brought to us promptly so that we could at once begin to outline what should and should not be accepted as part of a valuation.

We have had a number of difficulties in bringing that about. At the very beginning the personnel was too small, but after the first of July there was a considerable increase in personnel of the Accounting Bureau, and things seemed likely to move forward better.

But a number of accounts that were before us in an indefinite way had never been brought forward for any decision. Certain items about them came out in the public press. That led to a good deal of confusion and disputes, which have been drifting, now,

for some months, but finally, under constant and steady pressure on our part to bring the Accounting Department to the point where we could get something definite, we had at the last meeting of the commission one account presented to us in a somewhat incomplete form, and we are told that there are four others now before the commission.

I mention that historically for this reason: It shows that the accounting side is of great public interest. It also requires special consideration, because in the determinations made by the power commission there will be effects produced upon the whole rate structure of the various power companies in the country. The functions there of the power commission become almost judicial. It requires hearings so that both sides can be represented. That requires a great deal of time and careful study, for the decision must be properly made.

So that it seems to me from the standpoint of accounting that it is too much to ask a Cabinet member to spend the time requisite for that particular duty which is preeminent, not so much because of the volume of business, but because of the policies that may be laid down.

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