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to build a dam on the Colorado River, either for flood protection alone, or for flood protection and an opportunity to develop power.
The company does, however, object, in view of this situation with Los Angeles, to the proposition of the power officials of the city of Los Angeles organizing a Boulder Dam Association and coming here and urging the development of this power for the joint use of all of the municipalities in southern California. We feel that the action is directly inconsistent with the provisions of the contract for the sale of our distributing system to Los Angeles, and is bad faith on the part of the Los Angeles officials. At least, that is our position.
We feel that the Southern California Edison Co. is the logical distributor of power throughout this territory. And one reason for that is the record of what is now going on.
Take 1923: The production of electric energy on the Southern California Edison system was in excess of one and one-half billion kilowatt hours. The revenue was approximately twenty millions of dollars. The output of the Los Angeles municipal system was approximately three hundred million kilowatt hours; and the revenue was, in round figures, eight millions of dollars.
In other words, the output on the Edison system was five times as great as the output on the Los Angeles municipal system. Its cash collections from consumers were two and one-half times as much.
The average rate collected by the Southern California Edison Co. for all of its power generated during that year was only 1.33 cents for each kilowatt hour; while the average rate collected by the city of Los Angeles was twice as much, or 2.66 cents per kilowatt hour.
Now, I do not submit those average rate figures as being conclusive as to the condition of rate schedules, but rather to demonstrate the fact that the Edison Co. is distributing the major part of the great supply of power throughout southern California, and a large part of it at wholesale; and is carrying all of the low-priced essential business of the territory.
For example, it is carrying-with the exception of some carried by one of the smaller private companies--all of the loads of the farmers in southern California for the irrigation of their lands. Land is irrigated in California almost entirely by electric pumping; electric pumps operated by Edison power throughout our territory are irrigating between 700,000 and 800,000 acres of land at very low rates.
The Edison Co. is carrying the big railroad systems, the street railway, and the interurban systems, and particularly with respect to the interurban system it is necessary that power be furnished at low rates in order that the systems may operate throughout the whole territory, reaching all of the territory and bringing one community in closer relation to the others, by reason of rapid transportation.
As to the individual rates, the company, of course, pays taxes to the State and to the Federal Government, in addition to which all of its securities are taxed in the hands of the individuals who own them, by the Federal Government. In the case of the individual rate, the maximum lighting rate charged by the city of Los An
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geles municipal power bureau, without considering the question of taxes, is lower than the maximum lighting rate charged by the Edison Co. in territories outside the city.
The present rate in Los Angeles city charged by the municipal system is 5.6 cents for each kilowatt hour, maximum. The maximum lighting rate charged by the company is 6.5 cents per kilowatt hour. The maximum rates in Los Angeles should be, and I think always have been, lower than in territory just outside of the city, for the reason that the costs of distribution are less, because the territory is more congested.
Before there was any municipal system in Los Angeles, the maximum rate as charged by the private companies was less than the maximum rate now charged. It was 5.5 cents per kilowatt hour, instead of 5.6 cents, now charged by the municipal system in Los Angeles. And at the same time, the rate charged by the private company outside of Los Angeles was somewhat higher than its present rate. The rate then was 7 cents, as against the present rate of 6.5 cents.
And going down the line, there is a difference of about that extent in lighting rates.
But when we come to power rates, there is no difference to speak of. The power rates are practically the same, taken as a whole, as between the sales by the Southern California Edison Co. outside the city, and the sales by the Los Angeles municipal system inside the city. The schedules are different; one rate may be lower, and the other rate may be higher.
And in connection with rates I think it was Mayor Evans of Riverside, who was asked a question respecting the rates of the municipal plants in Riverside, as compared with rates charged by some of the private companies, particularly the Edison Co., in towns which are neighbors to Riverside, in the same general territory. And I think that Mayor Evans did not have the figures with him.
I have a comparison here. And I think this comparison will more cleary indicate to you the rate situation throughout southern California ; because this is a comparison of the rates charged by the Southern California Edison Co. in the towns outside of Los Angeles, with the rates charged by the city of Riverside in similar territory:
In Riverside the first rate, the maximum rate, is 8 cents for each kilowatt hour. The Edison Co. maximum rate is 6.5 cents per kilowatt hour.
The second rate in Riverside is 7 cents per kilowatt hour. The second rate of the Edison Co. is 5.5 cents per kilowatt hour. The third lighting rate of the Riverside municipal plant is 5 cents; the third rate on the Edison system is 4.5 cents. And the rates stop on the Riverside municipal system; but the Edison schedules carry two more blocks still lower, one at 3.5 cents and one at 3 cents.
In power rates-
Mr. Swing (interposing). The last two were industrial rates, were they not?
Mr. BALLARD. Yo; it was all light; that is the lighting schedule.
In power rates the schedules are somewhat different, but figured on sizes of motors and equivalent consumptions, the comparisons are these : For a 10-horse power motor using 1,000 kilowatts per month, the Riverside rate would be $27.50—that is, the bill would be that amount. The Edison bill would be $26 per month.
For a 24-horse power motor, on the same basis of use, the Riverside rate would be $61.25; and the Edison rate would be $57.50.
For a 50-horse power motor, on the same basis, the Riverside rate would be $117.50; and the Edison bill would be $100.
For a 100-horse power motor, the Riverside bill would be $230; the Edison bill would be $185.
For a 250-horse power motor, the Riverside bill would be $557.50; and the Edison bill would be $185.
For a 500-horse power motor, the Riverside municipal bill would be $1,130; and the Edison bill would be $825 per month.
Mr. RAKER. That is, in the same town?
Mr. BALLARD. These are the municipal rates in Riverside. And these rates of the Edison Co. are in towns corresponding to Riverside—all towns outside of Los Angeles. For example, in Redlands and San Bernardino, and towns of similar characteristics, within 10 or 15 miles one of the other.
And I would like to file this schedule, and in filing it, simply make the comment that the Edison rates include the collections from consumers of an amount of money with which to pay taxes equal to about 10 per cent of the rates; and the Riverside municipal rates include no taxes; making a further differential in favor of the Edison Co. of about 10 per cent, as between these rates.
The CHAIRMAN. You will hand that schedule to the reporter for the record, will you? Mr. BALLARD. I will do so. (The statement referred to is as follows:)
Comparison of city of Riverside electric ratex with the rates of Southern Cali
fornia Edison Co.
NOTE.-Edison rates include 10 per cent for city, county, State, and Government taxes. Riverside pays no taxes.
Cents per Kilowatt how
First 500 kilowatt hours per month.--
Cents per kilowatt hour per horse
power, per month
Horsepower of connected load or measured maximum demand First 50 Next 50 Next 100 Allore
kilowatt kilowatt kilowatt
kilowatt hours, hours, hours,
hours, per per per kilowatt horse- horse
horse hour power power
1. 20 1. 15 1. 05
NOTE.- Edison rate includes 10 per cent for taxes. Riverside has no wholesale power schedule. For larger Kilowatt-hours consumption per month the saving to consumer greatly increases under Edison rate. This is the reason why Riverside can buy power from the Edison Co. and resell to their own consumer The city of Riverside has recently reduced their rate for power used for agricultural purposes (pumping plants) to the same rates charged by the Edison Co.
Mr. RAKER. Has that been a fairly continuous condition for the last 10 years as you have described it in your statement ?
Mr. BALLARD. No. The rates have varied in the last 10 years There was a time when these municipal rates, on the face of them, were lower than some of the private rates. I doubt if at any time, however, they were lower taking into consideration the question of taxes.
Mr. RAKER. What I meant was, have you lowered your rates in the last 10 years somewhat progressively?
Mr. BALLARD. The Railroad Commission of the State of Californis has lowered our rates in the last three years four times, I think: they are doing it all the time.
Mr. Swing. Do you have in connection with those rates a supplemental rate known as “ ready-to-serve," or something equivalent to that?
Mr. BALLARD. No, sir; those are the rates; no; there is nothing more; those are the complete rates, as I have read them.
Mr. RAKER. What do you mean by that? What do you mean by saying that the taxpayer gets the benefit of about 10 per cent in the difference between the rates in the city of Riverside and those outside?
Mr. BALLARD. My reference to taxes was this: That the Edison Co. is compelled to pay to the State of California and the United States Government certain taxes. Its affairs are all under regulation by the railroad commission. It is entitled to earn, under the public utilities act of California, a sufficient amount to pay its operating expenses and taxes, to maintain its property as against wear and tear and depreciation, and a reasonable or fair return upon the actual investment in its property. Therefore, all the money that we pay to the State or Federal Government for taxes, we must collect from the consumers; there is no other place for us to get it. So that all our rates to our consumers include an item in our operating expenses for taxes; and that amounts to a little more than 10 per cent of the rate. If we did not have to pay those taxes, our rates could be at once reduced 10 per cent, and it would not cost the stockholders a cent.
If, also, our securities were all tax exempt, as the Los Angeles municipal securities are, our rates could be reduced another 15 per (ent, without costing the stockholders a cent.
The effect of taxation on the private company rate is 25 per cent, as between the private company rate and the municipal rate.
But notwithstanding that, our rates in the territory outside of Los Angeles are lower now than the rates charged by these municipal plants, particularly Riverside.
And in Los Angeles, they compare very favorably; the rates outside the city are but slightly higher than the rates charged by the municipal plant inside the city.
In Pasadena, there is another situation. The Pasadena maximum rate is lower than either the municipal plant of Los Angeles or the Edison outside rate.
But you have here, I think, a report of the Pasadena municipal plant; and if I remember those records correctly, they generally contain a statement as to the rates from which you could pick out the average rate collected in Pasadena for all the services; and you will find that the average rate is a very large percentage of the maximum rate. In other words, Pasadena furnishes no large power business. It carries no farmers, but furnishes only its own people, who are, more or less, resident consumers in a congested territory, with a lot of rich people living within a small area, and with a low distribution cost; and they pay no taxes in their rates.
Now, gentlemen, there seems to be an urge to this committee for the adoption of the Swing-Johnson bill as it stands, without amendment; and there have been submitted, I understand, in the testimony of a number of witnesses advocating the bill, certain data, general in character, and nothing so far, I think, having any particular relation to the proposition of buiding a dam on the Colorado River and the financial effect of doing so.
It seems to be the idea that, for some reason, in some way, municipal ownership people shall get through a bill here which shall make