Summary of load, gross revenue, and expenses showing cumulated deficit over period 1930 to 1945 on basis 600,000 horsepower is installed by 1930 on Colorado River and output sold to 54 municipalities in southern California Six hundred thousand horsepower at 65 per cent load factor will produce 2,560,000,000 kilowatt hours per year. From table showing yearly demand through the period 1930-1945, the demand in 1945 is shown as 2,650,000,000 kilowatt hours, of which 1,460,000,000 is used by the 54 municipalities and 560,000,000 kilowatt hours for pumping water to Los Angeles, the remainder being transmission and distribution losses. Applyng to these figures the rato 256/265 in order to reduce them to the 600,000 horsepower capacity of the plant, the figures will be: Kilowatt hours used by 54 municipalities. Kilowatt hours used for pumping water to Los Angeles_ Kilowatt hours sold___ Revenue, at $0.00445 per kilowatt hour Operating expenses... Remainder for fixed charges and sinking fund. Capital invested: 3 transmission lines. 220,000 volts_ Power plant, 600,000 horsepower Dam_-- Substations 1, 410, 000, 000 540, 000, 000 Total__. 1 120, 000, 000 Mr. BALLARD. Now, I have some few notes here, which, because of your desire to hurry the proceedings a little, I will read; perhaps I can go over them a little faster in that way. Some one in the hearings has attempted to point out that there is no opposition to any feature of the bill from anybody except power companies, and possibly, the owners of lands in Mexico. The representatives of the city of Los Angeles Mr. LEATHERWOOD (interposing). I would like to supplement that statement, Mr. Ballard, by saying that the upper basin States are opposed to it. Mr. BALLARD. Yes, sir: I am glad to hear it. 1 $8,240,000 is 6.86 per cent on $120,000,000. Mr. RAKER. So we find the Southern California Edison Co. and the upper basin States joining hand in hand on this opposition? Mr. BALLARD. No, sir. I am not speaking for the upper basin States. You will find the Edison Co. not opposed to the Government development; but decidedly opposed to the preferential special legislation outlined in this bill, which is so far contrary to, and gives preference so much greater than are granted by the general law now existing, the Federal water power act of 1920. We are not opposed to Government development. We are opposed to that special legislation; and we think it is entirely possible, in the course of time, for somebody to amend this bill and provide a proposition that would be profitable and that would accomplish the purpose which is desired. Mr. SWING. Do you mean profitable from your point of view? Mr. BALLARD. Profitable from the standpoint of the people living in the territory to be served-all of them. The representatives of the city of Los Angeles, the Imperial Valley irrigation district and the Boulder Dam Association purport to represent the whole people of Southern California. It can be pointed out that votes taken at the elections have demonstrated that there is a great majority of opinion opposed to municipal ownership on principle. You take the vote on the water and power act in California in 1922-a proposition to bond the State of California for $500,000,000, and inject the State of California into State ownership of water and power, under the control of a board of five people-a proposition quite similar to this preferential municipal ownership bill now before this committee, and almost to a man, supported by the same people who are supporting the principles of this bill. That proposition was submitted to the people of California; and the vote against it was approximately 600,000, and the vote in favor of it was approximately 250,000. In other words, it was defeated in the State as a whole by a vote of 24 to 1. In Los Angeles city, it was defeated by a vote of 2 to 1; and in the territory outside of Los Angeles, in Southern California, served exclusively by the Southern California Edison Co., it was defeated by a vote of more than 4 to 1. That will show you that there are some people in southern California opposed to these socialistic schemes. Another fact of interest in this connection is that in Los Angeles city, as recently as the 5th of June of last year, there was submitted to the people a proposition for a $35,000,000 bond issue, for the development of power. In that amount, there was one item of $10,000,000 for the extensions of the local distributing system; and another item of $25,000,000, as a contribution toward this particular Boulder Dam proposition. That was submitted to the people; but it was submitted as one item: it was not segregated, so that the people must vote "Yes" or "No" on the $35,000,000 proposition, or not vote at all. There were 41,000 votes in favor of the proposition; there were 38,000 votes against it. The proposition was defeated. No bonds may be issued, under the California law, as I understand it, execpt by a vote of two-thirds of those voting. 92265-24-PT 3- -4 I am satisfied that had the distribution feature not been included, the proposition would have been defeated in Los Angeles by approximately the same vote as defeated the water and power act. That is all shown in this statement that I have here. If you wish to adjourn, Mr. Chairman, I can defer this. Mr. RAKER. Just so this may get into the record, so that we may go into it later: Then that brings up before the committee, you having made that statement, how this water and power act was defeated in California, does it not? Mr. BALLARD. Yes, sir. Mr. RAKER. And it also brings up the further fact that there were some 60-odd thousand or more stockholders of the Edison Co.-whom the people did not know were stockholders-appealing to their friends to defeat these various acts, because, if they were not defeated, it might reduce the revenue on the stock holdings of those people. Mr. BALLARD. I do not say that it brings that question up. Mr. BALLARD. You can ask me the question, if you wish. I do not say it brings that up, or that it would be involved. Mr. RAKER. I do not want to go into that now. I just wanted you to have that in your mind when you come before the committee this afternoon. Mr. BALLARD. Yes; I would be very glad to discuss that with you at any time. I will tell you what our position was, if you want to know: We were against it, and we helped defeat it. These voters who voted against those propositions have not come to Washington, for the reason that they are unorganized, and have no funds with which to finance such an appearance. The public ownership enthusiasts, on the other hand, are here in force, because finances have been made available, through the action of public officials appropriating money derived either directly or indirectly from taxes. We know by. reason of our contract with our customers throughout southern California that our company is highly regarded, that its service is satisfactory, that the people have a good opinion of its officers and administrative agents. This is shown by the large num ber of residents of southern California who have invested in its stock. There have never been any substantial complaints about the company in respect to any feature of its operations. So far as we are advised, there is no desire on the part of the company's consumers to take service from any other agency. The agitation for municipal ownership is theoretical, pure, and simple. It has not sprung up as the result of any great popular demand growing out of any abuses. Under the Swing-Johnson bill, the power houses are to be built by applicants for power benefits, not by the Government. The smaller cities could not finance power houses at the dam and transmission lines to load centers. It would be hard enough for Los Angeles to do it with all of its load. There is no present law of a satisfactory character, apparently, under which cities and districts can "club together" to own a power house and transmission line. It is clear, furthermore, that no such scheme could be feasibly worked out. The electric business is of such a character as to require a strong central controlling authority, a thing which is inconsistent with the independent nature of cities. The city of Los Angeles is not a satisfactory administrative unit, because it is not set up for the business of selling power at wholesale to other municipalities. There is no regulating authority to govern its actions as to price, or as to priorities. Furthermore, the city of Los Angeles has contracted to sell its surplus power to the Edison Co. for a period of 15 years, 1922 to 1937. The distribution of electric power from Colorado River power sites is really an interstate matter which should be entrusted to such agency only as has freedom of interstate action, either the United States Government itself, or some agency created by it, or under regulation by it. The best agency of that kind is a public service corporation Mr. RAKER (interposing). Let me ask you a question right there; but just so that you can get to it later: The Los Angeles power interests or its municipal power plant-does that come under the public utilities regulation? Mr. BALLARD. No, sir; it is not regulated by anybody. Mr. RAKER. If it had more electric energy than it could use, under this contract to which you have refered the Edison Co. would get it? Mr. BALLARD. The Edison Co. has an option to buy it. Mr. RAKER. It has an option to buy it? Mr. BALLARD. Yes, sir. Mr. RAKER. But under our State law, is that not contrary to our constitution and our statutes-that anyone who asks and desires power could get it as against the Edison Co., and that your contract is absolutely void, so far as any additional consumer is concerned? Mr. BALLARD. Do not ask me, Judge Raker; I am not a lawyer. That contract has the approval of the legal authorities and the railroad commission of the State. I presume that they are familiar with the State law. As I was about to say, the best agency of that kind is a public service corporation, which, as the name implies, is not a private corporation, but is, on the other hand, public in the sense that it is subject to State control in all essential features. It may not be realized by the members of the committee that the plan advanced by the Boulder Dam Association, if carried out, may destroy the electrical utilities now operating in southern California. The market which this association represents to exist for Boulder Canyon power, is the market now supplied by these private utilities (with the exception of Los Angeles, Pasadena, Riverside, and a few small cities). It is fundamental that paralleling competition of electrical utilities in the same field is economically wasteful, and produces no benefit to consumers. Wherever competition of this kind exists, it means sooner or later the death of one or the other of the competitors, and the loss of capital invested. The entrance into southern California fields of a large block of power to be distributed by new agencies, will lead either to loss of investment by the new agency or by the existing agency, or, as is often the case, tremendous losses by both. Congress should not be instrumental in turning loose competitive forces in southern California. It should make certain that the power produced by the Boulder Canyon Dam will not be used to destroy any present business or enterprise. It may be urged that to turn over these last great governmental resources to "private interests" would be nothing short of a crime. The answer is twofold: First, that under the terms of the water power act they are not turned over, except under strict limitations as to time of use and profit which can be made. In the second place, they are not turned over, in our case, to "private" interests. Our company is a "public" service corporation whose affairs are thoroughly and fully regulated by the Government. Experience has demonstrated that the consumer of a public-service corporation has a much better opportunity to obtain redress for grievance as to rates or service than the consumer of a municipal or other governmental utility. There is no possibility under the law of exploitation of the natural resources licensed. It is true that the licenses granted under the terms of the Federal Power Commission defer out and out socialism in these enterprises for a period of 50 years. Unless such postponing is specifically provided for, there is no possibility of present-day financing by publicservice corporations to utilize these resources. The question is, Are we ready for socialism now? If not, should we finance through public-service corporations under regulation for the next 50 years, or not at all? Why should not this project be handled under the provisions of the Federal water power act? That law contains provisions providing for the licensing of power sites for Government dams, and places the municipalities and public-service corporations on an equality, the municipality having priority only where its plans are equally well adapted to utilize the natural resources in the public interest, and under that law, during the past three or four years, administrative regulations and principles have been thoroughly worked out and are now in satisfactory operation. The question may be asked as to what regulation is provided for in the Federal water power act in the case of an interstate stream. I have some notes in my statement in regard to that, but I will not stop to read them. (The statement referred to is as follows:) Section 19 of the act provides that as a condition of the license every licensee, which is a public service corporation, shall abide by such reasonable regulation of the service to be rendered and of rates and charges as may from time to time be prescribed by any duly constituted agency of the State in which the service is rendered or the rate charged. Section 20 provides that when the power to be distributed enters into interstate commerce, the rates charged and the service rendered shall be reasonable, undiscriminatory, just to the customer, and that whenever any of the States directly concerned has not provided a commission or other authority to enforce the requirements of the section within said State, or to regulate and control the amount and character of securities to be issued, or such States are unable to agree through their properly constituted authorities on the service to be rendered or on rates or the amount or character of securities to be issued, jurisdiction is conferred upon the Federal Power Commission to enforce the provisions of the section, to regulate and con |