The CHAIRMAN. Very well.

Mr. KING. Mr. May, if you are under the impression that you are quoting a document of the New York Power Authority there and that is what you told the committee-you are quite mistaken. That document that you have was a document of the development commission. The impression is, as you gave it, that that was by the New York Power Authority, and that this is Governor Roosevelt's proposition. That is not true. The men who made this report failed of appointment by Governor Roosevelt on the New York Power Authority, which is now headed by Frank P. Walsh.

Senator BONE. Mr. Chairman, may I make one further statement? A member of the press has asked me about my reference to Mr. Charles Francis Adams. Let me say that in December 1929, when this controversy over the Lexington coming to Tacoma was before us, I had occasion to wire Senator Dill, and at that time I examined Moody's Manual and other statistical works in order to determine the connection of Mr. Adams with the Puget Sound Power & Light Co. and other Stone & Webster organizations. Those manuals showed that Mr. Adams was a director in practically all of the Stone & Webster power companies scattered all over the United States. It was later announced that Mr. Adams had severed his connection with them. Whether he retained any stock interest is not apparent from this record. But it was a fact that Mr. Adams, while Secretary of the Navy, made it possible for the Puget Sound Power & Light Co. to utilize the great Government steam plant at Bremerton Navy Yard to carry it through this power shortage in the winter of 1929. The CHAIRMAN. Thank you, Senator.

Mr. JAMES. May I ask the chairman a question? Does not section 23 of your bill prevent anybody being paid $4,600 for four telephone calls?

The CHAIRMAN. I will say that it was intended for that purpose. I enlisted the assistance of the Department of Justice in drawing a condemnation statute that would prevent this authority from paying any excessive and unreasonable charges in condemnation proceedings.

I have just been notified of an article appearing in one of the Tennessee newspapers, a Knoxville newspaper, indicating that there might be considerable speculation in real estate in the hope that something like exorbitant charges might be imposed upon this authority. I want to state, and ask the newspaper men to carry it, that the people who own that land down there now, in Tennessee, will make a very serious mistake if they allow land speculators to come around and take options on it, or to take deeds on it, in the belief that the Government is going to pay exorbitant prices for the land in the Cove Creek Basin area. We are going to pay, of course, more than it is worth, but not any excessive, unreasonable, or inordinate prices. We have got a provision here that Mr. Lloyd and Mr May have both considered with regard to condemnation proceedings.

Mr. MAY. Mr. Chairman, I did not catch my colleague Mr. James's question about paying a citizen $4,600.

Mr. JAMES. I asked the chairman if section 23 of the bill did not prevent anybody being paid $4,600 for four telephone calls.

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Mr. MAY. The statement I made a while ago was that I made a power company pay $4,600 for four calls-not a citizen.

Mr. JAMES. This editorial that Mr. McSwain has referred to, in the Knoxville paper, suggests to the people down there, in reply to an editorial in another paper, that the people ought not to profiteer on the Government. The other editorial suggested that the people ought to be allowed to profiteer and make a little profit; and this section will prevent that.

Mr. MAY. That is anarchy and socialism. Someone suggested yesterday I believe it was Mr. Brand-that they had a real-estate agency set up now at Muscle Shoals, with a lot of seats around the wall. Is that true?

The CHAIRMAN. He said it was in New York, as I recall it.
Mr. MONTET. It was New York.

The CHAIRMAN. I have been advised by the Attorney General that a piece of property that was fairly worth $1,100 on the market was assessed by a jury of condemnation against the Federal Government, which was seeking it for lighthouse purposes, at $44,000. Now, we ought certainly to do everything in our power to prevent such outrageous prices as that.

The committee will now hear Mr. Dickerman.

STATEMENT OF JUDSON C. DICKERMAN, FEDERAL TRADE COMMISSION, WASHINGTON, D.C.

The CHAIRMAN. Mr. Dickerman, what connection have you with the Federal Trade Commission?

Mr. DICKERMAN. I am a public utility investigator, an engineer investigator for the Commission.

The CHAIRMAN. What has been your experience as an engineerelectrical, steam, or mechanical?

Mr. DICKERMAN. Originally I am a graduate of the Massachusetts Institute of Technology, in chemical engineering, in which I gave a great deal of consideration to power engineering. Since then I have had manufacturing experience in chemical plants; I have had charge of a utility; I have been the principal engineer in charge and supervision of all the utilities, except railroads, for the State of Virginia; have been connected with the Wisconsin Railroad Commission in the utility investigations; was assistant director of the giant power survey in Pennsylvania, and a staff member of the public service commission there; and I have been for 4 years traveling over the country investigating the physical properties and the operating conditions of the power plants in this country.

The CHAIRMAN. You graduated at Massachusetts Institute of Technology in what year?

Mr. DICKERMAN. 1895.

The CHAIRMAN. Now, it has been stated here if I do not misstate the testimony-that it is more economical under present conditions, general modern conditions, to produce electric energy by a steam plant, by a dynamo driven by steam power, than by a dynamo driven by hydro power. Have you made any calculations or observations upon the comparison of these two sources of energy?

Mr. DICKERMAN. I am continually making those comparisons in reports which I have been making for the last 4 years. I have had

occasion to find out what both the installation and operating costs of various hydro and steam electric power plants have been, so that I have gathered a considerable knowledge of such matters.

Now, when it comes to comparison of hydro as against steam production, it appears to me that there are at least three groups or factors which must be considered as regards any particular place in which you wish to develop power. One very obvious one is the probable cost of coal over a period of years. At the present time we are all aware that coal is being sold at the mines at a cost which represents practically no return on investments; a dollar a ton or less is a prevailing price. How long that will last we do not know. It is bound to last for a while, but it does not seem conceivable that that can remain as the fundamental price for coal over a period of

years.

The cost of coal includes, at the point of use, the railroad or freight charges to deliver it. There are power plants in this country which, in the last few years, have been charging coal into their plants at $2 a ton. Those are located in the coal-mining States. The companies which are operating in such sections as New England and New York State are having to charge in from $4 to $5. In the interior of New England they have to charge in practically $6 a ton for their coal. So the coal price, regardless of what it is at the mine, will vary according to the transportation charges to different parts of the country. Another factor is, what sort of service do you expect to supply? If you are going to supply a community or a group of communities that are commercial, residential, and only moderate in their industrial development a few factories employing 50 or a hundred people you will find that what we call the load factor-that is, the percentage of the total time that the equipment will be operated at full capacity is apt to be only between 30 and 40 percent. If you are going into a highly industrialized community, where there are large factories that are likely to have continuous operations throughout the year, you may get your load factor built up to around 50 percent. If you can operate a lot of electrochemical or electrometallurgical industries, such as are clustered around Niagara Falls, you may get a load factor of approximately 80 percent.

I will come to that a little later, as to why load factors are very important in determining the relative value of steam and hydro installation, other factors being equal.

The third thing depends primarily upon the variableness of the hydroelectric water supply. With steam we realize that we can operate the plant any minute in the year that we want to, barring a positive breakdown, if we have coal available, which can be provided for by storage, and so forth.

The hydroelectric plants are dependent upon the rainfall and the run-off resulting from the rainfall into the streams. All up and down the Atlantic coast we have quite variable rainfall and very variable run-off. That means that our streams have flows, like the Susquehanna River, that will vary from 4,000 second-feet-that is, 4,000 cubic feet flow in a second-during drought times to 4,600 second-feet during flood times. Unfortunately, in the Susquehanna River there is very little storage. Yet on that river there have been built 3 large hydroelectric plants, 1 of them completed in 1931, in which no work other than survey has been done perhaps to about 1928 or maybe

1929, showing that that was built for the interests that control the Baltimore Consolidated Gas, Electric Light & Power Co. The second plant, the largest one, the Conowingo, was built in the period of about 1924-25. The older one was built back in 1909 and 1910. Storage, therefore, or control of the water is quite important for a continuous operation of hydro plants in this part of the country; in fact, everywhere except at Niagara Falls.

As to the operating costs of steam plants, under present conditions we can build a plant and operate it for the supply of large demands with a consumption of about a pound of good coal. There are plants that are running for less than that.

Mr. MAY. A pound of coal per kilowatt-hour?

Mr. DICKERMAN. A pound of coal per kilowatt-hour output. There are plants running on less than that, but those plants are usually base-load plants that are operated more continuously than would be required to meet the ordinary needs of our communities. So I think it is a fair proposition to say that under present conditions good plants can operate on a pound of coal per kilowatt-hour.

Now, with $2 a ton as the cost of coal at the plant, that means 1 mill as the fuel cost per kilowatt-hour. When you go to a region where you pay $4 a ton for coal, that means 2 mills per kilowatthour as the average cost. If you have to pay $6, as they do in Minneapolis, it is 3 mills.

There are not many systems that are actually operating on as low as a pound of coal. The average of all the steam plants in the country is approximately 11⁄2 pounds now. But there are plenty of systems that are running on 14; and looking a little ahead, into the future, 1 pound is probably a fair figure to use.

The operating costs other than fuel of a steam plant will run about 1 mill. It may be a little less or a little more. I think that 1 mill is a fair figure for salaries, wages, supplies, and maintenance in a steam electric plant, well designed.

So with $2 coal you will have a factor of about 3 mills. It would be 2 mills for $1 coal, or it might be a little bit less.

Mr. Goss. For $2 coal?

Mr. DICKERMAN. Yes; for $2 coal-about 2 mills or a little bit less. I know of a plant in Ohio that is running on coal at about $2 that the operating men tell me is working on 1.6 mills operating cost, but that is a base-load plant. You can hardly figure on getting that for system work.

I want you to bear in mind that there is quite a difference between figuring what you could do with a plant run to meet a steady load or high load factor and what you have to do to meet a good community development. There is a little difference there.

The operating expense aside from fuel in two modern steam plants will not vary very much. The labor force is practically the same whether they are running at 75 percent capacity or 25 percent, as long as they keep turning out something throughout the 24 hours. The supplies and maintenance will probably vary a little, and that mill can be shifted back and force a few tenths of a mill without serious disturbance to the general economic picture.

The better hydro plants have an operating cost which is only about one tenth of the very best that we can hope for from steam plants. That is, the larger hydro plants, operating at in the neighborhood of

50 percent load factor, will have an operating cost for labor, supplies, and maintenance of less than two tenths of a mill. If you use two tenths of a mill, you are a little higher than is obtained in some of our best plants.

That situation becomes very important from a competitive standpoint. After your plants are installed, your hydro operation can compete in its output without being out of pocket, in operating cost, very much more than a steam plant can.

Mr. Goss. You mean to say that you want to compare 2 mills with two tenths of a mill in the two different places?

Mr. DICKERMAN. Yes; that is what I would set up as a fair comparison between a modern steam plant and a justifiable hydro plant. Mr. THOMASON. Is that price based on the actual cost at the plant?

Mr. DICKERMAN. That is only the operating cost, without any interest, taxes, or depreciation.

Mr. THOMASON. No return on the investment?

Mr. DICKERMAN. No. That is the reason that people look at hydro plants as so tremendously valuable, because the operating cost is almost nothing.

So far as the investment charges are concerned, which have got to be added to those operating costs in order to get the real cost of the output, we have for several years been able to put up plants of efficient type for under a hundred dollars a kilowatt.

Mr. MONTET. Hydro plants?

Mr. DICKERMAN. Steam plants, I mean. Steam plants have been put up for less than a hundred dollats a kilowatt of generating capacity as rated by the manufacturers. I have a plant in mind in Milwaukee that has been in course of building since 1921, that is $83, and that is a high-pressure steam plant. That is a 1,200-pound pressure plant. I know a plant that was built partly before the war and partly after the war, in Cleveland, that represents only about $76 or $77. The engineers figure that they can put a standard plant up now, with a moderate amount of charges for interest during construction and engineering charges, for $75 a kilowatt. You can go into the Southern States, where you can get rid of buildings, and perhaps put the plant up for less than that. One engineer that has figured on building one in Ohio, without any buildings-an outdoor plant-thought he could put it up for $60 a kilowatt.

The CHAIRMAN. Mr. Dickerman, excuse me. We are satisfied with your expertness. Now, would you please just give us your conclusions? You have justified your opinion; now will you please give us your conclusions, so that we can go on?

Mr. DICKERMAN. Yes, sir.

Mr. Goss. Are we going to get at those further costs, or are we going to let it stand here with the operating costs?

The CHAIRMAN. His conclusions about the costs, you understand. There is no use in telling about what a number of engineers and contractors have said. Come down to the point.

Mr. DICKERMAN. I would say that we could put the plant up for $75. I would say that is a sort of standard cost. I do not expect that you could depend on its operation with an investment of only $75 a kilowatt. You will have to have some excess capacity in your steam plant in order to be sure that you can operate continuously,