Hetch Hetchy Contract Killed

In Yosemite National Park, 143 miles from San Francisco, the waters of the Tuolumne River are dammed in the big blue lake called Hetch Hetchy. Without Hetch Hetchy, San Franciscans would sometimes have gone waterless; so would many a farm in the valley between, a land rainless four months or more a year. Fifteen years ago San Franciscans put their famous reservoir to another use. At Mocassin Creek near the valley floor they built turbines, harnessed nearly 100,000 horsepower of electricity. City-owned transmission lines carry the power to Newark near San Francisco Bay. There, 27 miles from Nob Hill, the power leaves the city's hands, enters those of big Pacific Gas & Electric, which sells San Franciscans all the electricity they use.

Seven times since 1936 the citizens of San Francisco have voted on bond issues which would give them their own distribution system, bring Hetch Hetchy juice from Newark to their own fuse boxes without help from P. G. & E. Seven times they have voted no. Reasons: 1) satisfactory rates and service by P. G. & E., 2) a faithful nucleus of some 25,000 voters who own P. G. & E. stock, 3) anti-municipal ownership propaganda by P. G. & E., 4) the $2,300,000 which P. G. & E. pays the city yearly for its Hetch Hetchy power, 7% of San Francisco's tax revenues. (P. G. & E. sells the power for a gross of $8,900,000 a year.) The voters, long satisfied with this arrangement, were last week overruled by the U. S. Supreme Court. Justice Hugo LaFayette Black (Justice McReynolds alone dissenting) read a decision declaring the 15-year-old contract between San Francisco and P. G. & E. against the law.

The law was no New Deal reform, but a ghost of Woodrow Wilson's New Freedom. When San Francisco got Federal permission to build Hetch Hetchy (in a national park), the enabling Raker Act made the condition that Hetch Hetchy power should never fall for resale into the hands of a private corporation. Claiming at first that their deal was an emergency measure, later that it was not a resale but an agency contract, the city and P. G. & E. managed to avoid the gaze of Secretary of Interior Hubert Work, drew a warning from Secretary of Interior Ray Lyman Wilbur, finally fell afoul of Secretary of Interior Harold Ickes. Three years ago Ickes forced the City of San Francisco into court.

To Public Powower Ickes, last week's decision was a clear mandate for San Francisco to go into the distribution business--"the proper method for meeting the requirements of the Raker Act." The citizens' seven previous refusals, said he, were "based in some measure upon misinformation." Instead of a paltry $2,300,000, "the city would double its income" by selling the power itself. But in San Francisco the decision caused a crisis. Mayor Rossi, his gall bladder and budget both upset, from his sickbed talked of canceling pay raises for city employes, increasing the tax rate 28-c-. Citizeness Henrietta Wright, a publicity-shy lawyers' stenographer, sued P. G. & E. on behalf of the city for $75,000,000--about what P. G. & E. has grossed from Hetch Hetchy power in 15 years. Newspapers lined up. Said the Scripps-Howard News, long in favor of public ownership, "We've got to get down to brass tacks now." Mourned the Ickes-hating Chronicle: "A hundred thousand horses . . . condemned to die."

As for P. G. & E., it said nothing. Like many another San Franciscan, its suave, cool President James Byers Black contemplated last week four ways in which San Francisco (short of shutting down Hetch Hetchy's turbines) may try to extricate itself from the dilemma. The ways:

1) Take Ickes' advice and buy Jim Black's distribution lines. This Jim Black and his faithful stockholders would oppose.

2) Write a new, perhaps less illegal contract with P. G. & E. This Ickes (and probably the courts) would overrule.

3) Get the Raker Act amended, a proposal of the San Francisco Chamber of Commerce. This Ickes and many a conservationist would oppose.

4) Sell Hetch Hetchy power elsewhere--perhaps to the publicly operated irrigation districts in the valley. This Jim Black would not oppose. It would leave P. G. & E. in control of the San Francisco market, which provides 23% of P. G. & E.'s gross. But it would shave P. G. & E.'s profits from this market, since costlier power than Hetch Hetchy's would have to come from P. G. & E.'s own turbines and stand-by plants. Last week P. G. & E. common, a Wall Street blue chip, dropped 1 3/4 points, hit a new low (31 3/4) for the year.

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