ELECTRIC POWER POLITICS

Making Partners of Old Competitors

WHEN Franklin D. Roosevelt was running for President in 1932, he favored using public power as a "birch rod" to control the rates of private utility companies. After the utility scandals of the early '30s, many citizens thought that the rod was needed. For the next 20 years, the Democrats made the private companies a favorite whipping boy, while the Government moved full speed into the power business. Now President Eisenhower has thrown away the rod and devised a new method to deal with the power problem. His policy: partnership.

The new partnership policy has stirred up a storm of protest from public-power supporters. They charge that it is a "giveaway" to private interests of hydroelectric resources that belong to all the people. Actually, the partnership policy simply means that the Federal Government, instead of going it alone, will act as a partner of state, local and private interests in building big new hydroelectric projects. Local funds will pay for the power features of the dams; the Federal Government will pay for whatever share is allotted to irrigation, flood control and land reclamation.

Whether power facilities shall be publicly or privately owned is left to local authorities, working with private utility companies, cooperatives and public utility districts.

The new policy means an increase in power rates, although they probably would have gone up anyway. The Administration has switched to a new formula for allocating costs of power at dams. This will boost power costs. But the biggest reason for a rise in rates is the fact that power costs of dams now coming into use will reflect the high postwar construction costs of $300 per kw. of installed capacity v. $100 prewar. Despite the protests of public-power men, the partnership program has already won favor among the potential partners. In California, local irrigation districts are ready to finance $44 million of the Tri-Dam project on the Stanislaus River. The city of Eugene, Ore. is willing to pay for power facilities for the Cougar Dam. A bill to allow local interests to develop power at Priest Rapids on the Columbia River last week went to the President for signature.

The hottest political fight is over the Hell's Canyon dam on the Pacific Northwest's Snake River, one of the last great undeveloped river valleys in the U.S. The fight started in 1948 when the Interior Department proposed a huge new dam. The Idaho Power Co. countered with an offer to build three smaller dams. They would cost only $133 million, compared to $383 million for the Government's one dam, yet furnish two-thirds as much power. The Interior Department opposed Idaho Power's application, argued that it would not fit in with overall plans for the Northwest.

When the Republicans came in, Interior Secretary Douglas McKay did an about-face. The private company plan, said he, would supply power seven years before the Government could. Moreover, as a practical matter, the Interior Department had twice been turned down on dam funds, saw little prospect of getting them. (The Idaho Power application is now before the Federal Power Commission.)

Although public-power proponents have been trying to represent the power fight as a straight Democrat v. Republican affair, both parties have split, depending on individual projects. Oklahoma's Democratic Senator Robert S. Kerr is sponsor of the Markham Ferry Dam in his state, to be built by a state authority, aided by federal funds for flood control. A bill to allow the Alabama Power Co. to build dams on the Coosa River, sponsored by Democratic Senators Lister Hill and John Sparkman, was recently passed by Congress (TIME, June 28). On the other hand, Republican Tom Dewey wants new plants at Niagara Falls to be built by the state, whereas Congress and the Administration favor private company development.

The crux of the Republican policy is that only where local interests cannot assure development of natural resources should the Federal Government step in. For example, the Administration is pushing two huge projects, which fall under this heading: development of the Upper Colorado Basin and the Libby Dam on the Kootenai River in Montana.

The partnership policy is a logical outgrowth of the changes in the private utility industry since the 1920s and 1930s. It was overloaded with promoters of watered stock and failed to supply more power where it was needed. Investment in new facilities from 1926-32 averaged only around $600 million a year. But, today, private utilities are expanding at a purposeful rate. Since 1950, more than $2 billion a year has been invested. Now that private-power men are willing to do their share in meeting power needs, the Administration thinks that they should be given a chance to do so.

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