In subjection (b) the present proviso that those intending to undertake projects on a nonnavigable tributary of a navigable stream may in their discretion file declaration of such intention with the Commission is changed so as to make it a duty to file such a declaration before proceeding with the construction, maintenance, or operation of any project on such waters. Furthermore, a provision is inserted expressly making it unlawful to construct a project on any navigable waters without a license granted pursuant to the act. This latter provision is in substance the result achieved by the River and Harbor Act of 1899 when read with the Water Power Act. It is thought desirable to bring together the regulations dealing with power projects in a single act. Under this section, as amended, every person intending to construct a project which might conceivably affect any navigable waters would be under the duty of coming to the Commission. The act would be greatly strengthened by enabling the Commission to preserve control over all projects with which the Federal Government has any valid concern. Section 211 of the bill, by amending section 24 of the act, would secure to the Commission control over the use of lands of the United States included in proposed projects. As the law now stands, such lands may be opened for other uses by the Secretary of the Interior upon a Commission determination that their value for purposes of power development will not be injured or destroyed thereby. The amendment would authorize the Commission to determine the purposes for which, and the restrictions under which, such lands may be opened and so to protect future power developments against payment of excessive damages. There is also added a proviso securing to the Commission the administration of the laws affecting permits and rights-of-way on lands of the United States or waters under its control for power purposes, except as such administration is reserved to the several departments under the provisions of the act. Section 25 of the present act carried a general penalty clause, but, in view of the more comprehensive penalty section in the new title to be added (sec. 314, p. 137 of the bill), the present section 25 should be repealed. An appropriate amendment will accordingly be submitted for this purpose. The CHAIRMAN. You may proceed with your statement. Mr. DEVANE. I am passing now from the first title II, on page 78 of the bill, to the second title II, on page 104 of the bill, which is the title that has to do with the regulation of these operating utilities. What I have to say of title I of the bill is simply this: I think you can illustrate a holding company, more or less, as a pasture fence that is built around groups of these utilities, here and yonder, scattered all over the country. Now, title I of the bill proposes to tear down that pasture fence and to turn the stock loose, that stock being the operating companies. These holding companies, as ( has been pointed out to you by Dr. Splawn, are sprawled all over the United States. Electric Bond & Share alone, for illustration, operates in 36 States of the Union. There is, to a certain extent, some integration between the companies that Electric Bond & Share own, but there is no integration in its entire system. Here it has built a fence around a group of companies, we might say, in Massachusetts, and another group in Texas, and another group in Florida, and another in Montana, and another in Indiana, and that is the way it is done all over the country. In other words, it operates in 36 States of the Union. Now, we propose to tear that fence down and to rid those companies of that holding-company control, and to let the holding company, if it is to exist, operate an integrated system; that is, a system in a particular district. Title II provides that as you tear down this fence you shall place in the Federal Power Commission supervision over the integration of these operating companies into strong regional systems. That is one of the reasons why I think title II is important in connection with title I. Title II has other matters to commend it besides that, but it does seem to us it would be most unfortunate if you were to enact legislation that would strike down the bars that now surround those operating companies, in these groups all over the country, and leave the operating companies to integrate in the interest of the financial center in New York and in Chicago, and not in the public interest. And it is that that we are attempting to accomplish through title II. Now, if you will bear with me for a minute, I should like to make reference to the previous consideration given to this matter by the Congress. First, I wish to refer to the Simms bill, H. R. 12776, introduced August 19, 1918. This bill contained no provision for the regulation of rates. It was a war measure intended to give the Government authority to require physical connection and the pooling of power resources for war uses. The bill authorized the Government to construct properties, to loan money for the construction of properties, to compel physical connections, and to take over properties if and where that was necessary. Next was Resolution No. 80, under which hearings were held to consider appropriate legislation to regulate the transmission of electric energy in interstate commerce. Hearings were concluded in connection with this feature of that resolution on March 5, 1930, out of which grew the Couzens bill, to which I shall presently refer. Next was Senate Resolution No. 83, passed in 1928, which authorized the Federal Trade Commission to make an investigation of the electrical industry, about which Colonel Chantland testified yesterday. Next was the Couzens bill, S. 3869, introduced March 12, 1930. Next was the Parker bill, H. R. 11408, introduced in the House about the same time the Couzens bill was introduced in the Senate. Next was House Resolution No. 59, adopted January 19, 1932, under which Dr. Splawn made his investigation and report on holdingcompany practices. Senator HASTINGS. What happened to the Couzens bill? Mr. DEVANE. It never passed. Next was the Executive order of the President, dated August 19, 1933, designating the Federal Power Commission as the agency to make the power survey authorized by section 202 of the National Industrial Recovery Act, approved June 16, 1933. Next was Senate Joint Resolution No. 74, approved April 14, 1934, authorizing an investigation by the Federal Power Commission regarding rates charged for electric energy. Now, that presents a rather strong array of investigations and considerations that have been given to this matter in the past, and constitutes, we think, sufficient information upon which the Congress can pass legislation of this character. I should like to give you a picture of this operating industry. Much of the statistical data that I shall submit has been taken from the preliminary report of the Federal Power Commission on domestic and residential rates in effect January 1, 1935, in cities of 50,000 population and over, and the national power survey interim report of that Commission. The national power survey was undertaken by the Commission at the direction of the President under the provisions of Executive Order No. 6251, dated August 19, 1933, which is the Executive order I have just referred to. This is the first investigation of its character ever undertaken on a national scale by public authority, and much valuable information is contained therein. The electric-rate survey was undertaken by the Commission as directed by Senate Joint Resolution No. 74, approved April 14, 1934, to which reference was just made. Copies of these reports have been furnished to each member of the committee. The preliminary report on domestic and residential rates in effect January 1, 1935, graphically shows the wide variation in the rates in cities of 50,000 population and over in the United States. Supplemental reports will show the variation in rates in all cities and communities in the United States. The national power survey interim report presents an analysis of the relationship between the Nation's power requirements and the generating capacity of existing power plants. It shows by districts the shortages and the surpluses of power that may exist upon a resumption of normal industrial activity. There are at present approximately 3,500 electric utilities in the United States, of which 1,900 are municipal and 1,600 are private. The 1,900 municipal utilities produce between 4 and 5 percent, and the 1,600 private utilities produce between 95 and 96 percent of the total power produced. The size of the companies varies from one serving a few customers to one system serving over 2,000,000 customers; from companies supplying a few kilowatt-hours to one supplying over 5,000,000,000 kilowatt-hours annually; from one serving a small community to a system with plants in several States. The total capacity of electric generators installed at the end of 1934 operated by private and municipal utilities was approximately 33,800,000 kilowatts. About 1,500,000 were operated by railroads and street railways and about 9,500,000 were operated by industry, making a total of 44,800,000 kilowatts. The power survey interim report covers 412 operating companies, representing companies each of which produce 25,000,000 kilowatthours or more per year. These consist of 21 municipal systems of that size and the 391 private companies combined into 194 operating systems as distinguished from companies. These 215 systems produce about 96 percent of the total power produced in the United States. They operate in round figures an installed capacity of electric generators of 9,000,000 kilowatts in hydroplants and 22,600,000 kilowatts in steam plants. Relative to the specific question of interstate transmission of power, we have analyzed these 215 systems and have prepared a statement for the year 1933 of the power transmitted across State lines. In the very early days practically no power, or very little power, was transmitted across State lines, but with the expansion of transmission this transfer increased fairly rapidly. Senator HASTINGS. Will you tell me what you mean by the word "system"? Mr. DEVANE. Yes. System means several companies that are under one control. Senator HASTINGS. Of a holding company? Mr. DEVANE. Not necessarily of a holding company. The 215 systems that we are talking about include every municipal plant, every independent plant, and the properties of the holding companies. There are between 70 and 80 holding companies. Senator HASTINGS. Give me an illustration of what you mean by the word "system". Will you give me a definition of the word "system"? Do you mean one company owning several plants, for instance? Mr. DEVANE. Yes; that would be a system. Senator MINTON. Would generation, transmission, and distribution all be in one system? Mr. DEVANE. Yes; that would all be included in the system. What we are attempting to deal with here is to divide these companies into groups where they belong. If it is a municipal plant owned by a municipality, that is a system. If it is owned by the American Water Works & Electric Co., that is a system. And it may take in there a great many different companies and different plants. Senator MINTON. All right. Mr. DEVANE. Authoritative data do not seem to go back to 1928, when 10.7 percent of the total power produced was transferred across State lines, and in 1929 it was 11.8 percent. In 1931 it had increased to 14.2 percent, and in 1933 to 17.8 percent. Proper interconnection between these systems would tend to greatly increase the percentage. I have here a table which shows the amount of energy transmitted into and out of each of the States of the Union, which table I should like to have incorporated in your record. The CHAIRMAN. That may be made a part of the record. (The three-page mimeographed statement entitled "Interstate Electrical Energy Transactions during 1933, data taken from reports of 215 systems ", is here made a part of the record, as follows:) Interstate electrical energy transactions during 1933 As the data included in this tabulation are for the 215 large systems only and as they involve transactions with smaller systems not included in the tabulation it is impossible to reconcile figures of "Generated", "Received", "Delivered", and "Available for systems within State." |