Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-04

follows:
To the Senate:
/ return herewith, without my APP
proval, Senate joint resolution 49,
ITO provide for the national defense
by the creation of a corporation Tor
the operation of the Government
properties at and near Muscle Shoals
In the State of Alabama; to author
ize the letting of the Muscle Shoals
properties under certain conditions;
and for other purposes"
This bill proposes thu tranSforma-
ton of the war plant at Muscle
Shoals, together with important ex-
pansions into a permanently oper-
ated Government institution for the
production and distribution of
power and the manufacture Of
fertilizers.
Disre garding for the moment the
question of whether the Federal
Government should or can manage
a power and fertilizer manufacturing
business, we should examine this
proposal from the point of view OF
the probabilities of success as
business, even If efficiently managed.
Such an analysis involves conSid-
Grafton of the capital invested, the
available commercial power, the
operating costs, the revenue to be
expected, and the profit and loss in
volved from this set-up. The figures
and estimates given herein are
furnished by the War Department
upon the authority of the chief Of
engineers.
Further Capital Outlay Cited.
The following properties and pro-
at11.aa aI 4y1
proposed project:
electric equipment valued at $751;
100000 being the original cost Of
1000, 900 less SIC, 000, 900 applicable
to navigation.
OBJ The steam power plant at
Muscle Shoals valued at $5,000,000
being a reduction for depreciation
of 100000 from the original cost
Of $12,000,000.
(c) Proposed further additions to
the electrical plant at Muscle Shoals
costing 100000.
Cd Proposed construction of Cove
Creek Dam with hydroelectric plant
with transmission line to Wilson
Dam, SAL ,000, 900, of which $4,000
may be attributed to food control
and improvement of navigation or,
say $4,000, 900.
(e) Proposed construction Of
transmission lines for wholesale dis
tribution of power within the trans
mission area-$40, 100000.
Q) Nitrate plants, Quarries, etc,
at Muscle Shoals which originally
cost $68, 555, 900, but upon which no
valuation is placed at present.
The total valuation of the old
property to be taken over for the
power portion of the project is there
fore $42, 1000, 900 after the above de-
auctions from original cost. The
new expenditures from the Treasury
applicable to the power business are
estimated at 500, 000, 900, less SIS, O00,-
600, which might be attributable to
flood control or total of $127, 000-
600 Of capital IN the electrical prof.
ect. This sum would be further In
creased by accumulated interest
charge during construction. AS
shown later on, several millions fur
Their would be required for modern
izing the nitrate plants. The total
requirement of new money from the
Federal Treasury for the project is
probably $100,000,000 even If no
further extensions were undertaken.
Amount Of Power Available.
Assuming the additional power
given by the construction Of the
Cove Greek Dam and the use of
steam power for five months in the
dry season each year and taking the
average load factor from experience
in that region, about 1900, 000, 900
kilowatt hours of continuous power
could be produced annually. Con-
sidered as general power business
portion of this must be held in re-
serve to protect consumers, leaving q
net Of about 1000, 000. 900 kilowatt
hours annually of salable power.
This amount would be somewhat in
creased If large proportion of "a
hour load were applied to fertilizer
manufacture.
The secondary power for a period
Of less than seven months In the
year Is not regarded as Of any pres
ent commercial value.
The following is the estimated an
nual overhead and operating cost of
the electrical end of the project, in
GLIDING the steam plant necessary
to convert seven-month secondary
power into primary power as stated
above:
Interest at 4 per cent per
annum on capital Of
sl27, 900, 900 ........... 5000 900
Amortization ......... 100000
Operating and mainte-
trio plant. ............. 775,OoO
Operating and mainte-
plant ................. $4,000
Operation and mainte-
sion lines. ............. $4,000
Total ................. SS,I4o,VOu
The estimated cost of production
and distribution is, therefore, about
81 mills per kilowatt hour. II only
part of the transmission lines were
constructed 1t would decrease capital
and operating charges, but would not
comply with the requirement. OF
equitable distribution through the
transmission area.
Estimated Gross Income.
The purpose Of the bill is to pro-
vide production and wholesale dis
tribution OF surplus power and 70
give preference to States, municipal
tiles and cooperative organizations.
It further provides that the poncy
of the Government must be to dis
tribute the surplus power equitabiy
among States, counties and munich
palities within transmission distance
of Muscle Shoals and provides for
the construction of transmission
lines to effect this purpose. Such
a transmission system for wholesale
purposes only is estimated to cost
$4,000, 900. If it is proposed to sell
power at retail to householders, then
there would need be a great increase
in the estimates Of capital outlay
and operation costs for such distrt-
button.
The average gross income Of the
power companies in that territory,
Including retail as well as wholesale
power, is about IL mills per kilowatt-
hour. This includes retail reSiden-
tial power averaging something over
so mills per kilowatt-hour. Miscel-
laneous industrial power realizes
about 10 mills per kilowatt-hour.
FnI,n y@o,vav cold Wholesale IN other