Evening star., 1932-10-18
POWER COMMISSION
Halls COST RULING
Decision Clears Way for
Rapid Disposal Of Many
+ Pending Cases.

with the refusal of the United States
Supreme Court to review an appeal OF
the Clarion River Power Co.. challenging
the right of the Federal Power Com
mission to determine the net costs OF
hydroelectric power projects built Under
Federal license. the way was cleared to-
day for rapid disposal of many cases
pending before the commission in which
the commissions authority had been
challenged
Oswald Ryan, the general cour-el OF
the commission, said today that in
practically every case coming unoer
Federal Jurisdiction, power companies
had protested the right of the commits
sion to determine net investment costs
a. basis for ratemaking and recapture
Purposes.
Authority Contested.
The Clarion company, after building
River in Pennsylvania, filed with the
Federal commission a statement Show
ing it had cost $11 100000
The commissions accounting depart
ment, however, recommended the elm
ination Of approximately $4,000, 900 from
the cost estimate. After the case had
been set for hearing before the COM
mission, the power company filed suit
in District Supreme Court, contending
the commission had no power to ascer-
tain the actual net Investment of a
project unless the Government sought
to acquire title to the ltroject at eXpira-
ton Of the 50-year LICENSE period.
This suit was dismissed by the Dis
trict. Supreme Court, which action was
affirmed by the District Court of Ap-
peals. In the latter decision an opinion
was handed down stating it was neces-
sary for the power commission to de-
termiue net investment because Of its
importance in ratemaking. The appellate
court held that this was an admins
trative function Of the commission. The
decisions were approsed by the Supreme
Court yesterday.
Commenting upof the decision, Gen
eral Counsel Ryan sAid:
IF the decision OF the Supreme Court
had been against the Federal Power
Commission in its right to determine
net investment, thr Federal power act
would have been destroyed by that de-
cision and the Federal Power Commis-
sion might as well have closed its
doors"
Smith Halls Decision.
Chairman George Otis Smith hailed
the Supreme Court decision as highly
satisfactory to the commission, in that
1t removed the oily obstacle to the
commissions carrying out the evident
intent Of Congress"
In the opinion Of legal experts of the
commission, the decision means that
for the first time In the history of Fed
eral regulation Of utilities reproduction
new" costs will be thrown out as a basis
for determining rates and In its stead
actual net investment will be the prime
factor. The courts decision has far
in that the Power Commission has
supervision ever rates. services and
securities Of Federal licensed projects
in all States in which there are no
State regulatory authorities.
Chairman Smith disclosed today the
Clarion River Power Co. faces the pos
sibility Of losing It's Federal license, due
to failure to report its acquisition by
the Pennsylvania Electric Co. BY a
manipulation within the family" Of the
Associated Gas &c Electric Co., the Clar-
ion company was 'foreclosed" against
by the Pennsylvania Electric Corpora
ton. its parent company, which in turn
sold" the company to the Pennsyl-
vania Electric Co.. another OF its sub
sidiaries. All three companies are
owned by the Associated Gas d Elec-
trio Co.
Other Projects Affected.
In defense Of the transaction and to
avoid the possibility Of its license being
revoked, the Clarion company contend
ed that its transfer had not been volun-
tary and that it was foreclosure pro-
cedure. The counsel for the commission
claimed it was a mere stock transfer
within the Associated Gas & Electric
Co. in support of which they pointed
to the fact that whereas the actual
sale price had been $6,000000, the, cost
had been booked on the accounts OF
the Pennsylvania Electric Co. at
5000, 900.
other important projects affected by
the Supreme Court decision include the
Alabama Power Co.'S Mitchell Dam
project and developments Of the Co.
Lexington Electric & Waterpower Co.
In all these questions were raised as to
the legality Of the commission determin-
ing net investment cost.
In another important decision az
fecting the power industry, the Power
Commission itself ruled yesterday that
the New River in Virginia and West
Virginia is navigable and that, there
fore, the Appalachian Electric Power
Co., which is constructing a hydro
electric plant near New Radford, must
come unde- the commissions jurisdic-
ton. The power company, contending
the river was 'non-navigable," filed suit
against the commission in the United
States District Court at Norfolk, Va,
contending the commission had no jur-
isdiction in the matter.
Oral arguments were heard last July
10 and the commission today filed q
brief asking dismissal of the case.
The New River case had been con-
fused considerably by various opinions,
some of which held the river navigable
and others non-navigable. This was
the first time the present commission
had ruled in the matter.
PINcH.PENNY POLICY