The Bismarck tribune., 1933-07-31
keeountant Is Key Man in Ef-
fort to Tighten Control
of Situation

Washington, July 31.-Thirty years
Of experience have left no doubt what
ever that the development of electric
power must 60 forward under care
full federal and state regulation.
Even leaders of the utility world
have come to admit this. They have
found certain stability in having a
monopoly of their fields, even under
regulation. Vice President William
j. Hagenah of the Edison Institute
put it this way recently to Senate
committee: " :. our business is pri-
vately owned, but it is dedicated to
public service, which fact the state
recognizes, and for that reason regu
lateS us. :"
this attitude. The struggle to get
any regulation at all has been a long
one, but today all states but seven
have commissions controlling the
electric business.
Uncle Sam Takes a Hand
It was the opening up of long-dis-
tance transmission that let the fed
eral government in on the game. AS
water power sites opened up most of
them were far from population CEN
ters, and thus power had to be sent
long distances, often across state
lines. Many were on federal land,
and many involved other questions,
such as interference with navigation
OF rivers. Thus water power brought
regulation to the door of the federal
government.
Back in 1902 Clifford Pinchot, Theo-
dore Roosevelt and the conservation
lists" began their fight to preserve
public resources to the public. This
long campaign produced the Water
Power Act of 1920 which set up a
Federal Power Commission to grant
licenses to develop power sites on
navigable waters, on non-navigable
waters where there would be anI
effect on interstate or foreign COM
merce, on public lands, or at govern
ment dams. In these cases Uncle
Sam was to have jurisdiction. It
might seem small sphere, but 1t
covers Is per cent of all water power
developments now existing, and a
higher percentage of the potential
power of the future.
When the government granted per-
mission to develop site it controlled,
It thought best to grant it for a term
OF years only, with the right to buy
the plants or release them to another
lessee at the end Of the term. That
Is recapture, and the method of de-
terming the figure at which the gov
ernment could recapture a plant in
this way has been one of the knottiest
problems of the Power Commission.
1t has also had to face continual ap-
pealS to the courts from its decisions
and even an eight-year fight on con-
stitutionality of the Water Power Act
itself.
Commission Handicapped
Under Harding, Coolidge and Hoo
yer, the charge was repeatedly made
IN Congress that the commission was
being throttled by unsympathetic
personnel and lack of funds.
Senator Couzens cried, Conditions
in the commission have become so in
tolerable that it presents one of the
rottenest exhibitions of government I
have ever heard of"
But the commission now consists
OF five full-time appointees instead
OF three cabinet members serving ex-
officio.
State regulation has become a
mass Of complications, with little uni
formity among the Al states which
regulate electric rates. One magazine
writer recently referred to this state
system as Public Futility Regula-
ton"
Reform proposals are now ringing
IN the legislatures Of Is states. Min
nesota and Vermont are considering
fixing rates by legislative action in
hope Of avoiding tiresome and ex-
pensive court appeals from commits
sion decisions. North Carolina and
oregon have appointed one-man con-
trollers of utility affairs. In West
virginia the House of Delegates has
actually adopted a resolution look
ing toward state ownership and op-
GRAFTON of all utilities lin the name
and on behalf of the people of West
Virginia"
~AOOOAMeaAt fNOW h1QK
In all these intricate negotiations,
the accountant is king. Only he can
hope to penetrate the mysteries of
the books Of great corporations and
determine whether utility is making
falr return on a fair valuation.
Everything hinges on this calculation
Of valuation.
Conflict here between two theories
OF valuation has been incessant. In
past years, utilities have usually MAIN
tained they should be valued at cost
OF reproduction new. Thus during the
years OF initiation in the '2Os, their
value, on which rates were based,
was continual y rising. Now that
costs are declining, they lean toward
the prudent investment theory"
which would value companies for
rate-making purposes at the amount
actually and prudently invested in
them.
The q. s. supreme court has re-
peatedly held that the cost of repro
duction new should be dominant
element. But there is no definite
standard, and each case presents q
different problem.
New York, for instance, has Just
launched into plan of basing rates,
temporarily at least, on the earnings
OF the companies, disregarding valu-
alton. Chairman Milo Haltby OF the
Public Service Commission calls it
frankly a shortcut" to lower rates,
seeking by cooperation with the
companies to avoid long court pro-
cedure in setting valuations