Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-09-15
VALLEY TO BECOME
ECONOMIC SCENE
Tests Made on Projected
Lower Light Shoals
Power Costs.
BY the Associated Press.

, BY the Associated Press.
The Tennessee Valley babe fair today
to become an economic battle-ground tc
test the business of the 20 to 60 per cen!
lower light bills projected for power
from Government owned and operated
Muscle Shoals.
Proposing to sell power at rates much
lower than in most American cities, the
Tennessee Valley Authority, in charge
of Muscle Shoals. has marked out 9
Rooseveltian yardstick which probably
will stir up the years-old argument OF
public versus private ownership and
operation.
Precautions Taken.
David e. Lillienthal, assigned to the
execution Of the power program, ap-
parentfy has taken every precaution to
be sure Muscle Shoals expenses will be
comparable to the expenses of a pri-
vately-Operated power plant, has al
lowed Is per cent for good measure
and then proposes an average of 90
cents a kilowatt hour. as against the
private companies average of $50 cents
to the ordinary consumer
Now competitive in only a small re-
gion ard with limited opportunity fol
geographical expansion. the Muscle
Shoals plant will be expanded with the
building of the Norris Dam so it NAV
support huge industrial empire within
the region-an empire attracted, ir
part, by low rates.
Thus, the accuracy Of the authority's
figures on costs and capitalization arr
| tremendously important to the private
utilities not only strictly as competi-
ton. but as an example which Nigh.
result in wholesale invasion of the
utility field by public-owned plants.
Lillienthal explained a tax Of pei
| cent on annual operating revenues
must be paid the State Of Alabama
and that to make taxes comparable
| with private companies he has added
per cent to equal the national aver.
age per cent of gross revenue which
private electric utilities pay in taxes
local, State and Federal
From the Governments method Of
valuing the Muscle Shoals plant OH,
| OF the principal arguments of the pri.
vate companies may arise. Lillientha
claims that in determining the pres.
ent value accredited methods have
been used and then goes on to poin.
out that the law requires ALLEGATIONS
| OF the property's value according to il.
use for navigation, flood control. fer.
tilizer, national defense and power
Thus. while power is sold on the basi.
| of the power plant valuation and MOI
the other costs. some of these othe:
| costs might be necessary in the erection
of the plant
ALLEGATIONS Not Known.
Iillienthal has not announced how thu
Muscle Shoals costs will be allocated
and no officially announced valuation
has yet been given the power plant
| An estimated figure. however. Is beint
privately used by him. arrived at OF
the basis Of what business man woull
be willing to put into similar plant
| and to this he has added Is per cent
to be sure the capital figure is sum
/ ciently high.
Another objection of private com
panies that a public plant does no
have to be operated at a profit is an
swered by Lillienthal with the explana
ton that. while the plant sells it
product at cost. as a matter Of fact i
, makes q profit of considerable size
First the fact that consumers pa,
only cost means a saving to them is ,
profit to the taxpayer, the actual owne
Of the property.
Second, provision is made for the vi
innate retirement of the entire capita
value at interest Of the project. Where
as q private company might pay divi
dends to stockholders. Muscle Shoal
! would pay back the United States tn
total value Of the property, and whel
those charges were met. 1t would turl
its earnings into still lower rates. Tn
plant might sell its power at a profit
then using the extra earnings the NOR
quickly to retire the capital.
Private companies, however. may sti
object that they have to compete a
a profit with public plant operatin
at no similar profit.
Depreciation and other business ex
penses are included in Lillienthal'
costs. so as to arrive at an apparentl
safe high cost figure.
T. V. A. Comparisons.
A list Of rate comparisons with tn
new T. v. A. schedule was issued yes
terday by Lillienthal
/ HIS figures, which he said were OBJ
| tanned from reliable newspaper sur
veys, showed that in Alabama. whicl
recently installed lower schedule. 5
kilowatt hours cost the consumer 81
as against $3.50 proposed by the Au
thority or q difference of ~ per cent
200 kilowatts $3.50. against $3.50 sug
gested by the T. v. A.. or "a per cen
lower; for 400 kilowatts, $780, a
against $3.50. a difference of "a pc
cent and 600 kilowatts, $ll00. agains
S7.30. a difference of 80 per cent. TIL
Alabama rate quoted Is now general
effective except in the city OF Birming
ham, which has a slightly higher rate
Comparisons with other cities follow