Evening star., 1934-10-25
PUBLIC UTILITIES
Z POLICY CHANGING
U. S. Ending Aid to Munich
paIities to Compete With
Private Companies.
BY DAVID LAWRENCE.


Evidence is accumulating that the
Roosevelt administration is gradually
changing its policy toward privately
owned public utilities.
Instead of using public funds indis-
criminately to aid municipalities to
compete with private companies. thus
forcing The latter out of business, the
Federal Government now has laid
down :hs rule that if local rates are
reduced by existing companies, there
will be no Federal money granted for
municipal construction of plants to
compete with them.
Private Company Harmed.
Hitherto, private companies have
been faced with the prospect that
eral and State taxation. would offer
low rates which could not possibly be
maintained for any length of time and
yet the private company would have
been, in the meantime, forced out of
the field
1t begins to look now as if the Fed
eral Government will examine care
fully into rates and conflicting claims
of low-cost operation when a NUM-
ripal project seeks Federal aid in COM
petition with private company.
Already, in number of instances,
the Public Works Administration has
rescinded its approval of loans it in
tended to grant to municipalities
Notable among these is the revoca-
ton of ALI allotment of $4,000, 900 on
the Verde power development in Ari-
Zona and recommendation that the
City of Columbus. Ohio, withdraw its
application for funds to finance a
power plant. The reason given in the
one case was that the investment
couldn't he liquidated in the time spe-
cifled and in the other that the Column
bus Railway. Power & Light Co. had
agreed to reduce its rates.
We make 1t a practice" says Ad-
n1lnistrator Ickes before approving
loan, to give the company an oppor-
tunity 10 put into effect rates at least
as low as those at which the NUM-
cipal system will be self -liquidating.
Several utility companies have ac-
cepted this opportunity.
A Ambiguous to City.
"1t IS obvious that. in such cases,
II is advantageous to the city and the
p, W. A. that the offer be accepted
and the applica tons withdrawn. To
make loans and grants to finance prof.
ects where the competitor offers rates
which are lower than those possible
by the city plant would duplicate IA
cilities without any social betterment
and impose on the city burden which
1t probably could not meet without
resort 20 taxation. Furthermore, the
public works will be free to use its
funds to better advantage elsewhere.
The P. w. A. will not retire from a
situation unless there is legal assur-
ance OF permanence of rates on the
new basis. but this involves the queS-
ton Of what the State utility COM
missions may have to say about such
commitments.
But the whole problem of whether
the Federal Government shall con-
tinue to subSidize local power plants
or to stimulate their competition with
the private companies depends on how
costs are figured. 1t is apparent that.
instead of taking any figures that are
offered, independent investigations will
be held and, If necessary, public hear
ings.
All this is a different approach from
that which prevailed several months
ago under the New Deal. It does not
mean that the administration has
abandoned It's policy of stimulating
local competition. but that the policy
Will not be pursued as brusquely as in
the past and that due regard will be
given to actual costs.
Cause Found in Wire.
Just what has caused the admins
Tatlon to recede somewhat from its
earlier view has not been explained,
but 1t is hardly any sudden interest
in the power companies or their in
vestors. Rather is the reason to be
found in telegram, such as was re-
ceived by Administrator Ickes from
George J. Leahy of the National Job
Saving and Investment Protection Bu-
reau for the Coal Industry, which
reads as follows:
= The coal industry of the country
mine workers and mine owners alike.
heartily approve your action in re-
voking allotment of four million dol
lars to Verde irrigation and power
project of Arizona ultimate cost of
which was estimated at $4,000, 900,
but actually determined by your board
of review to be s29, 900 900. This is
the first ray of hope that our industry
has had that there might be a let-up
IN the hydro-electric program that
threatens us with the loss of millions
OF tons from our coal markets and
thousands of additional idle miners.
Can you not consistently take the
same action in regard to Loup River
project in Nebraska, Casper -Alcova
project in Wyoming, and others
equally unjustifled by economic facts?"
There is every reason to believe the
coal industry and the miners of the
country have made their protest felt.