The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1934-02-12
NEWSPAPERS OPINION
TOTAL MUSCLE SHOALS PRESENT
CAPACITY CONTRACTED BY IVA

The Tennessee Valley Authority started opera
tons in June, 1888 To be sure, the aetNltieS
which theTVA took over have been under way ior
some Is years, but the IVA likes to be considered
as a newly organized. up-and-dOing branch OF the
present federal administration.
Tn. TO FEBRUARY l. 1884, the IVA had made two
contracts, and only two for acquisition of Gus
toners. Nothing more clearly illustrates the far
flung ramifcations of this enterprise than the eX-
traordnary different character of these contracts.
One was with a municipality; the other was with
three large power companies affiliated with the
Commonwealth and Southern Corporation, and the
latter corporation was also made party to the
contract.
The first contract was made with the city of Tu-
pelo Miss for the supply of power to be dlstrlb-
uted by that municipality. Among other things the
upele contract provided that electricity should be
seld in Tupelo in accordance with the standard
rate ssehedule of the IVA but this provision was
promptly nuIlifed by the inclusion of a rider which
provided that the city of Tupelo might add sur
: charge to all rates except residence rates, which
world take care of excess costs while the hoped for
increase in use of IVA electricity was being ac-
eomplkhed In other words the industrial and
commercial user of electricity is to be penalized.
ct least during the promotional period, for the
benefit of the residence user, indicating that the
charges are not to be based cost of service but
that the"rate schedule is purely political struc-
ture which gives low rates to the largest number
of voters and tacks high rates onto the customers
who have the fewest number of votes.
The second contract provides for the purchase,
at a price of approximately $3,O00,O0O of the
transmission lines and substations in few coun-
ties belonging to the Alabama Power Co., the Ten
nessee Electric Power Co.. and the Mississippi
Power: Co
Wendell, L. Wilkie, president of the Common
wealth. and Southern states that the annual gross
earnings of the properties sold amounted to APP
proximately $1,OOOOOO out of over S50,OOO,O0O
gross earnings from the southern companies in the
Commonwealth ard Southern group. In other
words the p&rchase may be considered to affect
the private Companies in the southern territory to
the extent of less than two per cent.
A striking feature of the contract is that the
IVA agrees not to enter into competition with
the privately owned power companies outside of
the acquired territory until December 81, 1885, or
until three months after the completion of Norris
dam, whichever is earlier. The power companies
also agree not to compete in the territory acquired
by the TVAfrOm the company. This seems to be
extraordinary provision until it is learned,
through q statement OF DAVID T.. LlQenCnal, QlreC-
tor of the IVA, that the territory just purchased
is expected to all of the present available pow
er from Muscle Shoals and that the IVA cannot
expand its power activities beyond the territory
acquired until new sources of power are estab-
lished.
We have here an extraordinary situation. The
government has on its hands power plant which
has cost upwards of $50 600, OOO it has purchased
from the companies territory which has yielded the
companies only $i,OOO,OOO a year in gross reve-
nue., and this will absorb all of the firm power
available at a $15OOOO,OOO plant. Bear in mind
that the $1i0oO,0OO gross received by the COM
panies at the companies rates and it is the
avowed purpose of the Twain fact it is its only
for existence-to sell energy in this terri
tory at rates much lower than the existing COM
pany rates; in which case the gross will naturally
be- under government auspices, much less than 81,
100000. tt appears that the gross earnings under
this arrangement would be less than One-half of
per cent on the money which has been invested
by the taxpayers of the United States in this
property. No figures are available as to what the
net earnings may be as there is nothing to indicate
that there will be any net earnings.
There are those who would take issue with Mr.
Liienthal in his statement that under this contract
the IVA aims to avoid the destruction of prudent
inyestment4 The Alabama Power company's inven
tory of property to beseoayeyed to the IVA, fol-
example, shows that thespresents replacement value