The Indianapolis times., 1935-07-24
new UTILITIES
WAR LOOMS ON
SERVICE FEES
Section 13 to Be Forced
Into LimeIight, Capital
Now FOreSeeS.
BY RUTH FINNEY
Times Special Writer

WASHINGTON. july y Z4-Behlnd
the doors where COnferees meet this
week on the Wheeler -Rayburn util-
tiles bill. the fierccst fighting may
center not about the sO-called death
sentence but about Section 13. al
most ignored so far IN debate.
The dramatization Of the death
sentence Section II. has diverted
attention from this other provision.
involving the daily meat and drink
by which most holding companies
are nourished- service fees.
Even If Congress should finally
adopt the House provision permit
ting continuance Of holding COM
panies, the victory for the COM
panies would be a hollow one unless
their service fees were left them
as the House bill provides.
Victory a Hollow One
On the other hand even if Con-
gress should accept the Senate pro-
vision fOrbidding continuance Of
utilities holding companies as such.
except those controlling closely knit
systems Of operating companies, the
victory for the Administration would
be a hollow one unless the Senate's
Section 13. forbidding pront-making
on service fees. were also adopted
Without this section proponents
of the Administrations original pro-
gram believe effective regulation
even Of the reduced holding COM
pany units would be almost impOs-
sible.
IN the past holding companies
have derived most Of their revenues
from fees collected from their oper-
ating companies for management,
construction accounting and financ-
Ing services. The fees have been
collected by non-utility subsidiaries
of holding companies, exempt from
state regulation.
mo Profit" say Senator's
The Senate Interstate Commerce
Committee, reporting on this mat
ter, said:
Section 13 is designed to free
public utility companies of the
tribute heretofore exaCted from them
in the performance of service. sales
and construction contracts by their
holding companies and by other
companies controlled by their hold
ing companies.
Such contracts when made freely
and openly by parties dealing at
arms length are subject to the
checks incident to our competitive
system, but when dictated by hold
ing companies sitting on both sides
of the transaction are one of the
most abused devices At the pubic
utility holding company system.
Where a holding company Serv-
ices its properties it should do so
without profit except as it may de-
rive profit indirectly through the
dividends which come from in
creased efficiency and economies"
EiCher Registers Dissent
The Senate without debate adopt
ed Section 13 as recommended. pro-
vldlng for mutual service companies
in any utility system to perform
services without profit. but banning
all service fees above cost.
The House Committee, in spite OF
the fact that utility witnesses con-
demned service fees for profit al
most unanimously, rewrOte Section
IS, eliminating the ban on profits
and giving the Securities and Ex-
change Commission broad powers to
regulate fees in the public interest"
Rep Edward C. Eicher Cd, la,
in his minority report from commit
tee. condemned the provision as un-
constitutional because of its failure
to set standards, and called it un-
1t is an impossible administra-
tive task for a regulatory commits
tion to determine what is a reason
able profit where there is no ef-
fective competition and no effective
standards of competitive costs" he