Evening star., 1938-12-07
Black Charqe
Against IVA.
Given Probers
Violation of Act in
Location of Base
Offices Alleged
BACKGROUND

,pas first major social erperi-
ment of the Ne,D Deal Although
flood control 1UdS cited as pri-
mary purpose of project, the gen.
GRAFTON and distribution OF elec-
trio po1Uer has had much great
er importance. Feud 1Uithin
three-man administrative board
resulted during past year in re-
moral of Chairman Arthur E.
Morgan and wecipitated cur
rent congressional investigation.
BULLETIN.
A Tennessee Valley Authority
official rejected today the pro-
posal of Wendell L. Willkie that
T. v. A. and the Commonwealth
& Southern Corp. submit dis
puted c. & S. properties to the
Securities and Exchange Com
mission for valuation. J. A.
Krug, T. V. A. power planning
engineer. told the T. v. A. In
vestigating Committee "the Will
kie proposal is entirely unwork-
able"
He said he was "authorized to
speak not only for myself, but for
the T. V. A. board of directors"
BY the Associated Press.
An opinion once expressed by
Senator, now Justice, Hugo Black
that Tennessee Valley Authority
directors were guilty of plain,
palpable violation" of the T. V. A.
Act was offered today to congress
sional investigators by Senator
Bankhead, Democrat, of Alabama
Senator Black expressed the
opinion in correspondence with DR..
A. E. Morgan, since ousted from the
T. V. A. Craftsmanship, just before
leaving his Senate seat for the
United States Supreme Court.
In the correspondence Mr.. Black,
then Alabama senior Senator, pro-
tested against location of T. V. A.
headquarters at Knoxville, Tenn.
Senator Black contended the law
required location of the headquar-
tiers in Alabama. Senator Bank
head and Senator Hill, Democrat,
who succeeded Mr.. Black in the
Senate, asked the congressional
committee investigating T. V. A.
to find if there had been non-com-
pliance with the law.
$20,O00,OO0 Revenues Seen.
The Alabama Senators inter-
rupted testimony by J. A. Krug,
chief of T. v. AS Power Planning
Division, that T. V. AS proposed
1O-dam system would produce an
nual power revenues of $4,000 900.
Mr.. Krug added that this would
leave balance of more than So, ,OOO.-
600 a year after deduction of all
direct and allocated power costs.
This amount, he said, would be
available toward liquidating the cost
OF the Authority's navigation and
flood control program. The Krug
estimates were based on existing
rates.
The planning engineer, a power
lly-built, youthful-appearing man,
testified that these revenues were
suf1iclent to cover all of the cost of
producing and marketing the power,
including all of the special costs of
power operations, fair portion of
the common costs of the dams and
reservoirs, depreciation, taxes and
interest on the Governments in
vestment.
Costs Cover Losses"
These costs will be covered" he
continued, with g. safe margin for
contingencies and to offset losses
occaSloned during the DEVELOPMENT
period. These development losses, I
might add, were brought about
primarily by the obstructive tactics
OF the privately -owned utilities"
Mr.. Krug said the rates at which
public agencies were reselling T. v.
A. power covered all distribution
costs, with substantial margin of
safety.
1t Is now apparent, in fact, that
the present schedules are too high
for urban communities having rea-
sonable densities and reasonable
opportunity to develop their mar
kets." he added.
The engineer said the output of
the four dams now in operation
Wilson, Norris, Wheeler and Pick
wick-had a combined capacity of
100000 kilowatts. The Authority, he
said, now is selling or has committed
for sale all the energy available from
the four-dam system.
Mr.. Krug told the committee
T. v. A. had contracts with g.
resale organizations, of which 43
were municipalities and 10 rural CO.
operatives.
Our contracts with municipalities
and co-operatives have pioneered
IN establishing a fair relationship
between the taxpayer and the rate
payer in municipalities rendering
electric service. They have helped
to establish a new and higher stand
ard of public service in the growing
(See T. v. A., Page A-5.)