Evening star., 1938-07-24
DELAY SERIOUS,
SAYSL|L|ENTHAL
Makes Statement Regarding
Dispute Over YardstiCk
Power Rates.
9y the Associated Press.


By the Associated Press.
KNOXVILLE, Tenn, July 23.-T. v.
A. Director David E. Lilienthal told
joint congressional investigating
committee today differences between
engineers and consultants over the
basis Of the authority's yardstick
power rates had serious conse-
quences."
He added, however. the conflict now
appears to have been wholly inno-
cent" asserting the friction result
ed from sharply varying theories and
methods of determining appraisals
and valuations.
He did not elaborate on the "seri-
Gus consequences" but apparently re-
ferred to delay which resulted in pre-
pairing the report on ALLEGATIONS.
In bulky prepared statements, the
witness described efforts since 1888 to
established a sound basis for alloca-
tions Of costs as to power, flood con-
troll and navigation in the authority's
system OF dams.
The report was partially delayed,
he said. by the disagreements between
advisory committees composed largely
Of university professors and T. v. A.
engineers under Dr. Arthur E. Nor
gan, recently ousted as chairman Of
the agency.
DR.. Morgan. who precipitated the
investigation by charges Of misman-
agement against Directors Lilienthal
and Harcourt A. Morgan. previously
testified Mr. Lilienthal fixed the power
rates without his consent or knowledge
and referred to them once as little
more than a guess"
Mr.. Lilienthal denied the inference
Of question that possibly the allo-
cations announced recently were
shaped to fit the power rates estab-
lshed in 1898.
He asserted virtually all the steps"
taken in computing the rates were
taken with the knowledge and ap-
proval OF the board but probably
there is not document that confirms
this"
wasn't 1t rather strange proceed
ure.' asked Representative Charles
Wolverton, Republican,. of New Jersey,
that a written report on the basis
for adoption of the rates, under which
long-term contracts were let, was not
submitted to the board with a recon-
mendation for action?"
Il agree" replied Mr.. Lilienthal,
''that the procedure was bad, but the
background Of the situation at the
time should be taken into considera-
tion. We were under pressure in get
ting started on our work"
Senator Lynn Frazier, Republican.
Of North Dakota interjected that
this committee is still confused, Mr..
Lilienthal, that you are waiting until
1888 to make a report explaining how
you fixed the rates in 1893. I think
we ought to know more about that"
Mr.. Lilienthal said he would clarity
the situation when the hearing re-
sumes Monday.
In a letter to Senator Charles l.
Monary Of Oregon last January, Mr..
Lilienthal said he explained the
r. v. AS wholesale and retail power
rate basis-without an ALLEGATION of
costs-as what q prudent business
man would pay for the Wilson Dam
property as going concern for the
production OF electricity"
Retail rates, he said, include "oper-
ating expenses, depreciation. taxes,
bond interest. reserve for new con-
struction, and amortization Of the
capital structure" He added that
amortization was one item private
utilities do not pay-"they simply re-
finance as do the railroads"