Evening star., 1938-03-13
Ickes Offers a War Chest
To City Rivals of Utilities
Truce Rejected, Private Interests Must Baraain
to Sell Plants to T. V. A. in Face of
Widening Competition.

tracts actually let the bureau estimated
that for every dollar spent one man was
employed for one hour as a direct result
OF the expenditure. To complete this pic
ture, the bureau also made a study and
an estimate Of the number OF hours of
employment that resulted indirectly. This
study revealed that on all P. w. A. nom
Federal projects an average of 25 man
hours Of indirect labor are created for
every man hour at the site of construc-
ton. On power projects it was found that
a. man hours of indirect labor are created
for every man hour at the site of con-
struction. This indirect labor includes
that created in the factories, mines and
quarries. where the raw materials used
are produced and fabricated, and on the
railroads engaged in transporting such
materials
The extremes Of the power projects af-
fected by injunctions are the Santee-
Cooper project, in South Carolina and the
project at Courtland, Ala.
$37,500,000 Santee Project
When completed, the antee-Cooper
project will cost s37.5oo,oO0, for which
P. W. A. has made an allotment Of s6,o0o,-
600. The latter figure is made up of
loan of s5,775,ooO and a grant of only
s225,000. This project contemplates the
combination of navigation and food
control facilities with the hydro-electric
development. Electrical energy will be
sold at wholesale to both public and private
utilities and will be transmitted over 585
miles Of transmission lines covering the
eastern half Of South Carolina and ex-
tending into North Carolina and Georgia.
The CORTLAND project represents only
the construction Of a distribution system
for street lighting, industrial, commercial
and domestic needs. The total cost will
be only $4,000, of which $4,000 is a
loan and $4,000 grant. The Alabama
community will buy its power from IVA.
: P. w. A. officials contend they have
not endeavored to encourage the construc-
ton Of electric systems that will compete
with or duplicate those of private utilities.
The fact remains, however, that compete
ton and duplication of facilities will re-
suit from all of the enjoined projects
when they are completed.
That being the case, it Is pertinent to
inquire whether the municipal plants will
be able to sell power at lower costs to
the consumer, as compared with the rates
charged by private power companies. and
still make profit for the community.
Grant Is Deciding Factor.
In considering this question it is neces-
sary to bear In mind that the municipal
plants will be financed in part with an
outright gift from P. W. A., the propor-
ton of the grant to the total cost varying
IN different cases. To the extent that the
amount of the grant figures in the pic
ture, it is, of course obvious that a private
utility cannot possibly compete with a
municipal plant.
The experience of the town of Culpeper
Va, which has the first municipal plant
to be completed with P. w. A. aid, throws
considerable light on this question.
The Culpeper plant was built in 1884
at total cost of s163,o0 This was made
up of loan from P. w. A. Of $4,000 and
grant Of s45,000. The private utility
operating in that region tried to block
the project by filing suit for injunction in
the State court, but the ultimate ruling
was in favor Of the town.
When the plant was put in operation,
on October /, 1884. the rates to the con-
sumers were about IS per cent lower than
those that had been charged by the pri-
vate utility. Since that time the utility
has reduced its rates and they are now
approximately the same as those charged
by the town and perhaps little lower in
some classifications.
That fact, however, does not mean that
the town would be as we'll or better off
had it not built its own plant.
In the first place. the grant from p. w.
A. has not proved a decisive factor in
favor OF the municipal plant Total re-
ceipts last year were roughly $50, 900 and
operating costs about $4,000, leaving an
approximate profit Of $4,000. This does
not take into account the amount allo-
Gated to the retirement of the indebted
ness on the plant, but it does indicate
that Culpeper could have built its power
system without any grant from the Fed
eral Government and still be in Just as
good position to compete with the pri-
vate utility by sacrificing its profits for
approximately one year.
Clear of Debt in ls41.
The Indebtedness on the plant. financed
at per cent interest, will be wholly re-
tired by 1s41. The life OF the plant is
about 40 years, which means that for 80
years after 1941 the difference between
receipts and operating costs will represent
clear profit to the community.
In the meantime, Culpeper has reduced
its real estate tax rate from SIPS to ST,
probably the lowest rate for any com-
parable town in Virginia. Had the real
estate tax rate been held to the old level
the town could have reduced its rates for
electricity. But since the electric rates
reach every one in the community, includ-
ing part-time residents, the officials of the
town feel it is more equitable to maintain
them and concentrate on reducing the real
estate tax.
The profit from the power plant Is
enabling Culpeper to pay of Indebtedness
for sewers, streets and public buildings. In
q few years the community will be entirely
out Of debt-something of novel situation
for any town.
Whether other communities now build
ing power plants will have the same sue