Montana labor news., 1944-03-30
VOTE SCHOOL ELECTION april |
PURPOSE OFPOWER COMMISSION EXPLAINED
In OPENING STATEMENT OF ATTORNEY

The high light of the hearing which is
being held at the Federal building con-
cerning the method of accounting en-
ployed by the Montana Power company,
and which hearing was brought by the
Federal Power Commission, was the
opening statement of Attorney Goldberg
Of the staff Of the Federal Power Com
mission. Excerpts from his opening state
ment throws a good deal of light on the
ultimate purposes Of the hearing. He
said in part:
Commission counsel think its import
ant at the outset that it be made clear
that there is no issue here as to the
present fair value of the company's
property or even the value of the COM
pany's property That value, whatever
it may be, less or more than real cost,
is neither material Or relevant to the
issues in the case.
Il think it may be said that this case
has its roots in the Federal Trade Com
mission investigation which was under
taken in 1923 and which lasted for some
seven years. That investigation, which
eliminated in a report to the Congress
Of the United States in 1885 by that
commission. revealed numerous abuses in
the utility industry detrimental not only
to consumers but to the investors.
Chief among the abuses was the wide
spread financial manipulations and ex-
ploitation whereby the plant accounts Of
utilities We're written up Or inflated at
least a billion and half dollars, the
initiation being balanced and evidenced
lfor the most part by the issuance Of
water securities.
The Trade Commission recommended
Ito Congress that remedial legislation be
enacted at once to correct these practices
and to prevent their REPETITION in the
future AS a result of this report, Con-
gress undertook consideration of appro-
pirate legislation and probably many of
you are familiar with the attempt to
prevent the enactment of that legisla-
ton
Eventually the Public Utilities Act of
1885 was passed Titles 1 and Of that
Act are the present Federal Power Act
under which this proceeding has been
instituted. Section 301 of the Federal
Power Act confers upon the Federal
Power Commission comprehensive ac-
counting authority and Section 2O8 of
that Act expressly carries the mandate
of Congress for the ascertainment of
the actual legitimate original cost of
utility property.
The system of accounts prescribed by
the Federal Power Commission, and that
prescribed by the state commission, re-
quire the utilities to determine the real
cost of construction OF their property;
the real cost of acquiring such properties
in arms length transactions, and further
requires the segregation of initiation in
utilities accounts by whatever means
such initiation may have been pumped
into the accounts
THE initiation and the excess of ac-
QUESTION costs in arms length trans
actions over original costs are required
to be put in adjustment accounts where
they become subject to disposition as
the Commission may, by order, approve
or direct after notice and opportunity
for hearing has been accorded all in
terested parties.
THE system of accounts prescribed by
the Commission has been subjected to
court test more than once, and it has
been upheld in every instance.
The cost with which the Federal
power Commission is concerned and with
which the staff of the Federal Power
Commission in this case is concerned is !