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Hoover Commission Said To Favor Destruction of Public Power, Resulting in Cost Increases
By A. ROBERT SMITH
Mail Tribune Correspondent
Washington (Special) A ma
jor shift in the method of future'
development of Pacific North
west hydroelectric dams was rec
ommended to Congress today by
the Hoover Commission on gov
ernment reorganization.
Basically, the commission came
out strongly for divesting the
federal government of much of
its role in developing the Colum
bia River system, as it has for
more than 20 years in building
Bonneville, Grand Coulee, Mc
Nary, Hungry Horse, Chief Jo
seph and other major multiple
purpose projects. The commis
sion favored shifting this role
generally from the federal to the
local level, and to a great extent
from public power to private
power companies.
The 11-man commission ap
pointed by President Eisenhower
and headed by former President
Hoover called for;
1.. Creation of a regional pub
lic corporation with jurisdiction
to develop all future power proj
ects needed by the Pacific North
west from its great Columbia
River system. The corporation
would have to get congressional
authorization of each dam it
planned to build, but it would
Medford
Tribune
Second Section MEDFORD, OREGON, THURSDAY, JUNE 30, 1955 Pagesl-6
have authority to sell revenue
bonds or other securities to pri
vate investors to finance these
new projects. This would end the
method employed over the years
of asking Congress to appropri
ate the funds needed to build ad
ditional dams.
Discontinuance o f building
government transmission lines
and of giving preference to pub
liv power agencies, such as rural
co-ops, PUDs and municipalities,
in delivering the power from
federally-built dams. This pub
lic preference clause, which the
commission wants repealed, has
been the keystone of the public
power movement for many
years.
The commission charged that
the public preference clause has
caused "serious inequities and
discrimination between the citi
zens of the various states." It
pointed out that because of the
strong public power movement
in Washington state, about 85
per cent of power generated by
federal dams in the region goes
into Washington and only about
15 per cent into Oregon, where
private power companies are
more prevalent.
The Hoover recommendations
were based generally on findings
made by the commission's task
force on water and power which
held hearings in Portland last
June. The Northwest representa
tives on, that task force were
Robert W. Sawyer, retired pub
lisher of Bend, Ore., and William
D. Shannon, Seattle engineer. .
While the task force report
was not immediately available,
it was understood to have in
cluded a recommendation that
all existing federal dams be
either leased or sold outright to
private interests in order to get
the government out of the power
business expeditiously. The full
commission turned thumbs down
on this idea, saying that "the
problem of ending, the present
government operations in com
petition with private enterprise
in the power field . . . cannot be
solved by simple recommenda
tion that such activities should
cease or be sold."
"We do not entertain the idea
of the sale of dams and their
power houses," the commission
declared. "These dams also per
form highly important services
to irrigation, navigation and
flood control which must remain
federal responsibilities."
In a related field, the commis
sion came up with two other pro
posals bound to stir new contro
versy in the Pacific Northwest.
It recommended that Congress
impose user charges on ships
using the Columbia River and
other inland waterways that have
been . improved for navigation
purposes at government expense.
Also, the commission recom
mended increasing the size of
land holdings any farmer . may
own to be eligible lor Irrigation
from federal reclamation proj
ects. The present limit Is 160 J The commission's report made
acres, designed to give small
family sized farms the benefit of
reclamation development.
What reaction the Eisenhower
administration may have to the
Hoover report remains to be
seen, for it was sent directly to
Congress.
But one aspect of the commis
sion report on power is expected
to be greeted favorably by the
administration an open en
dorsement of the "partnership"
power policy. The commission
suggested that "private enter
prise be offered the opportunity
to provide the capital for the
electrical component of multiple
purpose dams and dispose of the
power through their own sys
tems, but the management of the
dams should remain in the fed
eral government."
The Hoover group said times
have changed since Hoover dam
was built back in the days when
such giant undertakings were
"beyond the financial and tech
nical strength of private enter
prise." Since then, private cap
ital has grown tremendously, the
commission reported, so that
"financially .there is no present
or prospective need for federal
financing of power activities."
it abundantly clear that it was
striving in various ways to re
duce what it regarded as an
'unfair competitive" position
held by public power over pri
vate power. In suggesting that
the preference clause be knocked
out, it made a major move in
this direction.
Another major recommenda
tion in this connection would re
quire the federal government to
make payments in lieu of taxes
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A.rfv'e IS M. Central Medford. Ore.
tnckxed find 51 Dpwn toymen. Please Hold For Me I
6-Pc loggoge Set wHk 2 Uggege Covert included. All; I
complete with oN festerae OS oaVertiiod. one! o for J29.'B8 I
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to state and local governments
for power facilities in the area
that are, of course, not taxable.
These payments, the commission
said, should be equivalent to the
taxes paid by local private power
companies. The commission also
wanted the interest rate charged
by the U.S. Treasury on funds
invested by the government in
power facilities increased from
2Vi to 3 per cent.
Both these recommendations,
if followed, would have the ef
fect of forcing a sharp increase
in the power rate charged by
Bonneville Power Administra
tion for the kilowatt output of
government dams.
Although it did not formally
recommeriti it, the commission
spoke favorably of interstate
compacts which would invest the
states with power to build new
power dams. It simply indicated
any of these shifts away from
federal control would be desirable.
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