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Mr. KELLOGG. If they have no rural lines, that would be the case. Mr. BIDDLE. And you think that is a fair basis of assumption? Mr. KELLOGG. The city lines appear to be very similar.

Mr. BIDDLE. What are the city lines, your 390 and 30? The rural lines are 267, of which Tupelo has none. Do you still stand on your statement that this difference must have been obviously furnished by a subsidy, even in view of the very wide difference of the two?

Mr. KELLOGG. Yes; I think that is a fair statement. The effect of the rural lines in Las Cruces, which of course as I said would tend to raise its cost per kilowatt above the national average

RELATIVE MILEAGES OF TRANSMISSION LINES

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Mr. BIDDLE. I am not speaking of the national average now. comparing these two operations. How about the investment in transmission lines, now again referring you to the Tupelo report, how many miles of transmission lines are there shown in the investment in transmission?

Mr. KELLOGG. Zero. It says "City of Tupelo owns no transmission lines."

Mr. BIDDLE. Owns no transmission lines. And what is the investment in transmission lines in the city of Las Cruces? Is that the correct figure, $191,406.90 [indicating]?

Mr. KELLOGG. It is, including substation equipment. It is not solely lines.

Mr. BIDDLE. That is part of the total investment for the city of Las Cruces, that does not appear. There is another difference of $191,000, which increases your investment in Las Cruces as against your investment in Tupelo, which you say are both fairly comparable, is that right?

Mr. KELLOGG. I would have to look to see.

Mr. BIDDLE. I will come to substations in a minute, and we can add that also.

Mr. KELLOGG. Well, that is, you have that corrected by the substation investment, of course. Of course, if they had no substation, that is one other thing that the T. V. A. furnished.

Mr. BIDDLE. But the substation is included in that figure of $191,000, there is a substation in Las Cruces, but that is included in the $191,000 figure, is it not?

Mr. KELLOGG. That is right.

Mr. BIDDLE. Now, do you find any substation in the Tupelo: report? The switchboard is there, but no substation.

Mr. KELLOGG. It just says "switchboard only."

Well, then, that is something which the T. V. A. furnished to Tupelo, and is the sort of thing which I referred to a moment ago, saying that I did not know where the difference came from, but the difference must be accounted for by things of that sort.

Mr. BIDDLE. What do you mean, something is furnished. What did T. V. A. furnish to Tupelo, that you said it furnished?

Mr. KELLOGG. I assume that if Tupelo had no substation of its own, and yet got current from the T. V. A., that it must have gotten it from a T. V. A. substation.

Mr. BIDDLE. Isn't there any substation through which current comes to the Las Cruces system, which may not be in that calculation?

Mr. KELLOGG. I should say not, I should be pretty definite about that, I should doubt that. I don't know, or I can't conceive of any other substation except the one in Las Cruces which steps the voltage down from the transmission voltage to the useable voltage in the city. Mr. BIDDLE. Why didn't you take out the transmission system. before calculating these figures, out of the Las Cruces investment? Mr. KELLOGG. Simply because I wanted to compare the two situations directly as they were, as they reported themselves.

Mr. BIDDLE. Wouldn't it have made it more comparable if you had taken out the transmission lines which don't exist in Tupelo? Mr. KELLOGG. It might have helped to explain this large difference. Mr. BIDDLE. It would have been more accurate, would it not? Mr. KELLOGG. It would have accounted for part of it, which I must say was difficult to account for, although I assume that anything which Tupelo did not furnish must have been furnished by the T. V. A.

Mr. BIDDLE. How about the 267 rural lines that don't occur in Tupelo, don't you think that it would have been fairer to take out that investment to make the comparison more accurate?

Mr. KELLOGG. Not necessarily. There is a good deal of difference in the way people classify rural lines; I don't know how Tupelo does that.

RELATIVE TOTAL WIRE MILEAGES

Mr. BIDDLE. Do you know how many miles of distribution wire the Messilla Co. uses?

Mr. KELLOGG. Not except from that report; no.

Mr. BIDDLE. I wonder if it gives it in that.

Mr. KELLOGG. That is the Tupelo report right there.

Mr. BIDDLE. You didn't take that into consideration?

Mr. KELLOGG. No.

Mr. BIDDLE. Isn't that a very important consideration?

Mr. KELLOGG. Yes; except that a given amount of sales, if that was made with a very small amount of lines, it would probably show much greater density in one city than in the other.

Mr. BIDDLE. Would you say that the amount of wire in both cities is approximately the same?

Mr. KELLOGG. Evidently it is not from the difference of pole line mileage reported in those two reports.

Mr. BIDDLE. I show you these reports, this report on Las Cruces, and direct you to the figure showing the amount of wire, how much is there?

Mr. KELLOGG. The total wire mileage is 1,210 in Las Cruces.

Mr. BIDDLE. Then I am showing you the comparable figure in the Tupelo, which is what?

Mr. KELLOGG. As reported, it is 102 wire-miles.

Mr. BIDDLE. So that the investment in wire, in Las Cruces, is about 12 times as great as that in Tupelo, is it not?

Mr. KELLOGG. It is according to these reports, and I don't know how much is included in that thing.

Mr. BIDDLE. Are you questioning the reports of the Federal Power Commission of the company which I understand your system owns? Mr. KELLOGG. No; I am not questioning those, but I am just wondering how there could be any such difference as 10 to 1 on wire mileage, on anything resembling the same kind of service.

Mr. BIDDLE. You question those figures, then, do you?

Mr. KELLOGG. I just don't know the answer, and I can't account for those differences.

Mr. BIDDLE. The difference is very substantial, as to investment, isn't it?

Mr. KELLOGG. Yes.

Mr. BIDDLE. And would very substantially change the accuracy of the comparison, if the figures are correct?

Mr. KELLOGG. It would depend entirely upon what was done, and I don't know what has been done outside of Tupelo, if that was furnished by T. V. A., and the city of Tupelo relieved of that normal extension which most utilities feel it desirable and necessary to do outside of their city limits, that would make that difference.

Mr. BIDDLE. You think that T. V. A. may have paid for those distribution lines, is that what you meant?

Mr. KELLOGG. Yes; but I don't know. I just don't know.

Mr. BIDDLE. You don't know about that?

Mr. KELLOGG. No.

Mr. BIDDLE. You didn't inquire?

Mr. KELLOGG. No; the record is quite meager on things of that sort, as you know.

Mr. BIDDLE. You wouldn't expect differences in plant costs, and operating costs, in such very marked differences of transmission lines and distribution lines?

Mr. KELLOGG. Yes; but you wouldn't necessarily know how to account for them.

Mr. BIDDLE. Well, then, why do you think that the comparison is fair, when those very marked differences in investment appear on the record itself?

Mr. KELLOGG. I don't know how it was done, but I don't believe that the age of miracles has come yet, and I think that there must be some explanation for it, which is not evident on the surface.

RELATIVE CUSTOMER DENSITIES PER MILE

Mr. BIDDLE. What is the customer density for the two cities?
Mr. KELLOGG. In respect to what?

Mr. BIDDLE. Customer density per mile of line?

Mr. KELLOGG. Well, it would be, I can figure that out.

Mr. BIDDLE. That will make a great difference in the cost, or the operating cost, would it not?

Mr. KELLOGG. Yes; it would have made more difference; yes; it would make some difference in the operating cost, you see.

Mr. BIDDLE. A very substantial difference, wouldn't it?

Mr. KELLOGG. That was 1,201, the mileage, wasn't it?

Mr. BIDDLE. Yes, that is the figure.

Mr. KELLOGG. How many to the mile in Tupelo?

Mr. BIDDLE. Yes.

Mr. KELLOGG. In Las Cruces it is 1.86, and in Tupelo

Mr. BIDDLE. I want the per mile of line, I think that that would be a simpler comparison per mile of line.

Mr. KELLOGG. What was your miles of line in Tupelo?

Mr. BIDDLE. Thirty, wasn't it?

Mr. KELLOGG. The customers per miles of line for Las Cruces, figures out to 7.2,and for Tupelo, it figures out at 51, approximately. Mr. BIDDLE. Well, that is quite a difference, isn't it?

Mr. KELLOGG. Certainly it is.

Mr. BIDDLE. And you said a minute ago, that that was an important consideration, and why didn't you in giving these statistics to the committee, why didn't you give that important consideration of density per mile, which you said was so important a while ago?

Mr. KELLOGG. Well, I didn't have those figures, that is why. Mr. BIDDLE. Wouldn't it have been very helpful in illustrating your conclusions to have those figures for the committee?

Mr. KELLOGG. Not necessarily; I think that it would have shown the same differences that I was unable otherwise to account for, in the differences that I did show.

Mr. BIDDLE. That explains a good deal of the difference, the density, does it not?

Mr. KELLOGG. Yes; it does; but it still doesn't explain the failure of the Tupelo figures to take care of its farm population, which is quite surprising.

OTHER CASES OF COMPRESSION

Mr. BIDDLE. Now, I think that you had the average investment for kilowatts, through the country, and the average, what figure was that? Was it 307?

Mr. KELLOGG. It was 307, exclusive of generating capacity. That is $307 per kilowatt.

Mr. BIDDLE. That covers exactly what-it covers transmission? Mr. KELLOGG. Transmission, distribution, and general expense, and general plant, and things like buildings, and everything except generating plant.

Mr. BIDDLE. Well, now, where did you get those figures?

Mr. KELLOGG. I got those from the statistical reports of the Edison Electric Institute.

Mr. BIDDLE. That covers transmission, distribution, and what else, did you say?

Mr. KELLOGG. Everything except generating.

Mr. BIDDLE. Everything but generating?

Mr. KELLOGG. Yes.

Mr. BIDDLE. What is the figure for distribution, can you give us that?

Mr. KELLOGG. Let me explain that. I have that in four categories, substations, generating, distributing, and miscellaneous. On distribution alone, this is an average for 17 years, ending in 1937, countrywide. The distribution is 29.7 percent.

Mr. BIDDLE. How much is it in dollars? You gave it as $307 for all.

Mr. KELLOGG. That is a derived figure.

Mr. BIDDLE. I understand, and now could you derive a similar figure for distribution lines only, so that we could have it on the same basis for comparison with your figure.

Mr. KELLOGG. That would be $119, approximately.

Mr. BIDDLE. That is $118?

Mr. KELLOGG. Yes; pardon me.

That is $118.

Mr. BIDDLE. And that $118 represents the average annual investment in distribution lines, is that correct?

Mr. KELLOGG. As distinguished from the other miscellaneous investments.

Mr. BIDDLE. Now, what is the amount invested in distribution lines of the city of Tupelo? I think that you will find it is $95 on page 10 of your own statement, will you not?

Mr. KELLOGG. Yes, $95.

Mr. BIDDLE. So you didn't want us to compare $307, the former figure that you gave? Is this figure of $95 very comparable, and not very far off?

Mr. KELLOGG. It is not very different, but, of course, I do not know how much Tupelo gained from other things furnished by others, and that I can't tell.

Mr. BIDDLE. I understand, that you are basing your testimony on what Tupelo has actually invested in distribution lines, and that compares favorably with the average national investment in distribution lines. No doubt you are not now taking into consideration those subsidies which you expect, but do not know, and that is a perfectly fair answer, but that is a fair comparison on the book figures which Tupelo has invested in distribution, isn't it? In other words, the comparison is not $307 to $95, but $118 to $95?

Mr. KELLOGG. Yes; except that other companies can't get along without these lines, and they can't have the distribution alone.

Mr. BIDDLE. Did you wish us to compare the $300 figure, to $95, or what other figure was it used with, or for what other purpose was it used except to compare $300 with $95? Was it used for any other purpose?

Mr. KELLOGG. Simply to show, as I tried to be perfectly frank in stating, a great deal of investment which anybody else would have required outside of power plant to deliver electric service, which didn't appear to be in Tupelo, and where it came from, I don't know. Mr. BIDDLE. You used a figure, which excluded everything but generating costs, to compare to a figure which included nothing but distribution lines, is that correct?

That is correct, isn't it?

Mr. KELLOGG. If that is the case; yes; and I assume from the reports

Mr. BIDDLE. I have given you the reports, and I have tried to check them as closely as I can.

Mr. KELLOGG. I am still not satisfied that it is an adequate comparison.

Mr. BIDDLE. You say that the comparison doesn't come out your way, so that there must be a subsidy, isn't that what you say? Mr. KELLOGG. Not "my way."

Mr. BIDDLE. But the difference is so great, that there must be a subsidy.

Mr. KELLOGG. Right; I don't mean my way, I mean from what the statistics show.

Senator FRAZIER. I think that the difference is that in one case the subsidy went down to the people, and in the other case it went to the stockholders of the old-line company.

Mr. KELLOGG. That is an average all over the country.

Senator FRAZIER. Of course, with the old-line companies all over the country, because they have to have a big profit. This is one of the best arguments I have seen for the T. V. A., and I appreciate very much your bringing in this comparison. It is one of the best arguments that we could have.

115943-39-pt. 10-6

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