Representative BARDEN. Hasn't there been in the past 2 years a downward trend in the rates that the customer had to pay for power? Mr. KELLOGG. There has been a downward trend, as I testified earlier, in the average amount paid. May I explain that so as to be sure I don't make myself misunderstood?

Representative BARDEN. You say there has been a downward trend? Mr. KELLOGG. May I make that a little bit more specific because I don't want to be misunderstood? Practically all utilities nowadays. have what are called inducement rates, which provide for the payment of a certain rate per kilowatt hour for the first 40 or 50 kilowatt hours a month, a lower rate for the next block of 50 or 60, and so on down, the result being that the average rate a man pays is the average of all these different blocks of energy, each one at a lower amount, divided into all of the energy he uses. So I am very glad you asked that question, because I want to make this clear, especially to Mr. Thomason so that the result is that two customers, one

Representative BARDEN. He's not here.

Mr. KELLOGG. Please let me finish this, because it is very important to get this idea across.

Representative BARDEN. All right.

Mr. KELLOGG. So the two customers, both on identically the same rate, one of them using a thousand kilowatt-hours a year and the other 500 kilowatt-hours a year would pay a different rate per kilowatt-hour, although exactly on the same rate schedule.

I am afraid possibly some of the members of the committee have gotten the idea that there is a discrimination in rates where these average charges vary. The average charge in most places depends on the amount of consumption, and the reason we have such low average rates out in Las Cruces is because of the large consumption per customer. I am not speaking by the book, but I am sure that the rates in Las Cruces are no lower than they are in El Paso as a rate schedule. If the people up there can use more each, their average cost for what they buy gets less, although they are working on practically the same rate schedule.

Representative BARDEN. Well, now, I am really speaking of the rates per kilowatt-hour. Hasn't that been generally lowered in the last 2 years?

Mr. KELLOGG. To some extent, yes; but the continual decrease that I testified to earlier in the average rate paid per kilowatt-hour has been caused fully as much by the increased use per customer as it has been by the actual reduction in rates themselves.

I didn't want to claim any more credit for the utilities than they are

due to have.

Representative BARDEN. You say you attribute that then to the increased use of electricity entirely?

Mr. KELLOGG. Not entirely, but as a factor I should say that that was a somewhat larger part of the situation than

Representative BARDEN (interrupting). To what else do you attribute it?

Mr. KELLOGG. Well, I think that is the largest factor. There have been some rate reductions. I think all of the companies as fast as they can are continually reducing their rates, but I believe that as a factor-I may be wrong-but I believe that as a factor in producing a net effect during the year, from one year to the next, that increased

115943-39-pt. 10-7

use has been a somewhat larger contributing factor than the rates themselves the rate schedules themselves.

Representative BARDEN. You don't think it would ever occur to anyone that the interest shown in the power situation by municipalities, States, and the Federal Government had any bearing on the situation?

Mr. KELLOGG. Why, it would be ridiculous to say it had no bearing at all. Of course it is very hard, with adverse interests, to make anyone believe that any utility man really has an altruistic viewpoint toward the public, but I can assure you that I don't know anything that gives more satisfaction to a utility management than to be able as a result of greater efficiency, or one thing or another, to be able to reduce rates. It makes all their customers happy.

As I have stated many times here today, it definitely stabilizes the business because the nearer you get to nothing, the more stable and nearer the ground you are.

Representative BARDEN. For a long period of time they were very unhappy, weren't they, because they never reduced them?

Mr. KELLOGG. There was a gradual reduction, there has been certainly for the last decade a steady reduction both in the rates themselves and in the average rates for residential consumption.

Moreover, I want to make this point, that reduction has been made in the face of a terrific increase in taxes, and certainly in recent years in the face of great difficulty in raising money, in the face of what every business is up against, very large increases in labor costs and corresponding rises in prices.

The record is a creditable one. Compared to the costs of living in other respects I don't know of anything that has made a more creditable showing in reducing costs to the public than electric light and power. May I just give you some figures along that line? You would be probably surprised at this. This is our "Bible" [indicating]. Representative BARDEN. I was just interested to know

Mr. KELLOGG. Just a moment, please, may I just answer your question?

Representative BARDEN. I have known one case in one State where the population has not increased very much, wages have gone up, living costs have advanced, taxes have advanced, and yet the rates have come down about 20 percent in the last comparatively few months, and it was interesting to me to see just how they could absorb all of that and still reduce their rates, and still have their stocks go up from 32 to 96 within a period of 1 year.

Mr. KELLOGG. Well, doesn't that show increased efficiency? Let me read the record to you.

Representative BARDEN. I am just trying to get your opinion on what has caused that change.

Mr. KELLOGG. I think it has been greater efficiency, greater economy in manufacture, this rate schedule which has induced much greater use, the effect of household appliances in increasing use. It is perfectly astounding how much the installation of a heater, a water heater, or electric range would increase the use of electricity in the home. The amount required for lighting is tiny compared with the amount required for these other purposes, and that is one thing that. has helped reduce it.

But let me read this to you. From 1920 down to 1937-I take 1920 because that is the year that the cost of living hit the high point after

the war, the cost of living that year, the index was about 190, and today it is around 150. During that period electric rates have gone down, that is a difference of about 25 percent. The average residential rate has gone down in that period from 86 down to 50, a decrease of 36, something like 70 percent. In other words, the average residential rate has gone down about twice as fast as the cost of living since the war.

Representative BARDEN. Do you think that there would have been the interest shown by the public, including the municipalities, States, and the Federal Government, if the public had not felt that they were being mistreated?

Mr. KELLOGG. I don't know whether the public really feels it is being mistreated or not. I think the relations of the utilities with the public are very much better today than they were 5 or 6 years ago. Representative BARDEN. They are better than they were 2 years ago, aren't they?

Mr. KELLOGG. I think so, yes.

Representative BARDEN. Do you think the holding company legislation improved the temperament of the people any?

Mr. KELLOGG. I beg your pardon?

Representative BARDEN. I say do you think the holding company legislation improved the temperament of the people any?

Mr. KELLOGG. No, I don't, I mean one way or the other. I think that the cause of the change of public feeling is the realization on the part of the utilities that the only thing for them to do to be saved financially was to do continually a better and more efficient job at furnishing electricity to the public.

Representative BARDEN. At cheap rates?

Mr. KELLOGG. Right, because that is all the public has to expect from us. They are not interested in our troubles or our difficulties, or really our welfare, except to get out of us the best possible service at the lowest feasible rates.

Representative BARDEN. In other words, you feel

Mr. KELLOGG. That is all we exist for.

Representative BARDEN. These quasi-public corporations are beginning to realize that they must take into consideration the public welfare to some extent?

Mr. KELLOGG. The intelligent ones have always realized it, sir. Representative BARDEN. They didn't do much about it until right

recently.

Mr. KELLOGG. May I give you a personal experience? I have been in practically the same organization all my business life. When I started out in the field as manager of an electric light company in 1904, there were, of course, various tests of what made a good or bad or mediocre manager and the No. 1 test in the organization that I was a part of, the one thing that if a man fell down in that he was not worth anything for any other purpose, was public relations, and that is going back, you can easily figure it, about 34 years. It has been the same way ever since then.

There is no possible substitute for a reasonable and satisfactory public relationship. A man who is just a good engineer or a good figurer or an economical operator, all of which are fine things, is no good unless he has the ability to get along with the public in a satisfactory way, and that includes his employees and customers.

Representative BARDEN. Well, a strictly selfish attitude toward the public will not work, will it?

Mr. KELLOGG. No, definitely not.

Representative BARDEN. That is all.

Mr. BIDDLE. I wanted to ask Mr. Kellogg if he would be kind enough to furnish the committee with a detailed break-down by year and by dams, of the second column on page 3 headed "Costs plus overheads mentioned," so that we can study your figures, Mr. Kellogg. That is the column starting with the $77,000,000?

Mr. KELLOGG. Right.

Mr. BIDDLE. Could you furnish us with the detailed break-down of each dam for each year for each type of costs added to the cash costs?

Mr. KELLOGG. I would be very glad to do that.

Representative JENKINS. Are you through, Mr. Biddle?

Mr. BIDDLE. Yes, sir.

Representative JENKINS. I should like to make one request of this witness. As we all appreciate, he has testified about some very technical matters, and his testimony is full of figures and formulas that are very hard to keep in one's mind, and I would like to make this request, that in case we should want him to come back later, would you be available, Mr. Kellogg?

Mr. KELLOGG. I am always available for a committee of Congress. Representative JENKINS. I want to make that request, that it might be I shall want to have him come back for an hour some day. Acting Chairman SCHWARTZ. He will come back any time he is called for.

Mr. KELLOGG. Right.

Representative JENKINS. Thank you very much.

Acting Chairman SCHWARTZ. We will recess until tomorrow morning at 10 o'clock.

(Whereupon, at 4:30 p. m., the hearing was recessed until 10 a. m., November 23, 1938.)

INVESTIGATION OF TENNESSEE VALLEY AUTHORITY

WEDNESDAY, NOVEMBER 23, 1938

CONGRESS OF THE UNITED STATES,
JOINT COMMITTEE ON THE INVESTIGATION,

OF THE TENNESSEE VALLEY AUTHORITY,

Senate Office Building, Washington, D. C. The committee met pursuant to adjournment in room 318, Senate Office Building, at 10 a. m.

Present: Senator Schwartz (acting chairman); Representative James M. Mead (vice chairman); Senator Frazier; Representatives Barden, Thomason, Wolverton, and Jenkins.

Acting Chairman SCHWARTZ. You may proceed, Mr. Biddle, when you are ready.

TESTIMONY OF BERNARD F. WEADOCK

Mr. BIDDLE. Will you give your full name to the reporter, please, and your address?

Mr. WEADOCK. My name is Bernard F. Weadock. I am the vice president and managing director of the Edison Electric Institute of New York City.

Mr. BIDDLE. Have you any prepared release or copy of your statement that you would like to submit to the committee? I see some material there, or are those all just exhibits?

Mr. WEADOCK. That is material in answer to your request.
Mr. BIDDLE. It is not a summary of your statement?

Mr. WEADOсK. I have no statement.

Mr. BIDDLE. You have no statement?

Mr. WEADOCK. No.

Mr. BIDDLE. Well, you mean you have nothing that you wish to testify to before the committee except in answer to questions that I may wish to ask you?

Mr. WEADOCK. No; my thought was, if agreeable to the committee, to make a preliminary statement of matters, and introduce as I go along the matters which you already have, plus the other data?

Mr. BIDDLE. You will introduce those when I ask you for them in response to my questions.

Mr. WEADOCK. Well, I didn't understand that.

Mr. BIDDLE. I will ask you for what I want, and then you can testify what you want.

Whom do you represent?

Mr. WEADOCK. The Edison Electric Institute.

Mr. BIDDLE. That is the institute of which Mr. Kellogg is the president?

Mr. WEADOCK. President; yes, sir.

Mr. BIDDLE. And you are vice president?

Mr. WEADOCK. And managing director, the executive head.