page 27

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page 27
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27 Mr. LEATHERWOOD. None of them have sold it at such a rate?Doctor MEAD. NO, sir; it is below any present rate.Then comes the question, and this is one of the moot questions, how that power is to be developed and used, and when we come to discuss that, I think we ought to have before us the plans for the dam, the situation that is created there. There are two plans proposed in this bill. One is for the allocation of power privileges and let the independent companies build their own power plants. In many ways, that would be desirable if the situation was favorable, but it is just the reverse.Then there is the question of the equitable allocation of this power. There are three States that, as far as they can utilize it, are entitled to consideration in that matter, and that is, Arizona, Nevada, and California. Of course, there are cities that want it, and important power companies that would like to add to their commodity that they distribute, so that brings about the question of how the power feature ought to be handled so as to, first of all, assure the revenue that is needed to make this a solvent undertaking and prevent the United States having to contribute anything to it. The other thing is the way to allocate it so as to meet the largest number of needs in the fairest way.Mr. LEAVITT. IS the theory there, Doctor Mead, that all of that can be done without any undue injustice to investments already made?Doctor MEAD. I think so; yes, sir. It would not interfere with their markets, nor do I think it will disturb-----Mr. LEAVITT. DO you think it will supplement, rather than displace?Doctor MEAD. Oh, certainly. The Southwest is short of power.Mr. LEATHERWOOD. Let me see if I get your viewpoint. Reference is made in the act to section 7 of the Federal water power act. There is no limitation, as I understand, as to the amount that might be allocated to any one purchaser. Section 7 of the Federal water power act creates a preference. Suppose that the preference user purchases power in sufficient quantities, and there would be a sufficient quantity--I think that is conceded--would it not virtually amount to a monopoly on the part of the preference purchaser?Doctor MEAD. Well, if there was a large enough percentage to cause a monopoly, it would amount to that, but take the situation: Suppose there is 550,000 horsepower; 200,000 of that would go to a use that is not competitive at all; that is, to pumping water for Los Angeles. I think that is recognized everywhere, that there is probably only a preference right, as I understand it, in the allocation of this power. The other depends upon the immediate needs of localities and forecasting or really meeting the needs--the industrial and economic needs of the country.Mr. LEATHERWOOD. May I ask you one other question? By the time the dam might be completed, say, within 10 years, could the entire output of the power from the dam be handled by municipal preference users without disturbing the economic condition of the country?Doctor MEAD. I am unable to answer that. About the only thing I am certain of is, and that comes from talking with those who represent cities and mines and railroads that are considering electrifying

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