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Show Some years later the editor of Electrical World, in an editorial of June 26, 1943, suggested that the electrical industry must substitute the concept of competition for the outlook of monopoly if the opportunity of private enterprise in the busi- ness is to be preserved. He said: In a competitive business, there is the same eager- ness to secure a fair return on invested capital, but the approach is different. Return in competitive business comes from expansion of sales-from volume. * * * In a competitive business one does not start with a rate that will produce a return and struggle to build business at that price. Just the opposite; one sets a goal and then finds out what price is necessary to reach that figure. The costs are adjusted to make the price bring a return on the estimated volume. What is the difference? Just this, that growth under the monopolistic concept is necessarily slower than under the competitive concept. Rates in one case are protective of investment, while in the other, they are volume creative. * * * This is a precise statement of the changes in management outlook which Federal power policy is designed to foster. It is not so much excessive profits as it is a short-sighted sales policy which is responsible for high electric rates. Practical Accomplishments The Commission has found a considerable body of evidence that the marketing policy in question has already had decided effect on the level of electric rates in the regions in which it has been operative. Thus, at its field conferences, repre- sentatives of rural electric cooperatives showed that in areas in which an authorized Federal agency was actively marketing power from river basin developments, the cost of power purchased by cooperatives from private companies tended to be little more than half as high as the cost of similar power in less fortunate areas. Reference to the eleventh annual report of energy purchased by REA borrowers for the year ended June 30, 1949, reveals some interesting comparisons. The accompanying map shows the situation graphically. For instance, one can compare the southeastern States (South Carolina, Georgia, Alabama, and Mississippi) with the northeastern States having rural electric cooperatives (Maine, New Hamp- shire, Vermont, New York, and Pennsylvania). The first region has been profoundly affected by the TVA and to a lesser extent by the South Carolina Public Service Authority. The second has had no such influence. Both have water power resources. A comparison of average rates paid to private companies by REA cooperatives in the two regions shows the following: TABLE 1.-Charges by private power companies to rural cooperatives in Southeast and Northeast States [Cents per kilowatt hour] Southeast Northeast States Bates States Rates South Carolina____...... Georgia______________ 0.76 .70 .74 .64 Maine___ __ ___ 1.44 1.41 New Hampshire......... Vermont_____________ New York............... Pennsyvania............. Alabama_____________ Mississippi............... 1.26 1.38 1.12 A similar comparison may be made between the Southwestern States (particularly Louisiana, Arkansas, Oklahoma, Texas, and New Mexico) and certain West North Central States (particu- larly Missouri, Kansas, Illinois, Iowa, Wisconsin, and Minnesota). Again, the first group has been influenced by the activities of the Southwestern Power Administration of the Department of the Interior, while the second group has felt no com- parable influence. The comparisons appear as follows: TABLE 2.-Charges by private power companies to rural cooperatives in Southwest and West North Central States [Cents per kilowatt hour] Southwestern States Bates West North Central States Bates LfinisiftTia 0.70 Missouri. 1.01 Arkansas______....... .63 Kansas .93 Oklahoma . .. .. _. .66 Illinois .98 Texas......... .63 Iowa 1.10 New Mexico__________ .74 Wisconsin. ___ ___ 1.44 Minnesota____________ 1.30 229 |