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Show used for both flood control and power can be oper- ated in the Tennessee Valley without sacrificing either function. Since the success of provisions for flood control depend on the availability of adequate storage whenever floods may occur, there must be means for assuring the inviolability of this storage. The provisions in the basic TVA statute, together with the administrative measures that have been taken to comply with it, give adequate assurance that flood control storage will not be impaired. 4. Electric Power Marketing and Rate Policy The Problem Choices in policy objectives for fixing rates for wholesale power, and for resale of power. The Situation TVA power rates are fixed in the light of the broader objectives and policies on which the re- sources program is based. This program does not have as its primary objective the development of a power supply. Instead the purpose is found in much broader economic and social goals, namely, the development of resources as a basis for an ex- panding economy and an improved standard of living. Tlie production of power is one of the by- products of that program, and the power produced becomes in. turn one of the most important tools in accomplisliing the program. Power rates are set so as to help attain the program rather than pri- marily to produce a profit, although TVA's rela- tively low rates have produced not only a great increase in power use, but also a substantial return after all costs and charges. The part which power rates play in furthering the objectives of regional economic development has been fully demonstrated in the Tennessee Valley. T*he availability of large blocks of low-cost hydroelectr-ic power has made possible the estab- lishment of industries which are exploiting the nat- ural resources of the area. In addition to the major indmistries, like aluminum, atomic energy materials, electrometallurgical and electrochemi- cal products, a number of small consumer goods plants help to diversify the economy. The problem of rate fixing has two phases. First, in fixing ra~tes for wholesale disposition of power to States, coumities, municipalities, corporations, part- nerships, ow individuals, the Authority is directed to give preference to rural and domestic users of electricity, and to encourage their increased use of electricity. Second, it is directed to make the power projects self-liquidating and self-supporting through the sale of surplus power. Of secondary but important influence are the pro- visions of the Government Corporations Appropria- tions Act, 1948.M Under this, TVA each year must pay from net power proceeds for the preceding year not less than 2.5 million dollars of its outstanding bonded indebtedness. In addition, this act re- quires payments from such proceeds of amounts which, added to the payments on bonded indebted- ness, will by June 30, 1958, total not less than $87,059,810, and an equivalent amount during each succeeding 10-year period until an aggregate of $348,239,240 has been paid. The act also re- quires that new congressional appropriations for power facilities be repaid in not more than 40 years from the time such facilities go into operation. Since enactment of this legislation, TVA has made payments totaling 24 million dollars from net power proceeds, of which 10 million dollars was applied as reduction of bonded indebtedness and the remaining 14 million dollars paid into the gen- eral fund of the United States Treasury. Under the TVA Act, the Authority is authorized to control resale rate schedules for sales to ultimate consumers, and to provide such rules and regula- tions as it may deem necessary or desirable to carry out the purposes of the act. This lends encour- agement to fullest possible use of electric light and power on farms, promotion of wider use of elec- tric power for agricultural and domestic use and for small or local industries, and promotion of the lowest possible rates. In September 1933, TVA published its basic schedules of wholesale and resale rates, devised to induce increased usage of energy. When first an- nounced, these schedules were approximately 50 percent below those prevailing at that time through- out the country. This low-rate policy, initiated by the Authority through its power contracts with municipalities and cooperative associations, and to a lesser extent with privately owned utilities, greatly increased the demand for power. In the early years this set the Tennessee Valley apart from the country as a whole. In some degree the difference still persists. Mu- nicipalities and cooperatives served at wholesale by TVA provide some striking illustrations of this elas- ticity of power demand. M Act of July 30, 1947, 61 Stat. 574, 576-577. 770 |
