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Show Year Sales of power (000 omitted) Total revenues Net operating revenues Return on net investment 1933......... 1934.........._ 1935_________ 1936........._ 1937......... Kttwatt-hows 15,505 395,842 99,808 437,450 731,605 699,362 1,618,287 3,629,677 4,974,057 5,983,370 8,336,066 9,110,371 10,314,746 9,058,797 11,587,386 12,244,859 13,614,194 14,165,592 $30,950 846,863 595,824 1,197,992 1,705,546 2,355,272 5,507,077 15,285,074 21,137,371 25,329,954 31,674,210 35,429,546 39,383,231 35,264,545 44,144,090 48,769,524 58,030,516 57,786, 111 $18,154 143,055 -320,704 31,045 -310,043 -310,172 1,442,880 4,587,716 7,326,582 4,280,253 U3,800,585 114,737,270 »18,605,832 16,783,000 21,838,749 17,176,448 21,478,789 27,005,954 Percent 1938_________ 1939........... 1940....... 1941......... 3.9 2.0 4.7 4.1 4.8 4.2 5.5 4.2 5.0 5.8 1942......... 1943....... 1944... . 1945________ 1946_______ 1947....... 1948... . 1949____...... 1950-....... Total_______ 107,016,974 424,473,696 1168,315,393 4.1 Aggregate net revenues: Tennessee "Valley Authority......................____$168,315,5 Distributors_______................___..........____ 86,925, ( Total-------........................................... 255,241,029 1 These figures do not reflect the adjustments in the accelerated amorti- zation of electric plant acquisition by write-off against accumulated earnings as follows: 1943-$2,000,000; 1944-$3,000,000; 1945-$1,000,000. cooperatives-pay a similar tax replacement to the local authorities. The cooperatives pay direct taxes unde j the assessment laws of the respective States, except in those States which exempt electric cooperatives generally from taxation as a matter of State policy: Althoughi TVA does not pay Federal income taxes, its 5.3J percent return for 1950 would permit payment of the corporate income tax and still leave a substantial return for the Federal Government. The power program of the Authority is being so managed as to provide full reimbursement. The seco»nd phase of rate policy relates to the resale rates of the municipalities and cooperatives. As has been stated, TVA was authorized to prescribe resale schedules so that the benefits of its program might be exitended to the ultimate users of Federal power.25 I* has exercised this authorization through the provisions of its standard contract with municipalities, cooperatives, and three small private companies that purchase their full power require- 26 Act of ]May 18, 1933, §10, 48 Stat. 58, 64, as amended, 16 ~U. S. C. 83 li. ments from TVA. The standard contract is sub- stantially uniform to the 95 municipalities, 50 co- operatives, and 3 private companies. It contains covenants under which the distributor agrees to charge consumers certain rates set forth in the schedules. Under certain conditions surcharges are permitted, and have been used in some in- stances where the basic rates do not provide sound financial support for the distribution system. In some instances, these surcharges have been an im- portant part of the rate structure, but in general they have been eliminated by the distributing cities or cooperatives at the first opportunity. The distributor agrees to use its power revenues to pay for current operating expenses, interest on debt and amortization and sinking fund charges, and to establish a reasonable replacement reserve. Out of the remainder of the revenues representing earnings of the system, the distributor may pay itself a limited return on its investment. It may pay into its general fund a tax equivalent. All remaining revenues are considered surplus to serve for reduction or elimination of surcharges to con- sumers, and thereafter for rate reduction. With the consent of TVA the distributor may use this surplus to retire the system indebtedness prior to scheduled maturity dates. About one-fourth of the distributors of TVA power have adopted rate schedules substantially lower than those originally prescribed by the Authority. Two courses have been followed in rate fixing. One was the conventional private company method of basing rates on the prevailing level of use. In 1933 this was about 600 kilowatt-hours per con- sumer annually. The other course was to adopt the pricing procedures used in mass production in- dustries-reducing the price in order to stimulate increased use, which in turn would increase rev- enues. The introduction of this method of rate fixing in the Tennessee Valley greatly increased residential use. From 1933 to 1950 TVA's consumers' average rates dropped 75 percent, as against 47 percent for the Nation. These declines were accompanied by corresponding changes in average annual use. In the TVA power service area, average consumer use of residential electricity increased 413 percent from 1933 to 1950, while in the same period in the coun- try at large it increased only 194 percent. From 1945 to 1950, average residential consump- tion in the TVA power service area has increased by more than 265 kilowatt-hours each year. In the 772 |
