Break for Private Power

For the Northwest, where the private v. public power fight is the bitterest, Interior Secretary Douglas McKay last week made a significant decision; he gave the private companies a better break. For the first time, they were permitted to sign 20-year contracts with the Bonneville Power Administration, giving the companics long-term assurance of low-cost power from the big federal dams. For years, the private companies could get no contracts at all. Then two years ago they got to sign agreements, but only for five years.

The new contracts were further evidence of McKay's middle-of-the-road power policies. Public utility districts, cooperatives and other public groups still get first call on BPA power. Next come the big industrial users that have already contracted for power. But the private companies will come ahead of any new, large industrial consumption and thus benefit from new power facilities. By keeping public bodies from getting a lien on future power supplies that their systems cannot absorb (a policy which McKay had previously laid down), the new contracts help the private companies in their long-range planning.

Break for Consumers. While McKay's decision made the last-ditch defenders of public power unhappy, it was good news for the small domestic and rural customers of the private utilities. Since the state keeps a close control on utility rates, they will reap the major benefits from cheaper power. Luckiest of all are the people in McKay's native Portland, Ore. They are supplied by the Portland General Electric Co., which counts on Bonneville for almost three-fourths of its power needs. Last year, when water was low and less power was generated, P.G.E. had to buy costlier steam-generated power (eight mills per kw., v. two mills for Bonneville power), and the state permitted a 20% increase in electric bills. With the prospect of more public power for private companies, these householders' rates should come down.

Hardest hit under the new deal will be the expansion plans of big industrial power users, particularly the aluminum industry, which uses more than a third of Bonneville's electricity. Said one Kaiser official: The new contracts "push into the misty distance any future industrial expansion in the Pacific Northwest."

Incentive to Build. Industry's biggest hope lies in the expansion of generating facilities, a good deal of which has already taken place. Power output, which fell 150,000 kw. short of contracted demand last year, should be enough this year to meet all contracts, with some to spare. Still other additions are well under way, including such major hydroelectric sources as the Chief Joseph Dam in Washington, scheduled for power production in 1955.

But even these will be inadequate to satisfy the expanding Northwest. McKay would like to see the private power companies expand to meet the demand. As added encouragement, he is considering a 15% rate boost for Bonneville Dam power to cover increased costs, thus bringing Government prices closer to private power costs.

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