pate in the benefits of huge nuclear generating plants. They said, the two, that it would not be included in their study, or in their recommendations, but they also said, "We would be happy to participate with the FPC and other agencies that may be interested." My question is-do you intend to discuss this with the AEC in this particular field? Mr. WHITE. As far as I am aware, we had no present plans, but with this question, it might be a good idea. Senator MAGNUSON. The question arises whether you should, I suppose, encourage the AEC and the Power Commission, if you want to use that term, on a smaller plant, say a small municipality or whether you say, "No, it will be better to have this nuclear generating plant in which you could participate," Which is the best, maybe a combination of both, because there are several applications in-or will be in-particularly in the Middle West from smaller areas on the theory they would have an independent plant. They would not be mixed up in these sensitive problems of allocation and distribution, and so on, and so forth. I think this is something, if we look down the road to nuclear development, we are going to have to get some guidelines on it. Mr. WHITE. Well, I will tell you that road--we are on it already the way those big orders are going. Just 2 years ago nobody would have predicted it, nobody did predict it. Senator MAGNUSON. Now, in our hearings on S. 1166, we heard that natural gas was the only transportation system not covered by Federal safety standards. There is a bill in to that effect. Mr. WHITE. Yes, sir. That would give jurisdiction to the Department of Transportation. ELECTRIC SAFETY BILL Senator MAGNUSON. Have you given any thought to the proposal for electricity safety proposal? Mr. WHITE. We have not focused on that in any meaningful way. Senator MAGNUSON. But we may have to. Mr. WHITE. But we would be happy to look at it and say that our stress has been on reliability Senator MAGNUSON. Well, I think that necessarily has to come in the other hearings, do you not? Mr. WHITE. Yes. Senator MAGNUSON. I am not talking about the household injuries, and so forth, because we do have the Safety Standards Commission now. The Senate passed a bill and the House has it now. Mr. WHITE. You are talking about these Senator MAGNUSON. We have had a series of that. Every once in a while airplanes will run into them or they will fall down, somebody will go over and grab a line. Mr. WHITE. We will be delighted to give you our views on it along with the information we supply for the record. INFORMATION FOR GAS SURVEY Senator ELLENDER. I presume in the survey you are proposing of gas that you will get most of your information from the companies involved, engaged in the business. Mr. WHITE. That is a primary source. We go to a few other places, Census, and so forth. Senator ELLENDER. I hope that before you start you will get together with some of the leading ones in the hope of working out some way by which your questionnaires would be short and not aggravated, by too much extra detail. Ι Mr. WHITE. We have already met with the people in all segments. Senator ELLENDER. That is the chief complaint I get, and I am sure Senator Magnuson gets the same thing. There are so many silly questions asked it would seem to me that before you proceed with the drafting, if you had some of the people in to assist, I believe that you should get and will get full cooperation of all those people. Mr. WHITE. Well, we really believe if we do not have it, we might as well save the money and not do it. Senator ELLENDER. That is right. Senator MAGNUSON. Off the record. (Discussion off the record.) SUPPORT FOR RESTORATION AND FUND REQUESTS Senator MAGNUSON. At this time I would like to insert a letter from Senator Metcalf supporting restoration and funds requested. If there are no further questions, thank you very much. Mr. WHITE. Thank you, Mr. Chairman. (The letter follows:) Hon. WARREN G. MAGNUSON, U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C., August 3, 1967. Chairman, Senate Appropriations Subcommittee on Independent Offices, Senate Office Building, Washington, D.C. DEAR SENATOR MAGNUSON: During the past several years I have spent a considerable amount of time studying the State regulatory commissions and electric utilities under their jurisdiction. I have come to certain conclusions which may be useful to you in connection with the forthcoming mark-up by the Appropriations Subcommittee on Independent Offices. The average state utility commission is, unfortunately, unequipped to provide commission members or legislators with the information upon which sound policy decisions can be reached. Even experienced investment firms find it difficult or impossible to obtain the basic data on electric utilities on which sound investment decisions can be made. A committee of the Investment Bankers Association recently reported that current utility accounting practices are "completely inadequate" and showed a greater lack of comparability than at any time since 1933. The Association reported that "differences in accounting practices have placed the average investor at a great disadvantage (and) even the institutional investor finds it difficult to follow and to determine comparable utility earnings." The entire regulatory process rests on the accounts, yet the average commission has only one or two accountants, paid about what we pay our clerical help. Use of automatic data processing would save a great deal of time and money, but only two of the states-California and Wisconsin-use ADP in the regulatory process. One commission, in one of the most populous states, with more than $20 billion worth of utilities under its jurisdiction, does not even have an attorney. The costs of distributing power are going down but, due to ineffective regulation, the rates are not being reduced proportionately. In one state the actual rate of return of the principal power company is more than twice the rate of return theoretically allowed by the state commission, 11.37% as opposed to 5.33% I was impressed by former Postmaster General Day's comments in the 20 July 1967 issue of Public Utilities Fortnightly. He wrote: "There is an urgent need for Congressional reappraisal of the proper and attainable goals and economic effects of regulation. There is a need for an objective study of the precise regulations under examination, the value and significance of the regulatory goals in light of current conditions, the costs of the regulation, and a frank appraisal of the results achieved." No Congressional committee has the staff for the job. The Library of Congress has all sorts of economists on its staff-except for public utility economists. I can attest that the existing literature on regulation is scant-the last and only thorough study of the electric power industry was conducted by the Federal Trade Commission at the suggestion, 39 years ago, of my distinguished predecessor, Senator Thomas J. Walsh. The universities have deemphasized utility and regulatory studies and the foundations have simply never gotten into the field. Therefore, for the time being Congress must rely on the Federal Power Commission for its data on electric utilities. It is a good source. In my opinion, former Chairman Swidler achieved remarkable results in rejuvenating that agency, and Chairman White appears to be continuing the good work. As a Westerner I am especially mindful of the need of Congress for full data on hydroelectric projects on which licenses will soon expire, data which is being prepared by the FPC. That is one of the programs which will be cut back if the $310,000 budget reduction in the FPC budget as approved by the House is not restored. The need for adequate staffing to insure reliability of service is of course even more important. There are other examples, available from my files to you or your staff, which illustrate the inadequacy of the present FPC budget. A recurring example involves political expenditure by utilities, improperly charged to the customers. Audits by state commissions or FPC are infrequent and some utilities regularly flaunt the reasonable accounting regulations and pad operating expenses with prohibited items. The commissions simply do not have the staff to require compliance. It is pertinent to point out here that the expenditures improperly charged to customers during one year by each of a number of electric utilities exceeds the $310,000 which I hope your subcommittee will restore to the FPC. I am not as familiar with the gas industry as I am with the electric industry, therefore I cannot speak with any special authority on the FPC's recent request for $300,000 for a long-range survey of the gas industry. I can, however, testify to the quality and usefulness of the similar study conducted by FPC, in conjunction with industry, of electric power. In my opinion a great deal of efficiency and economy in regulatory commissions can be achieved by use of automatic data processing. FPC should become a data bank for the electric and gas industries; the Federal Communications Commission should similarly become a data bank for the telephone utilities. This would expedite and ease the workload of both state and Federal commissions. Also, the ready availability of detailed information on expenditures of public service corporations would tend to reduce the number of instances of improper accounting by electric companies. The Subcommittee on Independent Offices will, I hope, give consideration in the future to the value of greater use of ADP. Meanwhile, I earnestly request that the FPC budget request be approved. Very truly yours, SUBCOMMITTEE RECESS LEE METCALF. Senator MAGNUSON. We will recess until 11 o'clock tomorrow, at which time we will hear the Department of Housing and Urban Development, another noncontroversial appropriation. (Whereupon, at 1:10 p.m., Monday, July 24, 1967, the hearing was recessed, to reconvene at the call of the Chair.) INDEPENDENT OFFICES AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 1968 MONDAY, JULY 31, 1967 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The subcommittee met, at 10:05 a.m., in room 1224, New Senate Office Building, Hon. A. S. Mike Monroney, presiding. Present: Senators Monroney, Ellender, and Allott. EXECUTIVE OFFICE OF THE PRESIDENT PRESIDENT'S COMMISSION ON POSTAL ORGANIZATION STATEMENT OF MURRAY COMAROW, EXECUTIVE DIRECTOR; ACCOMPANIED BY TIMOTHY MAY, GENERAL COUNSEL, POST OFFICE DEPARTMENT; ROBERT KELLER, GENERAL COUNSEL, GENERAL ACCOUNTING OFFICE; RICHARD R. HITE, BUDGET EXAMINER, BUREAU OF THE BUDGET SALARIES AND EXPENSES BUDGET REQUEST: SENATE DOCUMENT 40 Senator MONRONEY. The subcommittee will be in order. This morning the subcommittee will take testimony in support of a $1.5 million request, contained in Senate Document 40, dated July 27, 1967, for salaries and expenses of the President's Commission on Postal Organization. The proper excerpt from this document will be placed in the record at this point. (The excerpt follows:) |