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effect of strengthening BPA at its boundaries.

Participating in the Missoula debate, the author of this history, then Executive Secretary of the Northwest Public Power Association, listed 10 beneficial effects of the preference clause.

The preference clause - facilitated rural electrification; - reduced electric rates; - stimulated increased use of power; - stimulated the formation and healthy growth of electric

cooperatives and public agencies; - facilitated the Congressional program of multiple pur

pose comprehensive development of water resources; - increased national defense productivity; - increased gross national product; – increased Federal tax revenues; - strengthened local units of government; and, - checked the electric utility monopoly.

This list suggests the broad, fundamental nature of the preference clause, its many meanings and effects. Later chapters illustrate how the preference clause facilitated widespread use of power and helped mitigate the problem of insufficient power supplies. The preference clause has helped provide low cost electric service to the people and especially those economically disadvantaged by the lack of power.

STATUTORY BASIS FOR PREFERENCE TO PUBLIC BODIES
IN MARKETING FEDERAL POWER
Act of March 3, 1877 (Reclamation).

(Bonneville Act). April 16, 1906 (34 Stat. 116, 117) (Recla May 18, 1938 (52 Stat. 403, 405) (Fort mation).

Peck Act). December 19, 1913 (38 Stat. 241) (Raker August 4, 1939 (53 Stat. 1187, 1195) (ReAct).

clamation Project Act). June 10, 1920 (41 Stat. 1063, 1067) (Fed October 14, 1940 (54 Stat. 1119, 1124) eral Water Power Act).

(Water Conservation and Utilization September 18, 1922 (42 Stat. 847) (Salt Act). River Project Act).

December 22, 1944 (58 Stat. 887, 890) December 21, 1928 (45 Stat. 1057, 1060)

(Flood Control Act, 1944). (Boulder Canyon Project Act).

March 2, 1945 (59 Stat. 10, Sec. 2) (River May 18, 1933 (48 Stat. 58, 64) (Tennes and Harbor Act, 1945). see Valley Authority Act).

June 18, 1954 (68 Stat. 255) (Falcon May 20, 1936 (49 Stat. 1363, 1365)

Dam - Transmission and disposition (Rural Electrification Administra of electric energy produced). tion Act).

August 30, 1954 (68 Stat. 919, 929, 954) August 20, 1937 (50 Stat. 731, 733) (Amendment to Atomic Energy Act).

gress, 2nd Session, June 28, 1954. Markham Ferry Dam, Public Law 476,

83rd Congress, 2nd Session, July 6,

1954. Priest Rapids, Public Law 544, 83rd

Congress, 2nd Session 68 Stat. 573,

July 27, 1954. Canyon Dam - Flood Control Act of

1954, Public Law 780, 83rd Congress, 2nd Session, 68 Stat. 1248 September

3, 1954. Central Valley Project Act of August 12,

1955. Small Reclamation Project Act of Au

gust 6, 1956. Niagara Redevelopment Act of August

21, 1957. Flood Control Act of July 30, 1958.

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Widespread Power Use

Flood Control

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The following acts or Executive Orders

provide for preference relative to the sale of power, power privileges or

power facilities.
Executive Order 9353, 8 F.R. 8587;

Executive Order 9366, 8 F.R. 10699;
Executive Order 9373, 8 F.R. 12,001

(all 1943).
Surplus Property Act of 1944, Section

13(d), Act of October 3, 1944, 58 Stat. 765. Codified in 50 U.S.C. Appendix

1622 (D).
Eklutna Project Act of July 31, 1950, 64

Stat. 382.
St. Lawrence Seaway, Public Law 358,

83rd Congress, 2nd Session, July 6,

1954. Coosa River, Public Law 436, 83rd Con

FEDERAL HYDROELECTRIC LAWS

The Public Resources

Preference

Clause

Lowest
Possible

Cost

Prevent
Monopoly

Navigation

Economic
Development

National Defense

11. POSTAGE STAMP RATE POLICY

The key to rural electrification in the Northwest has been 'Bonneville power' and the postage-stamp rate, a rate that is the same wherever power is delivered, regardless of the distance from the source.

- Marquis Childs The uniform rate policy, once called the "blanket rate,” and now the "postage stamp rate policy," was the focal point of a major controversy from 1935 to 1938. Under a uniform rate the cost of power is the same regardless of the distance of customers from the dam. The alternative, "rates uniform throughout prescribed transmission areas," meant a zone rate. For example, the base rate might apply within 50 miles of a dam, and increase by half a mill per kilowatt -hour each concentric 50-mile zone. In this example, the rate would be "uniform" within each zone.

The historical basis for the uniform or blanket or postage stamp rate policy dates from the 1935 Pacific Northwest Regional Planning Commission report on the Columbia Basin Study, formally known by the title Regional Planning Part 1 - Pacific Northwest.

The Portland Chamber of Commerce and its allies had advocated a low generator bus or bus bar rate for power from Bonneville Dam, or perhaps some free transmission line service as far as the Portland-Vancouver area, to entice industry exclusively to that local area.

At the PNWRPC meeting March 2, the Portland Chamber of Commerce presented a resolution urging that Bonneville power be sold at a very low rate to paper mills. The PNWRPC responded by adopting a policy:

"Be it resolved, that all such projects so submitted shall be referred to the planning consultant of the commission, and its staff, for investigation and report before the commission takes action."

People in the remainder of the region, particularly throughout Oregon and Washington, disagreed with Portland's proposal. Generally, they envisioned the interconnection of Bonneville and Grand Coulee Dams and future Columbia River dams in a regionwide transmission grid. The regionwide postage stamp rate was strongly supported by rural people and by existing and prospective public power systems.

The rate controversy actually involved many policies and objectives. The Portland proposed bus bar rate for big industries and private power companies was viewed as a

way of keeping the lid on the incipient public power movement, and thus symbolized the private versus public power issue. Planners saw the rate question as centralization and urban congestion versus decentralization and regionwide benefits. Farmers saw it as rural electrification and a better standard of living versus rural drudgery and hardship.

The postage stamp rate idea did not spring forth full grown like Athena from the head of Zeus. Its birth was laborious. The PNWRPC and its staff analyzed other large power grids. The analysis indicated the merits of a regionwide transmission grid and uniform wholesale rate. This view was expressed in the December 28, 1935 PNWRPC report, which the National Resources Committee endorsed after extensive review. The NRC endorsement includes the following explanation and justification for recommending a uniform rate:

"It would appear that a wise national policy will see to it that this new resource is so distributed as to achieve the maximum regional and national benefit. That requires that the surplus electric energy from Bonneville, Grand Coulee, and such future federally financed public works on the Columbia River and its tributaries as may be built shall become available to the greatest number of people at the lowest practicable rates consistent with the solvency of the works used for generation, transmission, and distribution of such energy. It follows that the operating agency should adopt a policy for the sale of electricity which will make rates similar over large areas, which will pass along the economies in the prices of wholesale power to the ultimate consumer, and which will contribute, insofar as may be wise, to the stabilization of existing communities, the appropriate decentralization of new industries, the increase of steady employment, and the increased consumption of electric energy by farmers and domestic consumers.”

This photograph was taken by a salesman for electric milking machines. Both the woman and the cow are giving him the skeptical look.

[graphic]

This philosophical paragraph caught the eye of Senator McNary. He was then Senate Minority Leader and a member of the Senate Committee on Agriculture and Forestry which opened the first hearing on marketing Bonneville power May 7, 1936. He had supported the Portland Chamber of Commerce viewpoint, as evidenced in the McNary-Steiwer bill, S.3330, introduced in mid-1935.

The hearing emphasized the PNWRPC report on the Columbia Basin. The Committee had invited witnesses familiar with the report. Frederic A. Delano, National Resources Committee Advisory Committee chairman, was the first witness. McNary promptly launched into four pages of questions on the feasibility of transmitting electricity 300 miles, which would include northern California. He asked whether Delano envisioned the same wholesale rate for northern California as for Portland. Delano concluded:

"We favor, in general terms, as shown in this paragraph that the Senator just read - we favor what might be called the blanket rate system."

From this somewhat strained encounter, Delano's relationship with McNary improved. He occasionally visited McNary's office in Washington, D.C., and visited him at Fir Cone during a trip to the Pacific Northwest.

Traditionally, the Portland Chamber of Commerce used McNary's office as its Washington, D.C., headquarters. In the Senate Committee hearing two days after Delano's appearance, W. D. B. Dodson, Chamber executive vice president, referred to Bonneville Dam:

"We feel we have a paternal position on this, Mr. Chairman. We fathered this project. We have listened to the experts as they take up our child and diagnose it, offer to take out its heart, possibly to put it back, and you can see we are deeply concerned as to whether the child will live after they get through.” Dodson obviously had no love for the PNWRPC or Delano.

"If we are going to sell that power in any reasonable time, it cannot be done except a heavy part goes to industry. If we are to get certain heavy industries, we cannot have these gentlemen of the Planning Commission come in here and say, 'Don't locate any industry in the gorge. You might deface that gorge in some way or another!”

On the last day of the hearings, May 13, when Senator Pope asked for his views on a uniform rate, Colonel Robins, North Pacific Division Engineer of the Corps of Engineers, replied:

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