Newspapers / The Franklin Press and … / Nov. 5, 1959, edition 1 / Page 2
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$J>e fftmKlitt Wft& and (Life Highlands JHanmtatt WEIMAR JONES Editorial Page Editor The editor controls and takes full responsibility for this pace. He has no control over or responsibility for what appears elsewhere in the paper. Light On Power Deal A court decision of half a dozen years ago throws light on an issue under discussion today ? the pro posal of Nantahala Power and Light Company to sell its retail distribution facilities to Duke Power Company. While the case dealt with a different matter, the facts, conclusions, and comments it brought out bear directly on questions raised about the Nanta hala-Duke deal. The 1953 proceedings, in fact, read as though they had been written in. answer to some of the current questions. Here is the background of that six-year old de cision : Nantahala, at that time, filed application with the N. C. Utilities Commission for authority to in crease its industrial rates. The Mead Corporation, of Sylva, protested. After a hearing, the Utilities Commission approved the increase. Mead appealed to the courts, and Judge A. H. Gwyn,, in Jackson Superior Court, reversed the Utilities Commission. Nantahala appealed from that ruling to the State Supreme Court. That tri bunal, in a decision written by the then chief jus tice, W. A. Devin, upheld Judge Gwyn in denying the increase. An associate justice, M. V. Barnhill, though concurring in the Devin ruling, wrote his own, separate opinion, because there were "certain facts" to which he wished to "direct particular at tention". * * * Some of the salient facts brought out follow: ? Nantahala is wholly owned by the Aluminum Company of America (Alcoa). ? It was organized as a North Carolina public service corporation in 1929. ? Between that date and June 30, 1952, its hydro-electric plants in the six-county area it serves increased from one to eight ; its capacity was multi plied by 56 ? from 14(X) K. YV. to 79,435; and the number of its customers grew from 238 to 10, (X*). ? The bulk of Nantahala's power was being sent to Tennessee for use by Nantahala's owner, Alcoa. The proportion in 1952, a dry year, was 81.65 per cent ; it had been higher in previous years. ? That power was classified by Nantahala as "dump"?- that is,N "secondary", or undependable ? power. On that basis, it was sold to Alcoa for 2.3 mills per kilowatt hour. Mead was paying 5.9 mills tor power classified as "primary", or dependable. -?Western North Carolina customers, who were using less than one-fifth of Nantahala's power, were providing more than half of its revenue. ? With an investment of approximately 17 mil lion dollars, Nantahala had never declared a divi dend, and its hooks showed it operated at a loss of $41,701 during the preceding year. They also indi cated that, even with the requested raft increase, it would continue to lose money at an annual rate of $26,856. ? * * The Utilities Commission said the issue to be de cided was : Would it be discrimination to raise the rates of Mead and other industrial customers, while leaving Alcoa's already-lower rate un changed ? Its answer was: Since Alcoa bought only "sec ondary" power, there would be no discrimination. Judge Ciwyn, citing Xantahala's own testimony that a hydro-electric .plant can be counted on, even in dry weather, to produce 50 per cent of capacity, held it was not reasonable or proper, therefore, to label 81.65 per cent of the power produced as "sec ondary"; "Giving it the wrong label does not con jure awav the reality, and no amount of judicial legerdemain can change its true character and make undefendable that which is in fact dependable . . . Calling it secondary power does not make it so." Accordingly, he reversed the Utilities Commis sion, and ^he State Supreme Court later upheld his ruling. * * * Those 1953 proceedings .seem to answer, in whole or in part, at least four of the questions raised by the proposed Nantahala-Duke deal. First of all, an incidental question: Is Nantahala losing money, and so wiU its customers' rates have to be raised, even if the sale does not go through? A secondary question : Duke has promised to keep pres ent customers on Nantahala rates, where they are lower than Duke's. Coidd the Utilities Commission, under state law , permit that? Another secondary question : Do the people of this area receive special benefits, such as low rates, under the pres ent arrangement? Finally, the primary question : As a public service cor - poration, with the power of eminent domain, Nantahala took private property, through condemnation proceedings, in acquiring sites for its hydro-electric plants in this area. Now it proposes to step out of its role as a public service corporation. But it proposes to keep the plants that role enabled it to acquire, and to take ALL the power they produce out of the state, for the exclusive benefit of Nantahala's parent corporation, Alcoa. The primary question is a moral one: Is that right ? The question of Alcoa's taking ALL the power from sites acquired through condemnation proceed ings was not before the courts, in that six-year old case. Put their comments, at that time, on the mor ality of its posing as a public service corporation to take four-fifths of the power were categorical and emphatic. How that and the other three current questions were answered, back in 1953, is shown by the quo tations at the bottom of this page. (The Italic type emphasis on certain words and phrases is ours.) LETTERS ? ? \ From Mr. Rollman Dear Mr. Editor: For many, many years I have been reading and enjoying your editorials. I also enjoyed reading your editorial, "No Longer David". Obviously, I have neither right nor reason to discuss in this letter your opinion, but believe, Judging you by past actions and your known fairness, that you will want to publish the following correction of facts. It Is true that I have met with "Republican leaders" and they have told me in condensed form the following: Rollman, in our primary. Just like the Democratic primary, every man is on his own. They dldnt say "let the best man win"; they didn't say "let the man win who is supported by a machine". They said "the winner, obviously, is the guy with the most votes." It was made abundantly clear that In the primary I am completely 100% on my own, but that I would receive the same treatment as any other candidate on the Republican ticket who Is a candidate for nomination to Congress. I do not know whether one or a dozen persons will seek the same honor on the Republican ticket in our Congressional District. But the "Republican leaders" did say the following: "Rollman, If you win the nomination, the Party, as is the proper thing to do, will be for you." And they also stated to me that if, God forbid, again anything would happen as It did in the last campaign when Mr. Shuford had to resign due to 111 health, they are convinced that they would pick me if I am second high man. In other words, Mr. Editor, let me put It this way. I don't want any special treatment and never have received special treatment in the last 48 years. But I have been treated won derfully all my life. Politically, all I ask for is an even break. HEINZ "DAVID" ROLLMAN Waynesville, N. C. DO YOU REMEMBER? Looking Backward Through the Flies or The Press 65 TEARS AGO THIS WEEK (1894) You can commence shooting partridges tomorrow. The sum of $68,000 Is being dispensed this week among the settlers on the Cherokee lands in Jackson and Macon Coun ties, this state, under provision of a recent act of Congress The registration of voters for the Franklin township was 493. Mr. Shanks expects to get the courthouse vault completed this week. John Henson says he will go ahead of any one in making syrup. John's a caseJ3mith's Bridge item. 35 YEARS AGO (1924) Historic Junaluska Inn was the scene of a brilliant gather ing on Thursday night, when the Franklin League of Women ^ Voters held its monthly meeting and banquet. Mrs. Florence Porter and daughter, Mrs. Iris Miller, left last Sunday to spend the winter in Atlanta. Uncle John Berry, of Ellijay, was in town last Saturday to hear the political speeches. IS YEARS AGO (1944) v Capt. Ben P. Grant and Mrs. Grant are visitors in Franklin while Capt. Grant is home on leave. The dedication service for Sloan Union Chapel in East Franklin will be held on Sunday afternoon. 5 YEARS AGO (1954) The old Blaine property has been picked as the site tor the proposed new Franklin municipal building, and the Board of Aldermen hopes to have the building under construction soon. I think people want peace so much that someday govern ments will have to get out of the way and let them have it. ? Dwight Eisenhower. STRICTLY v PERSONAL By WEIMAR JON1 Last month, it seemed to me. wasn't up to par for October in the mountains. There were, to be sure, days when the cloudless sky was some thing to behold: but there were days of leaden skies, too ? more like mid-winter than fall. There were, to be sure, nippy mornings, followed by warm sunshine that brought all the pleasures and none of the discomfort of spring fever: but there were days when It was uncomfortably cold all day long. There was, to be sure, the atumnal coloring: but it lacked the brilli ance of some Octobers. Even at its worst, though, Oc tober here in the mountains is a glorious time to be alive. It's a month I look forward to from one fall to the next. And this one was worth waiting for. even if it wasn't up to standard. Maybe, though, I'm just spoiled; maybe I've come to expect noth ing In the year's tenth month but "October's bright blue weather". Maybe It never is that and noth ing else. O, well, in any case, it's only II months until October comes again. And no matter what next October's like, it will be a time worth waiting for, something to be looked forward to. ? ? ? One of the Interesting repot brought back by that Mac< delegation that toured Washir ton. New York, and the Unit* Nations last week Is a fact hadn't heard before: North Cai lina ranks first among the stat in the number of persons who ha visited the U.N. That despite tl fact nine other states have larg populations. It's yet another indication something a lot of people see to have forgotten: The Southea always has been preeminently 1 ternatlonal-minded ; this s t a 1 notably so. The U. N. visitii figure seems to indicate it still ? ? ? I like that Halloween story th comes out of Charlotte. The children in a prima grade schoolroom were discussii plans for Halloween costumes, et One youngster said he was goii to dress up like the devil; ai half a dozen others cried, "o too". Not so one original litle chap "I'm going to get myself son vanishing cream and be God." Sacrilegious? Coming from ? adult, it would have been. Bi from a small boy, it's Just wh you'd expect. It's an idea, in fac no adult would be capable of coi ing up with. MODERN 'IMPROVEMENTS'? Passing Of The Featherbed ANDREWS JOURNAL wnatv you don't know what a featherbed Is? Well, this is the time of the year when Mama used to get Papa to drag out feather mattresses for all the beds as cold weather was beginning to set in. Why, feather beds were the thing for soft, cozy sleeping, especially in an unheated room of an old frame house. Those bedrooms were as cold as out-of-doors. You'd slip into your flannel pajamas before a fire downstairs. You'd warm a blanket by the heater and make a dash upstairs. You'd pull back five of Grandma's heavy patch quilts and put that warmed blanket on your top sheet. Then you'd dive quickly into bed. This was a problem if you were a small chap. The bed was quite a hurdle with springs, the hard summer mattress, and the foot-high fluffed-up feather mat tress on top. So you'd climb the cold metal bedboard and splash into that over-sized pillow ? "splop!" The fall of your body would make Its impression In the mushy pad which swallowed you. At first you'd stick your head under the covers and curl up as a ball or as if you were trapped inside a giant egg. Your warm moist breath circulated to fill the air space around you. When you felt snug in that position, you then ventured one foot, an inch at the time, toward the end of the bed as a hatching chick break ing out his shell. The sheets wou seem more Icy at the foot of tj bed. But Big Brother would soc come to bed and you'd snes your cold feet next to his whe you thought he was asleep. Soon you'd be warm and sni and cozy and sleepy. Then can morning and you'd hear Man calling you to breakfast. Burif in that featherbed under a mour of Grandma's heavy quilts, you be too comfortable to slide yoi feet onto the cold, slick linoleui But soon the smell of hot biscuit fried ham, and scrambled eg) would drive you downstairs I dress by the kitchen range. But nowadays a lot of peop haven't heard of featherbed Maybe it's because improved ar more economic heating metho< are being used and more compai and insulated houses are belt built. In some places the electr blanket is replacing the billon feather mattress and Orandma quilts. Ah! But nothing modern wl be as sbft and cozy and snug t that old featherbed. YOU AND YOUR TEEN-AGERS If you act too suspicious of you teenagers, they may start to woi der what you were doing at the: age. ? Northwest Colo. Press. Nantahala-Duke Questions Answered By 1953 Court Ruling (EDITOR'S NOTE: Ijght is cast on the cur rant proposed Nantahala- Duke deal by the quotations below from a 1953 court decision. They tend to answer, in particular, four of the questions raised about that deal. See ed itorial. above, for background). , AN INCIDENTAL QUESTION; Is Nantahala losing money, ami so .will power rates liare to go up in any ease? On that point . . . 1 Judge (iwyn said:' "It has never earned, a profit . . . The petitioner (Nantahala) does not ask for an increase in rates sufficient to make a profit; in fact, it asks for such an increase as will insure a calculated loss . , . The mystery deepen,* vvhe" !t is considered that the pe titioner regards 81.65';. of its production (during a dry year) surplus or 'left over' 1 power, and at the same time the parent company prepares to increase production by construction of other plants . . . "It is embarrassingly obvious that the petitioner is operating not at a loss but at a profit it has been able to eonceal . . . The prices charged the parent company have been consistently reduced from year to year, notwithstanding a consistent rise in cost of production." Justice Barnhill said: "In 1952 Alcoa, which received 81.65% of petitioner's (Nantahala's) total production of power, paid only 47.3% of petitioner's total revenue while those who purohased only 18.35% paid 52.7% (of the revenue). "Corporations must operate on a profit motive basis. Not so with petitioner. Fi nanced as it is, it can afford ? indeed it pro poses ? to operate at an apparent loss. By mo doing, it can evade the payment of its fair portion of State and Federal taxes." Chief Justice Devin said: "It was also in evidence from the director of accounting of the Utilities Commission that considering only the revenue afforded by customers using 18.35% of total energy, in relation to that proportion of capitaliza tion and expense, it (Nantahala) would show a return of 6.52* , whereas the serv ice to all customers, including Alcoa at the rate paid, would show receipts less than operating expense." (That is, the fractional part .'tf Nantahala's power going to West ern North Carolina customers was sold at a rate that, proportionately, would have yielded the company a profit of more than six and a half per cent.) A SECONDARY QUESTION: Would Diikr be permitted to keep some customers on a lower rate than others ? On that point . . , The Utilities Commission said: "A public utility is under a legal duty to serve all its customers alike without favor, preference or discrimination." Chief Justice Devin said: "The statute . ? . prohibits discrimina tion by a public service corporation in the following language: v " 'No public utility- shall, as to rates or service, make or grant any unreasonable preference or advantage to any corporation or person or subject any corporation or per son to any unreasonable prejudice or dis advantage. No public utility shall establish or maintain any unreasonable difference as to rates or service either as between local ities or as between classes of service.' "The obligation of a public service cor poration to serve impartially and without unjust discrimination is: fundamental . . . There must be substantial differences in service or conditions to justify difference in rates. There must be no unreasonable dis crimination between those receiving the same kind and degree of service." ANOTHER SECONDARY QUESTION: Does this area receive special benefits from the present arrangement? On that point . . . ~ ^"he-Utilities Commission said: . . we find no reason to condemn the arrangement between the applicant (Nanta hala) and Alcoa by which Alcoa obligates itself to purchase ... all power generated by the applicant in excess of the require ments of its othet* customers. Such an ar rangement inures to the benefit of other customers for the reason that it obviates the necessity and expense of stand-by plants to meet the requirements* during years or periods of water deficiency ... , "Perhaps the purpose of requesting an increase in rates which will still produce insufficient revenue to yield a return on the investment is to eflect a savings in taxes, but whatever the purpose, the effect is lower rates to all customers and the de velopment of that part of Western North Carolina ip which said public utility (Nan tahala) operates. No other section of the state is so favored with cheap dependable power available to such a large proportion of the rural population. "The Mead Corporation is in no position to complain ... its rates when measured by any accepted standard are low and with the proposed increase in rates will still be low . . . we find no industrial plant in North Carolina which now purchases as many kilo watt-hours of primary power for as little money as does the Mead Corporation. With the proposed increase in rates it will still be in position to purchase more power from the applicant for less money than it could under any existing schedule from any other power company operating in North Caro lina." Judge GWyn said: "This Court would join with the Utilities Commission and all others in their appre ciation of the part the petitioner (Nanta hala) has taken in the development of West ern North Carolina. The fact that its rates for primary power are lower than some other companies is an advantage to the users." Justice Barnhill said: "Unquestionably local customers of pe titioner (Nantahala) enjoy special benefits from the arrangement now in existence be tween it and Alcoa, and the arrangement has contributed to the development of the extreme western section of North Carolina . . . Certainly, the mere fact its rates are lower than those of other companies . . . does not justify increasing the cost to Mead ... so as to further protect Alcoa and as sure the continued delivery to it of more than 80% of petitioner's total output of electric power." THE PRIMARY QUESTION: I.i it right? On that point ... Judge Gwyn said: ". . . secondary power must be sold at a lower rate than primary power. It is less valuable than primary power. It is available when the rivers are full, but it is uncertain. It is a surplus, a fluctuating excess. "According to the label given it, the pe titioner (Nantahala) sells to the parent company, the Aluminum Company of Amer ica, only secondary or undependable power. The Utilities Commission seems to have ac cepted the label as importing verity with out exploring the evidence to ascertain whether the label is true or false. It is the opinion of this Court that the label is false . . . "To raise the rates for those who use only 18.35% labeled as primary power and to al low the bulk, 81.65%, to be taken by the parent corporation at cost, or less, is like requiring too small a tail to wag too big a dog . . . "It's ( Nantahala 's) primary purpose seems to be to serve its parent company with primary power labeled as secondary. When the amount of power which petitioner transmits to the parent company is threat ened to be decreased by an increase of pub lic users, the threat is promptly met by the establishment of other plants. "It is difficult to see how the relationship between the petitioner and its parent com pany squares with the law which governs that relationship." Justice Barnhill (adding to his already quoted comment that "unquestionably local customers of the petitioner enjoy special benefits from the arrangement") said: "Local customers are entitled to these benefits in exchange for the special advan tages and privileges acquired and enjoyed by petitioner (Nantahala) and its parent corporation ( (Alcoa). It could well afford to retail the minor percentage of its product which it sells to local customers in exchange for these privileges . . . "Judge Gwyn's . . . thought-provoking comments and observations (on this) . . . shoulcj command the careful attention of all the right-thinking citizens of the State. "Neither this Court nor his can give re lief (since the courts "may only decide the legal questions presented by the appeal") against the conditions he so graphically points out. Yet his comments should serve ' to give notice to the public officials or agencies, having the power to act, that the time is at hand when these conditions should receive prompt and careful atten tion. If they will only cut through the form to the substance, they will find just another hydro-electric power producing agency of Alcoa, retailing just enough of its produc tion ? less than 20% ? to permit it to pose as a quasi-public service corporation with the right to use the water power resources of this state, exercise the power of eminent domain, and enjoy the other monopolistic privileges accorded a public utility while it was, in fact, created and exists primarily to serve its master which seeks and must have low cost hydro-electric power ... k "Seldom indeed is a situation such as the one disclosed by this record brought to light ... I am certain its parallel does not exist elsewhere in this state." Chief Justice Devin said: "The more Nantahala expands the greater volume of electric current Alcoa obtains at 2.3 mills . . . And Nantahala continues to derive the greater part of its revenue from customers other than Alcoa who consume only 18.35% of its power and are charged approximately twice as much . . . "Having received the benefit of its char tered privileges, including the power of eminent domain, Nantahala must be charge, able with corresponding responsibilities in a business affected with a public interest."
The Franklin Press and the Highlands Maconian (Franklin, N.C.)
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Nov. 5, 1959, edition 1
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