Yardstick v. Slapstick

One of the pet projects of James Delmage Ross, onetime Securities & Exchange Commissioner, longtime head of Seattle's municipal power system and now administrator of Bonneville Dam, is a standard yardstick for all Federal power projects. Last week Administrator Ross took his yardstick formula to President Roosevelt at Hyde Park for approval. The President approved for Bonneville only, but the idea seemed to be that if it worked at Bonneville the formula would be applied permanently to TVA, Boulder and Grand Coulee Dams and the "little TVAs" of the future. Said Mr. Ross: "We ought to be businesslike about this thing and pay Uncle Sam back the money he puts up."

The Ross formula called for power rates high enough to pay 3 1/2% interest on the Government's investment and to pay back that investment over a period of 40 years. In this formula, however, there was a big joker. The Government investment would not be the total cost of the development but only that part allocated to power. The rest would be charged off to flood control or navigation. On the Tennessee River, Wilson Dam, for instance, is valued at $33,000,000 but for yardstick purposes the power investment is considered to be only $22,000,000. Division of the $51,000,000 investment in Bonneville has not yet been determined by the Federal Power Commission.

To a private powerman who has to pay interest on the entire cost of a dam or a steam station, this arbitrary allocation of Government costs seems thoroughly unfair. Moreover, a public project pays no taxes, which may take as much as 25-c- from every private power dollar. And after the Ross formula works itself to its 40-year conclusion, the Government apparently will be almost ready to give its power away. Cried the Republican New York Herald Tribune: "Bonneville may be a yardstick to Mr. Ross. To the plain citizen its economics are just slapstick."

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