York, because it is obsolutely opposed by the vast overwhelming majority of all the people of the State of New York, and 95 percent of whom are all served by private utilities who would be discriminated against, farmers and domestic consumers alike, 95 percent would be discriminated against by a Federal preference clause.

Senator CARROLL. Perhaps this is an exception reached by interstate compact.

Mr. MILLER. The point you bring up is very salient here, and I think it should be commented upon. We are not in our approach to this thing destroying the rights of the consumers in Pennsylvania or Ohio. As a matter of fact, we are protecting them because it is spelled right out in the bill that they shall be entitled to their fair share of the allocation of this project power. But we go further and we protect Senator Clark's people from Senator Clark's approach himself, and we say that the power shall be distributed in Pennsylvania according to the law of Pennsylvania. And how much fairer could we be? Senator CARROLL. In other words, by contract or by the legislation itself, they have the protection in Ohio and Pennsylvania? Mr. MILLER. Right.

Senator CARROLL. Thank you.

Senator NEUBERGER. You made the point, Congressman, if the preference clause is added it will discriminate against the customers of the private utility companies. Is that right?

Mr. MILLER. That's right.

Senator NEUBERGER. Is it your point that whenever a preference clause is enacted that it discriminates against those in the area who are served by a private utility company?

Mr. MILLER. It could, in the State of New York, where 95 percent are served by private utilities, and where you couldn't

Senator NEUBERGER. I don't know why the State of New York is so different from the rest of America.

Mr. MILLER. Because it is completely electrified, for one thing.

Senator NEUBERGER. The point I don't get, though, is this: Why do you make the claim that the enactment of the Federal preference clause-whatever else you want to call it-discriminates against the customers of private utility companies in that area?

Mr. MILLER. First, I make the claim that it would discriminate against New York because it is the first time you had ever done it to any State.

Senator NEUBERGER. You are shifting the scenery all the time. What I want to get, Congressman, if I may, is why would the Federal preference clause discriminate against the customers of private utility companies in that area?

Mr. MILLER. Because of the fact that 95 percent of the farmers and the domestic users of electricity in New York State are now served by private utilities, or public utilities. That if you had a Federal preference clause which gives an outright preference to the customers of municipally owned plants or REA's, it means that all contracts to the public utilities for power which they in turn sell to the rural and domestic consumers of New York, would be subject to withdrawal upon application by a preferred customer, to an outright withdrawal.

So that if you resided in an area to be served or served by a municipal plant, all you would have to do if this Federal preference were

passed, all you would have to do is make application to the Power Authority of the State of New York, and get your power, even though it meant the power had to be withdrawn from the utility which was using the power to serve other farmers and other domestic users in an area not served by a preferred customer.

Senator NEUBERGER. If your point is right-and I am not disputing it because who knows the right in a lot of these things-then the preference clause has always been discriminatory and always been inadvisable.

Mr. MILLER. Of course not.

Senator NEUBERGER. Then isn't that the way the preference clause works in the West?

Mr. MILLER. The preference clause originated, as you well know, because of the fact it was in cases where Federal money was being used. The taxpayers' money was being used to build Federal projects with Federal money, and the Federal preference clause was put in so that there would be electricity given to people in areas that the utilities had not served or refused to serve and were not serving now, in order to give them electricity and electrify them. That doesn't apply in New York.

Senator NEUBERGER. Have you studied the operation of the preference clause in the Western States? Do you realize that in the Western States under the preference clause as it applies to Federal power projects, that a municipal operation or cooperative can make a preferred demand for power and that they can get the power from the Federal project, regardless of what particular Federal project it happens to be?

Mr. MILLER. I understand that.

Senator NEUBERGER. And that it can be withdrawn then from a private utility that is serving its customers?

Mr. MILLER. I understand that.

Senator NEUBERGER. And that this has gone on in most of the western projects since the Presidency of Theodore Roosevelt.

Mr. MILLER. I understand that.

Senator NEUBERGER. And that this discriminatory claim hasn't applied there.

You have described accurately how the preference clause works. I don't see how you can say it is discriminatory in New York and yet you say it isn't discriminatory in Colorado or Oregon.

Mr. MILLER. Because in Oregon or Colorado you are talking about power created or made or generated out of the public taxpayers' funds, and we are not talking about any such thing in New York. We are talking about having our power authority raise the money by the sale of its own bonds, $600 million, incidentally, to be paid for out of a business operation of the power authority, and we are not asking for a single thing from the Federal Government except that you leave us alone, and that you don't impose upon the people of the State of New York a Federal preference clause which is contrary to the laws of the State of New York and under which we could not accept a license because of the enabling legislation.

Senator NEUBERGER. In other words, your basic objection to the preference clause then is not that it is discriminatory in general, but that you are just opposed to it as it applies to a State financing?

91898-57-3

Mr. MILLER. I believe in States' rights if it comes down to that question, and also because of the fact that if you have a Federal preference clause in New York, what it would lead to only is the incentive to condemn existing utility systems and steam plants and other possessions of utilities in the State of New York who now serve 95 percent of the people, and you would have all of those things going off the tax rolls in various localities and you would eventually have a further crisis than you have now as far as letting our people educate themselves and provide funds and so forth and so on, all on the theory that you get power cheaper, which actually has never worked out.

Our industrial rates in New York today are lower than they are in the TVA area, and our commercial and our residential rates are lower than the national average. And our people time and time again have indicated, both in resolutions and in legislative action, that they don't want the preference clause. They don't want a law set up which encourages the condemnation of the existing utility system which has served New York since its inception.

Senator NEUBERGER. How have your people indicated that?

Mr. MILLER. By resolutions passed by-I take it that these would be an even greater proof because over the years, as I think you probably know, we have had an issue here in the development of this, not even by the State of New York but by private enterprise, and that approach to the development of this agency was endorsed by the New York State Federation of Labor, by the Towns Association—we have local governments called towns in the State of New York, and the Towns Association, representing all the towns in the whole State of New York, endorsed the private enterprise bill. The boards of supervisors of every one of 62 counties endorsed the private enterprise bill. Since this solution has been reached, every resolution I know anything about that has been passed in New York by any organization has been in favor of the approach of the Ives-Javits-Miller bill, which does not include the preference clause, including Empire State chambers of commerce, the boards of supervisors, common councils and so forth, all organizations which have gone on record in this issue.

Former Governor Dewey said the preference clause was not consonant with the New York law. The chairman of the Power Authority of New York, who is here, who is going to have to raise the money for this, who is going to have to run the operation and sell the power and liquidate the bonds, says that it is contrary to the law of the State of New York.

And, as a matter of fact, it was proposed to our legislature in Albany this year that the Power Authority Act be amended so as to make a Federal preference clause applicable to the distribution of power in New York. It was overwhelmingly rejected. And every single person I know anything about in New York is opposed to the Federal preference clause.

It is recorded, and I understand former Governor Poletti is here to testify for Governor Harriman, and I don't propose to speak for him. I do say that in the final distribution of the power at St. Lawrence the Governor didn't apply the Federal preference provisions or theory in the distribution of St. Lawrence power, and I am not too sure the Governor would be too mad if this approach to the problem were accepted.

Senator NEUBERGER. I will say that is quite a unanimity of opinion. I am curious to know where Senator Lehman got his votes.

Mr. MILLER. I am curious to know, too.

Senator NEUBERGER. I want to go back to one of your points in which you said that if there were a preference clause these municipalities might encourage the buying-out of the private companies and that would take

Mr. MILLER. There is no other preference to the Federal preference clause in New York.

Senator NEUBERGER. Let me ask you this: Do you think that necessarily means that the preference clause is bad? Hasn't that been the reason that the preference clause has been in operation in the Western States, that if a municipality should want to buy out a private company that it has a source of energy?

You mentioned education taking property off tax rolls. Have you studied, for example, the educational systems in the city of Seattle, or Tacoma?

Mr. MILLER. Yes; and I understand we in New York have to help pay for your power, which makes it easier for you to educate your people.

Senator NEUBERGER. May I ask you where you are helping to pay for our power?

Mr. MILLER. Because in New York all of the consumers of power are paying taxes for their power, and you are not.

Senator NEUBERGER. We are not paying for our power?

Mr. MILLER. You are not paying taxes.

Senator NEUBERGER. Let me get that straight, because I think a lot of us from the Western States are involved in this.

New York paying for our power?

How are you in

Mr. MILLER. We are subsidizing the power because you are not paying any taxes and we are.

Senator NEUBERGER. We are not paying any taxes?

Mr. MILLER. In your power rates.

Senator NEUBERGER. În our power rates where are we not paying

any taxes?

Mr. MILLER. In the Bonneville area.

Senator NEUBERGER. We are not paying any taxes?

Mr. MILLER. In your power rates you are not paying any taxes, or small, in lieu of tax provisions, in the TVA theory. That is nothing in comparison to the taxes which the utilities in New York pay, full taxes, full corporate taxes.

Senator NEUBERGER. Are you claiming that the Bonneville rate does not pay for the project?

Mr. MILLER. It pays for the project, but it doesn't pay any taxes. Senator NEUBERGER. Are you claiming then that flood-control projects of the Federal Government, the navigation projects of the Federal Government, should pay taxes?

Mr. MILLER. Of course not. And I voted for them. And I believe, also, that when you get into Federal multiple-purpose appropriations that certainly the hydropower, which is incidental to the construction of the dams for those purposes, should be developed. And if it is developed by Federal funds, and the area is short of power and it is not an electrified area, certainly I agree that you should have the power. But the point remains you don't pay any taxes for them.

Senator NEUBERGER. You have put on the record that you in New York are paying for our power with your taxes. I want to know how you are doing that. You haven't told us. Mr. MILLER. I will try once again. Because of the fact that in New York-I don't have the exact figure, but I would like to have the opportunity of submitting it for the record-in New York the five utilities which serve at the present time the people of the State of New York, paid in Federal taxes last year, X number of millions of dollars. I don't have it but I can get the figure. I presume it was well over a hundred million dollars. And that money has come down here to the Treasury of Washington. I don't dispute the fact that those taxes are reflected in the rates that the people of New York pay for their electric power. All I am saying is that in your area, when you buy your power, there is no tax reflected in the rate. And nothing comes to Washington from the Bonneville Dam. That is for

sure.

Senator NEUBERGER. I don't get your point. Do you think then there should be a tax on Bonneville Dam?

Mr. MILLER. No.

Senator NEUBERGER. Do you think that would be advisable?

Mr. MILLER. I will say once again that I will leave Bonneville Dam in Oregon all alone, if you will leave us alone in New York, and let us develop our power like we want it in New York, like our law provides for in New York, and that is all.

Senator NEUBERGER. We don't expect you to leave Bonneville alone because Bonneville is a Federal project and we are glad to have Congress exercise supervision over it and it is very successful. Bonneville is paying for itself and it is away ahead of the repayment schedule set up by the Congress.

Mr. MILLER. And you are for the Bonneville Dam proposition?
Senator NEUBERGER. I am.

Mr. MILLER. And you feel it is good for the people of Oregon.
Senator NEUBERGER. Definitely very good.

Mr. MILLER. I feel that this development in New York is good for New York if it does not have the Federal preference clause. But if it does have a Federal preference clause which would force the condemnation and destruction of the existing utility system, the necessity of building duplicate transmission lines, the money for which could never be secured by the State of New York-we are not talking here about this big, colossal, unlimited treasury of Washington; we are talking about a pay-as-you-go little authority in the State of New York that is going to try to raise its money by the sale of bonds in the open market, and to liquidate those bonds by the sale of its power. And that if you get into a question of an outright preference and the question of encouragement to municipalities and REA's throughout the market area, of encouraging the condemnation of existing systems to set up their own systems because they have a preferred claim on their power, then you would get into a question of the necessity for duplicate transmission lines, the cost of which could never be repaid, the money for which could never be secured by the Authority of the State of New York.

It just would be-well, it would simply mean there would be no development at all. In addition to which I must point out to the