output is to be sold 50 percent to Georgia Power Co. and 50 percent to South Carolina Electric & Gas Co., which in turn, intends to sell 30,000 kilowatts to E. I. du Pont de Nemours & Co., as agent for the Atomic Energy Commission. The financing arrangements consist of 75 percent in 3%-percent first-mortgage bonds due in 1979 to be sold to 2 insurance companies, 15 percent in 4-percent notes due in 1964 to be sold to an insurance company and a bank, and 10 percent in equity to be provided by South Carolina Electric & Gas Co. The rates provided by the generating company's power contracts with Georgia Power Co., and South Carolina Electric & Gas Co. are calculated to service the bonds and notes and to provide a reasonable return on the equity capital.

In approving the Electric Energy, Inc., financing, the SEC noted that it departed to a considerable degree from standards which the Commission had consistently applied to the financing of public-utility companies. The Commission indicated that its approval was due, in part, to the "unique" character of the situation, particularly in relation to the contract between Electric Energy, Inc., and the Atomic Energy Commission. The South Carolina Generating financing did not require SEC approvel under the Holding Company Act.

In the case of Idaho Power Co., there are also certain legal and regulatory problems involved in the financing method whereby a generating company subsidiary is formed and capitalized with a high percentage of debt, such debt to be amortized with proceeds from sale of power. If these problems could be resolved, and the necessary Commission approvals obtained, we believe the required funds could be raised in this manner without difficulty.

Yours very truly,

Senator WATKINS. Mr. Chairman, would you permit him to explain the letter? If you don't ask it, I shall ask it.

Senator KEFAUVER. It is not his letter. It is a letter from the head of the finance division of Ebasco to Mr. Roach.

If you have anything to say about the letter, say it, Mr. Roach. Senator WATKINS. I want to know the whole transaction around this. If we are going into it at all, let's find out what it is all about. Senator KEFAUVER. My thought was that the letter speaks for itself but if Mr. Roach has anything he wants to add to it, he may do so now. Mr. ROACH. Senator, manifestly I did not take the time. This letter is dated 1952, that is over 5 years ago.

I have not taken the time or imposed upon the time of the committee to read it in detail.

But prior to our Federal Power Commission hearing when I was endeavoring to prepare myself in planning our financial program to carry through these projects and to prepare myself for the testimony

that I was going to give before the Federal Power Commission in the hearing, I sought counsel and advice from the financial department of Ebasco services from the Blythe & Co. in New York, from Kidder & Peabody, investment bankers, from the Bankers Trust Co., from Guaranty Trust Co.

I talked to a number of major life-insurance companies who might be expected to be purchasers of the securities, bonds, and other securities of Idaho Power in the event they received a license and went through with these projects, and this inquiry and the answer was in part my preparation for testimony so that I would be able, with intelligence and with accuracy, be able to defend the program of financing and to prove to the satisfaction of the Federal Power Commission that there were means by which the project could be proved financially feasible under the test applied by the Federal Power Commission.

Senator KEFAUVER. The only purpose of showing you that letter was to show, as you have said, that you had knowledge that this tax certificate would be valuable and beneficial to you in the financing of your company.

Mr. ROACH. Šenator, I said that in my testimony to the Federal Power Commission that is on file here, so it is no different from that. Senator KEFAUVER. That is just the advice that Ebasco gave you? Mr. ROACH. Ebasco was one of about a dozen organizations, Senator, from whom I sought advice.

Senator KEFAUVER. Mr. Roach, Idaho Power Co. in connection with Hells Canyon had an advertising program for newspapers and magazines. Is that one of your advertisements?

Mr. ROACH. Senator, this is a printed piece.

Now whether it is a copy of an ad or merely a printed piece for distribution I can't answer you, but it is an Idaho Power Co. document. Senator KEFAUVER. Show it to Senator Watkins and let's make it a part of the record. It is signed by the Idaho Power Co. Mr. ROACH. It has Idaho's printed signature on there. (The document is as follows:)

THE HELLS CANYON ISSUE IN SIMPLE TERMS

The controversy surrounding the proposed development of the Hells Canyon stretch of the Snake River can be reduced to this simple proposition:

"Which plan of development is most beneficial to the people of the area and of the Nation?"

All other considerations are subsidiary. The final determination will be made on this basis.

In fact, the Congress has given to the Federal Power Commission the specific responsibility of determining which resource development plan is best in the public interest, not only in this case but for all other hydroelectric projects in the United States for which licenses are granted.

It is easy to define the issue, but difficult to determine what is truly best in the public interest when emotional appeals are made which conflict with facts of engineering and economics. Extensive hearings of technical testimony must be conducted, witnesses must qualify as to competence, testimony must be given under oath, and cross-examination permitted. Ultimately the truth will be established.

This process is now taking place in the formal hearings before the Federal Power Commission in Washington, D. C. Public confusion has been created by the widely disseminated claims and opinions of public-power supporters who oppose development by private enterprise. Their claims, as well as those of Idaho Power Co., are being tested in this hearing by the agency authorized by Congress to decide which of conflicting programs best meets the test of comprehensive development.

A summary of the program which Idaho Power Co. has presented to the Federal Power Commission and supported by sworn testimony appears below. We think the public is entitled to know the company's position and the findings of its engineers.

We sincerely believe the company's proposed program meets the test of being "most beneficial to the people of the area and of the Nation."

IDAHO POWER'S PROGRAM IN SUMMARY

The company's program will—

(1) Fully develop the Hells Canyon stretch of the Snake River at a far lower construction cost and at a far lower cost of producing power than any other plan.

(2) Produce approximately the same amount of power "at site" and downstream as the proposed single Federal dam. Any small difference in output which might for a relatively short period and under certain temporary conditions favor the single dam would be prohibitively expensive.

(3) Make possible the production of over 40 billion kilowatt-hours-the output of Bonneville Dam for approximately 10 years prior to the time a single high dam could be completed.

(4) Provide 1 million acre-feet of storage-the maximum dependable amount afforded at the site after taking into account the future upstream irrigation development and resulting depletion of water available for powerstorage purposes.

(5) Fully provide the release of water required by the United States Army Corps of Engineers for navigation purposes.

(6) Adequately meet the test of flood-control needs.

(7) Create a superior recreational area.

(8) Fully protect irrigation water rights of present and future agricultural development upstream. (There is no irrigation to be served from a reservoir at this site under any plan.)

(9) Provide large blocks of low-cost power rapidly to serve the needs of Snake River Valley and of the Pacific Northwest through interconnection with the Northwest power pool.

(10) Be productive of $10 million annually in tax revenues for Federal, State, and local taxing units in addition to the tax revenues created by users of the power—all without cost to taxpayers.

Senator KEFAUVER. How many of those ads do you think you put out, Mr. Roach?

Mr. ROACH. Senator Kefauver, I don't have the slightest idea how many were put out. During the course of the discussions on Hells Canyon, we put out a number of bulletins, we put out a number of booklets, and they were distributed some of them to our employees and some of them throughout our service area.

I could not hazard a guess as to how many we might have put out. Senator KEFAUVER. I have seen a number of them too and they are along this line. The pertinent part that I wanted particularly to call attention to is the summary, the 10th part saying the program would

be productive of $10 million annually in tax revenue to Federal, State and local taxing units in addition to the tax revenues created by users of the power, all without cost to taxpayers.

Is that the general purport of your various advertisements?

Mr. ROACH. We have consistently used that expression, Senator, as Mr. Parry has explained to you.

Senator KEFAUVER. On the assumption that you don't feel this is a cost to the taxpayer?

Mr. ROACH. Yes; in the terms that Mr. Parry described, that it was a contribution from the Federal Treasury, a subsidy or any cash contribution toward the construction of the projects.

Senator KEFAUVER. Ebasco, your agent, also had an advertising program on your behalf, did they, Mr. Roach?

Mr. ROACH. No; I don't believe so, Senator.

Senator KEFAUVER. Will you examine the Ebasco advertisement and the letter to you?

Mr. ROACH. I think what this is, Senator, is an ad of the Ebasco Services, Inc., which was one of a series that were being run at that time telling about companies for which they had done work or were doing work?

I think there was no campaign on behalf of or no program, no continuous program on behalf of Idaho Power.

I think this happens to be one of a long series of ads, the particular one of which happened to be Idaho Power, but I am sure to the best recollection there was no other ad than that one.

of my

Senator KEFAUVER. It is something you paid Ebasco to do?
Mr. ROACH. We did not sir.

Senator KEFAUVER. Anyway, so that we can all know what it is, it is a photostat of an ad and it is accompanied by a letter from Bill McInnis, department manager, to Mr. Roach, of February 19, 1954. Mr. ROACH. Is that addressed to me, Senator?

Senator KEFAUVER. Yes; it seems to be addressed to Mr. T. E. Roach, airmail, so we will make that an exhibit to the testimony. (The letter referred to is as follows:)

Mr. T. E. ROACH,

Idaho Power Co., Boise, Idaho.

FEBRUARY 19, 1954.

DEAR TOM: Enclosed herewith is a copy of the Ebasco advertisement which we have discussed, showing the text, with the changes which Mr. G. L. Stanton authorized in his letter to me of February 10. You will note that we have used the $100 million figure. It will be more impressive than the figure we previously used showing the contribution that Idaho Power Co. has made to the economy of the Snake River Valley.

I am sure that you will approve of the use of this larger figure for Mr. Stanton indicated in his letter that it is the one you have used in publicity items. Please let us know as soon as possible if the revised text is satisfactory to you.

Hal Slocomb, who handles our advertising, is writing to Mr. Stanton to get answers to a few technical questions which they can straighten out easily by direct correspondence.

As we agreed over the telephone, I think this is a particularly good advertisement both from the standpoint of Idaho and Ebasco. We are glad that we can engage in this joint effort.

I am looking forward to having a chat with you the next time you come to New York.

With kindest personal regards,

Sincerely,

BILL, Department Manager.