Ebasco Services, Inc., description of services and billings rendered to Idaho Study re economics of power gener Technical services re joint A. C. Technical services re transmission $23, 066.05 1, 161.09 $3, 802. 74 135. 27 12, 301.45 9, 202. 84 48, 764.43 Total.. 1 36,663.86 216, 391.04 107, 916.03 41, 401. 14 20, 665. 49 3,921. 77 5, 953. 49 Includes charges unbilled in previous year amounting to $1,953.78. Senator KEFAUVER. Gentlemen, on another subject, Electric Bond & Share was a holding company for Idaho Power in 1942, wasn't it, or a subholding company? Mr. COSDON. Senator, I did not come with the Ebasco Services until 1944. My recollection is just a bit hazy as to what the situation was prior to that time. Senator KEFAUVER. Sometime previous it was a subholding company or holding company for Idaho Power. It was dissolved under the Holding Company Act; isn't that true? Mr. PоTH. Perhaps, Senator, I can clarify that. If my recollection serves me, Idaho Power was a subsidiary operating company in the Electric Bond & Share system. It was one of the earlier companies, if my memory serves me, that the subholding company in the system, which I have now forgotten, divested by order of the SEC. Its stock was distributed sometime in the year 1943. Senator KEFAUVER. I think it is interesting for the consideration of this committee, in the light of the continuing year after year service that you are rendering for Idaho Power Co., to put into the record the order of the SEC and also the Commission's opinion and order 4527. which was the divestiture order, which says in that connection, speaking of Ebasco and Idaho Power Co.: We shall therefore condition our order herein to require that the contract between Idaho and Ebasco pursuant to which Ebasco now renders to Idaho continuing general and special services shall be promptly terminated and that Idaho shall not thereafter enter into a service contract with Ebasco for any managerial, supervisory, or other continuing services. Mr. COSDON. Senator, I would offer this with the thought in mind that perhaps it will clarify that point: We do have in our Washington office what in the past has been called group or continuing services. Our other departments in New York have the very same type of services. Certainly as far as the Washington office is concerned and to the best of my recollection as far as the other departments of Ebasco, there has not been any continuing arrangement with the Idaho Power Co., that all services rendered to Idaho Power have been at their specific request, for which we have received our customary per diem rates. Senator KEFAUVER. Let that order be made part of the record. (The order is as follows:) SEC ORDER 4527 (P. 6, Commission's opinion in Holding Company Act Release 4527 of August 31. 1943. In re Idaho Power Co. File No. 70-753) We agree that the divorcement of Idaho from Electric is necessary to effecuate the provisions of section 11 and therefore make the suggested findings and will issue the requested order. To find the requisite compliance with the provisions of section 11, however, we must insure that the sale of the stock of Idaho held by Electric will result in its complete and unquestionable divorcement from Electric. In our view, such divorcement cannot be insured so long as the present close continuing relationship is maintained with Ebasco Services, Inc., a wholly owned subsidiary of Bond & Shares and the service company for all of the Bond & Share system domestic companies. We shall therefore condition our order herein to require that the contract between Idaho and Ebasco pursuant to which Ebasco now renders to Idaho continuing general services and special services shall be promptly terminated and that Idaho shall not thereafter enter into a service contract with Ebasco for any managerial, supervisory, or other continuing services. Mr. Pотн. I might observe that the SEC order specifically makes reference, sir, to continuing services. There were two clearly different types of service offered by Ebasco back at the time of the Commission's order; the continuing general type which is inhibited by this order, and recurrent services, Senator, which are upon the order of the company. As I am sure you know, Ebasco is still subject to the SEC under section 13 of the Holding Company Act. So whatever is done is under statute, sir. Senator KEFAUVER. The present relationship and what you are doing, whether you are meeting and complying with this order or not, is now being looked into by the SEC. Mr. POTH. I think so. There are representatives in the room. Senator WILEY. May I read into the record two paragraphs here which were given in the testimony of Mr. Seaton, which confirms my understanding of the situation? Seaton said: My letter of March 11 was intended as an appeal to the Office of Director of Defense Mobilization to exercise the discretion vested in him to deny these certificates on grounds which lie outside of the established regulations and criteria which have been applied in previous cases. Then he goes on I recognize full well that the Director of the Office of Defense Mobilization has the authority to act in these matters without my concurrence. I also recognize that in the face of the precedents— this is important reaching back over two administrations, he might be most reluctant to deny such certificates on the grounds which lie outside of the established regulations and criteria. Therefore, I— Seaton says have no criticism to offer of the Director. He exercised his judgment as it appeared to him under the authority vested in him. Nevertheless, I reiterate that I did recommend against the issuance of the certificates and would do it again. Now I think that sort of clears up some of the disputed matters that he is right as to where the authority is and also as to precedents that have been set through two administrations. That is on page 515 of volume IV of the hearings. Senator KEFAUVER. I think before these gentlemen leave, it is of interest to point out that we had a similar situation in connection with the Mississippi Power & Light Co., where they had been divested but Ebasco continued to render various services. The fact is Mr. Steitenroth, the treasurer of Mississippi Power & Light, said Mississippi was completely run out of Ebasco's office at No. 2 Rector Street in New York. That was his opinion. I have always felt that the testimony in some of these cases showed that after Electric Bond & Share's subholding companies were dissolved, it continued through this service agent, Ebasco, to service companies with just about the same services that it rendered before, the only difference being in one case it received dividends and in the other, fees for services rendered. That is a matter now being studied and I am glad it is being studied by the SEC. I hope they will render an opinion and make some conclusion about it. Thank you very much, gentlemen. Mr. COSDON. Thank you. Mr. PоTн. Thank you. Senator WILEY. Are we through for today? Senator KEFAUVER. Let's get Mr. Roach and Mr. Kimball identified. These gentlemen have come from far away to testify and have their say. Then we will recess until after lunch. Mr. Roach. Mr. ROACH. I am Mr. Roach. Senator KEFAUVER. Mr. Roach, you may sit down and the gentlemen with you may have a seat. You are Mr. T. E. Roach, the president of the Idaho Power; is that right? Mr. ROACH. That is correct. Senator KEFAUVER. Will you identify yourself and give the full title of the gentlemen you have with you. Mr. ROACH. I have with me Mr. John T. Kimball, who is vice pres ident and general manager of Idaho Power Co., and Mr. R. P. Parry of Twin Falls, Idaho, who is special counsel for Idaho Power. Senator KEFAUVER. Mr. Parry, I believe, has testified a number of times before Congress and has handled the general matter of the application for the Idaho Power license before the Federal Power Commission and has appeared before the Interior Committee and perhaps other committees speaking for Idaho Power Co.; is that correct? Mr. ROACH. He has appeared before the Senate and House Interior Committees, speaking for Idaho Power. As to any other committees, I don't presently recall. Senator KEFAUVER. We asked you to bring certain material with you and I wonder if you would submit the material that you brought at this time, Mr. Roach. Will you identify the material that you turn over? STATEMENT OF T. E. ROACH, PRESIDENT, IDAHO POWER CO.; ACCOMPANIED BY JOHN T. KIMBALL, VICE PRESIDENT AND GENERAL MANAGER; AND R. P. PARRY, SPECIAL COUNSEL Mr. ROACH. Senator, I received a telegram dated June 6, 1957, signed by yourself, reading: In addition to the material requested by staff counsel, of Mr. Parry by telephone, kindly bring the following with you to the hearing Tuesday: Photostat copies of records of stock transfers for the period April 1, through May 15, 1957. which I will now hand to this gentleman across from me here. Senator KEFAUVER. We will let it be exhibit 1. (The material referred to may be found in the files of the subcommittee.) Mr. ROACH. Copy of minutes of the stockholders' meeting of May 1, 1957, which I am likewise handing to the gentleman here. Senator KEFAUVER. That will be exhibit 2. (The material referred to may be found in the files of the subcommittee.) Mr. ROACH. A copy of the company's latest financial report, which is our published annual report for the year ending December 30, 1956. Senator KEFAUVER. Let that be exhibit 3. (The material referred to may be found in the files of the subcommittee.) Mr. ROACH. Mr. Parry conveyed to me the substance of a telephone call from Mr. Dixon for a copy of our construction contract with Morrison-Knudson Co., with all up-to-date amendments, covering FPC project 1971, which I am handing him. Senator KEFAUVER. That will be exhibit 4. (The material referred to may be found in the files of the subcommittee.) Senator KEFAUVER. Does that have Oxbow and Brownlee both in there? Mr. ROACH. It does. Senator KEFAUVER. Are they separate or how do they come? Mr. ROACH. This is one contract, sir. Senator KEFAUVER. Does it have little Hells Canyon in it? Mr. ROACH. No, it does not. Senator KEFAUVER. Does this have all the latest amendments to the contract? Mr. ROACH. It has everything in the way of our contractual arrangements with Morrison-Knudson. Senator KEFAUVER. Very well. Mr. ROACH. The last item was a request that I bring with me, if I have it, the text of a talk made before the New York Society of Security Analysts on May 15. Senator KEFAUVER. Are your notes in connection with it? Mr. ROACH. I brought my notes along because I didn't have a prepared talk or a manuscript, Senator, and those notes are the original notes, which I am handing to the committee. Senator WILEY. You are an ad libber. Mr. ROACH. Well, not exactly, Senator. Senator KEFAUVER. Those notes will be marked "Exhibit 5." (The material referred to may be found in the files of the subcommittee.) Senator KEFAUVER. We thank you for bringing these. Are there any of them you want returned, Mr. Roach? Mr. PARRY. I believe Mr. Roach has told me those are the only copies of his notes. Senator KEFAUVER. We will have them photostated and return them to you. It is almost lunch time, but I presume you gentlemen have prepared statements, do you not? Mr. ROACH. No; I do not. Mr. PARRY. None of us do. Senator KEFAUVER. While we are on the subject, we had Mr. Cosdon and Mr. McDonald and the telephone official here about these calls on April 16 or April 18. Will you tell us what your records show in connection with those calls or tell us what you recall about them? Mr. KIMBALL. I made a list of the calls as they were enumerated here this morning. I do not recall the call on April 11. Senator KEFAUVER. Do you have a record of having received the call? Mr. KIMBALL. So far as I know, I do not. |