The CHAIRMAN. We are much obliged to you, Doctor. Mr. Barton is present and will now be heard. STATEMENT OF PHILIP B. BARTON. Mr. BARTON. In connection with the questions that are asked me, may I have the privilege of volunteering certain information? The CHAIRMAN. Yes. Mr. BARTON. I am manager of the Niagara Falls Power Co. Mr. Chairman and Gentlemen, we did not intend to make any other statement at this time than that presented by Mr. Brown. I am simply here to answer any questions that the committee may wish to ask. Mr. SHARP. What position do you hold and whom do you represent? Mr. BARTON. The Niagara Falls Power Co.; I am vice president and general manager of the Niagara Falls Power Co. Mr. SHARP. Are you familiar with the equipment for using that power in a mechanical sense? Mr. BARTON. I am. Mr. SHARP. It has been said here by different witnesses at different times through this hearing that there was not the efficiency developed that there ought to be in the economical use of this power. If that is true, to what extent is it true-not only in your company, but if you know of the other concerns using power, applying to them also? Mr. BARTON. The tunnel of the Niagara Falls Power Co. has a loss of about 55 feet-that is, a slope, a difference in level-between the upper end of the tunnel and the lower end, and about 55 feet, which, of course, results in loss in the amount of power that can be developed from the head available between the river above the rapids and the river below the Falls. Mr. SHARP. Can that be remedied in any way by more efficient equipment? Mr. BARTON. In connection with second tunnel that we had planned to put in if we should develop our second hundred thousand horsepower, we had under consideration the plan to put in a very much larger tunnel at a lower level, and in that way not only make our second development more efficient than the first but also help the loss of the head in the first tunnel by connecting the old wheel pit with the new tunnel. But we did not develop the second half of our power. Mr. SHARP. Can you do that with profit with your present diversion of water? Mr. BARTON. I don't think we could, because the cost of the tunnel and the alteration of the plant would be exceedingly expensive. It is a serious question whether it would be commercially feasible. Possibly it might. But it is a serious question. Mr. SHARP. What would you say if you had the knowledge of the other companies who use this power, as to their efficiency compared with what it might be made? Mr. BARTON. I don't know that I ought to speak for the other companies because I have only a general knowledge of their features. I think the hydraulic company is using water about as efficiently as it is possible to be used with the head they have got. So are we. The companies on the Canadian side are using water about as efficiently as it is commercially possible to use it, considering their location. Of course the reason for this loss of a head with Niagara Falls Power Co., which has been spoken of, I think has been explained. When we built our plant in 1890 one of the very first considerations that our directors had in mind was that there should be no interference of any kind whatever with the scenic features of the Falls. For that reason we placed our plant a mile and a half above the Falls, where it could not be seen by spectators of the Falls, and that necessitated a long tunnel. In order to get water with sufficient rapidity the tunnel was given the necessary slope. At that time there was no question about the amount of water to be used. That was 22 years ago. The amount we could use in any case would be absolutely a negligent quantity so far as the scenic beauty is concerned. As was explained to you the other day by advice of the most eminent engineers that could be found in the world that slope was adopted, and the whole thing was done largely to preserve the scenery, on account of which we are now being criticized for the lack of efficiency. Mr. DIFENDERFER. What time in the day do you use the most force to create your power or the most water? Mr. BARTON. Our load is substantially uniform throughout the 24 hours. It is almost a straight line. From midnight until 7 o'clock in the morning there is a slight depression due to the falling off of the load at Buffalo. Between the hours of 4 and 6 o'clock in the afternoon in the fall and winter months there is a decided peak due to the overlapping of the heavy street car traffic and the lighting load when the lighting commences somewhat earlier due to the longer night. Mr. DIFENDERFER. Then during the day you would consume more water than you would from 12 o'clock to 7 o'clock the next morning, would you not, during daylight? Mr. BARTON. Yes, sir; slightly, but the difference in effect on the appearance of the Falls is absolutely imperceptible. Mr. DIFENDERFER. That would be about the time when visitors would like to see the Niagara Falls at its best, wouldn't it? Mr. BARTON. I presume that is the case; but they couldn't possibly see any difference. Mr. DIFENDERFER. Then at the time the most water is falling over the Falls would be at the time when they were sleeping. Mr. BARTON. Theoretically, yes; but our variations are small, and as a matter of fact cause no variations in the depth of water at the crest of the Falls. Mr. DIFENDERFER. There is one other question I would like to ask in that connection and that is this: How do you measure the water that you take from the Falls, by the hour, or do you measure it by the day-24 hours, is that where you get your measurement from per hour? Mr. BARTON. The amount is determined by means of half hourly readings of the electric horsepower output on the basis, fixed by the Government engineers, of the relation between output and quantity of water. This then makes accurate measurement every half hour. Mr. DIFENDERFER. That was done by measurement? Mr. BARTON. That determination was made by measurement, they determined the relation between the water taken by our plant and the output in electrical horsepower. We keep a continuous record of our output. Mr. DIFENDERFER. By the hour? Mr. BARTON. Every half hour, and those records are transmitted to the War Department, and they can see by that data whether at any time we have exceeded the limit. Mr. DIFENDERFER. Under that agreement, what are you privileged to use? Mr. BARTON. It wasn't an agreement, it was a requirement of the law. We are permitted to use 8,600 cubic feet per second. Mr. DIFENDERFER. Have you used that at any time? Mr. BARTON. Yes, sir. Mr. DIFENDERFER. The full amount? Mr. BARTON. We have been using that continuously. Mr. DIFENDERFER. I believe it is in evidence that the cost of production on the Canadian side is about $9 per horsepower. Do you care to state what the cost of producing this power-I believe you are a transmitting company? Mr. BARTON. We are a generating and transmitting company. Mr. DIFENDERFER. Distributing company, are you? Mr. BARTON. We distribute to some extent. We distribute to our own customers at Niagara Falls, and on the Canadian side the Canadian Niagara Co. at Bridgeburg and Fort Erie distributes a small amount to consumers. Mr. DIFENDERFER. I would like you to state to this committee what the cost per horsepower is for generating this electricity. Mr. BARTON. Our cost last year, 1911-I am not pretending to give the exact accurate figures-was approximately $14.50 per horsepower. Mr. DIFENDERFER. Now, you sell that power, do you not, to distributing companies? Mr. BARTON. We do; some of it. Mr. DIFENDERFER. Have you any idea what they charge the citizens of Buffalo and Lockport? Mr. BARTON. The price we charge them? Mr. DIFENDERFER. Have you any idea what they charge the public? I understand there are three profits that come out of this. Mr. BARTON. That is a mistake. We sell the Buffalo City line to the Cataract Power & Conduit Co., which takes from us and distributes in Buffalo about 65,000 horsepower. Mr. DIFENDERFER. Now to whom do they sell? Mr. BARTON. Of that 65,000 horsepower they sell about 55,000 direct to consumers, and about 10,000 is sold to the Buffalo General Electric Co., which is an electric lighting company, engaged in business long before the Conduit Co. was organized and before we began to deliver power. Mr. DIFENDERFER. Then it passes through three hands? Mr. BARTON. The power delivered to the lighting company, which is used only for lighting and running small motors, passes through three hands. Mr. DIFENDERFER. Then there are, naturally, three profits? Mr. DIFENDERFER. I should judge so. Mr. BARTON. But the investment in that lighting company would have been just the same if there had been only one company. Mr. DIFENDERFER. Now, of course, when you make up your estimates of cost you include in that your capital invested? Mr. BARTON. The costs that I gave you? Mr. DIFENDERFER. Yes. Mr. BARTON. That includes all expenses, fixed charges, operating charges, cost of transmission. Mr. DIFENDERFER. What has been the cost of the construction of that plant up to this time? Mr. BARTON. Taking the whole property of the Niagara Falls Power Co. and the Canadian Niagara Co. on both sides of the river, the actual investment to-day is about $24,000,000. Mr. GOODWIN. Do you include in your estimate of cost the interest on the investment? Mr. BARTON. Yes, sir; if you refer to cost of production, interest on the bonds, etc.; but no interest is included in cost of investment. Mr. DIFENDERFER. How do you account for its costing so much. more than the cost of production on the Canadian side? Mr. BARTON. What figures do you take as the cost of production on the Canadian side? Mr. DIFENDERFER. Nine dollars per horsepower. Mr. BARTON. That is the selling price on the Canadian side, not the cost of production. Mr. DIFENDERFER. Twelve dollars I understood was the selling price on the Canadian side. Mr. BARTON. Nine dollars and forty cents is the price at which I understand the Ontario Power Co. sells to the hydroelectric commission. Mr. DIFENDERFER. Then the cost of producing is about that, as I understand it; they are furnishing it at the cost. Now, the question asked was, How do you account for this difference between the cost of production on the American side and the cost of production on the Canadian side? Mr. BARTON. I don't admit that $9.40 is the cost of production on the Canadian side. Mr. DIFENDERFER. Would you say that they are giving it away for less than cost? Mr. BARTON. I don't know; I have no information. But, leaving that question aside, it naturally costs us more to generate and deliver on the American side. We have a larger investment because we have a larger tunnel, as I have explained, and for other reasons. Mr. GOODWIN. How modern is the Canadian company? Mr. BARTON. The Canadian plants are not complete yet. There are three of them, and none of them actually completed. They were all started at approximately the same time, about 1901 or 1902, I think. Mr. GARNER. Would you mind telling the committee if there is any water connected with your company outside of what you take from the Niagara River? Mr. BARTON. You mean in the capitalization? Mr. GARNER. The capitalization. Mr. BARTON. I don't think there is, sir. Mr. GARNER. How did you organize with a capital of twenty-four million to begin with. Mr. BARTON. The capital stock is about $5,760,000. The bond issue is a little over $18,000,000. The original capitalization started was $10,000,000 of bonds-first-mortgage bonds-and about $4,000,000 in stock, before the American plant was completed, $3,000,000 in bonds in addition were issued, making $13,000,000 and $4,000,000 in stock for the American plant. Mr. DIFENDERFER. Now, if your directors should conclude to become distributors in the city of Buffalo, would you consider that you had capital enough to do so? Mr. BARTON. In that case we should have to raise more capital. Mr. DIFENDERFER. You could raise it, could you? Mr. BARTON. I think so. Mr. DIFENDERFER. Why is it your company does not distribute in Buffalo? Mr. BARTON. Because there is a distributing company there, and there is no reason to go into competition with them. Mr. DIFENDERFER. Don't you think so? Don't you think, as a producing company, you could go into competition with them and supply the people of Buffalo with power at less cost per horsepower? Mr. BARTON. I do not think so. We should have to make the same investment they have made, and I don't see how we could sell power any cheaper. Mr. DIFENDERFER. Do you know if there is any gentlemen's agreement existing now? Mr. BARTON. There is more than a gentlemen's agreement. There is a contract. We have specifically agreed not to go in, in consideration of their agreeing to take and pay for a large amount of power at a specified price for a long term of years. Mr. DIFENDERFER. Does the hydraulic company distribute in Buffalo? Mr. BARTON. No; they do not. Mr. DIFENDERFER. Do they sell power as you do? Mr. BARTON. In Buffalo? Mr. DIFENDERFER. Yes. Mr. BARTON. They do not sell any power in Buffalo. Mr. DIFENDERFER. It is confined principally to Niagara Falls, is it not? Mr. BARTON. Yes, sir. Mr. DIFENDERFER. Do you distribute any in Niagara Falls? Mr. DIFENDERFER. To big consumers? Mr. BARTON. About 80,000 horsepower. Mr. DIFENDERFER. Does the hydraulic company infringe upon your territory in the neighborhood of Lockport? Mr. BARTON. We have no territory. Mr. DIFENDERFER. You distribute in Lockport? Mr. BARTON. We do not. Mr. DIFENDERFER. To whom do you sell? Mr. BARTON. We sell power to the International Railway at Tonawanda. It has a transmission line going through Lockport. Mr. DIFENDERFER. They supply Lockport? |