Under arrangements with its three associated companies of the Southern Co.'s system, located in adjoining States, the Alabama Power Co. interchanges power with, and sells power to, these companies. The company also supplies power to Alabama Electric Cooperative, Inc., a generating and transmission cooperative. The transmission facilities of each of the utility companies of the Southern system are connected to their generating plants and other sources of power by means of heavy-duty, high-voltage lines in such manner that, in effect, power generated at any point on the entire Southern Co. system may be utilized at any other point. There are additional interconnections with Tennessee Valley Authority, other neighboring utilities, and a number of industrial and miscellaneous sources. This transmission system is being strengthened each year as necessary to meet the needs of the area served by the companies of the Southern Co. system. The total rated capacity of the Alabama Power Co.'s 12 generating plants is 1,379,700 kilowatts, of which 489,700 kilowatts is in 6 hydroelectric plants, and 890,000 kilowatts is in 6 steam plants.

The company has under construction unit No. 8 at Gorgas steam plant, which, when completed, will add approximately 157,000 kilowatts to the steam capacity of the company. It has also under construction unit No. 9 at Gorgas steam plant, which, when completed in 1958, will add approximately 165,000 kilowatts to the Gorgas steam plant, making a total of approximately 1,212,000 kilowatts of steam-plant capacity. The company's load is growing rapidly, nad we are planning additional steam-plant capacity in the near future.

In addition, the company will shortly apply to the Alabama Public Service Commission and the Federal Power Commission for authority to construct hydroplants on the Cocoa and Warrior Rivers.

Development of the Coosa River by Alabama Power Co. began with the start of construction of Lay Dam in 1910, which plant went into service in 1914, and has a present capacity of 81,000 kilowatts. This dam was authorized by an act of Congress in 1907. Mitchell Dam, with a present capacity of 72,500 kilowatts, went into service in 1923; and Jordan Dam, farther downstream, was completed in 1928 with a capacity of 100,000 kilowatts. These existing hydroelectric installations of the company form a series of successive slack water reservoirs on the Coosa River starting just north of Wetumpka, Ala., and extending upstream for approximately 45 miles.

The Rivers and Harbors Act of 1945, by authorizing Government development of the Alabama-Coosa River and tributaries, prevented the Federal Power Commission from granting licenses for new projects on such streams. On June 28, 1954, the President approved an act of Congress giving the Federal Power Commission jurisdiction to permit further development of the Coosa River by private interests. The act provided that the dams licensed by the Commission be best adapted to the comprehensive plan for development of the Coosa River for the use or benefit of interstate commerce, for the improvement and utilization of waterpower development, and for other beneficial public uses, including recreational purposes; that they shall provide a substantially continuous series of pools; that basic provisions for future economical construction of navigation facilities be included; and that economically feasible flood-control storage be provided. The act further requires that an application for license be filed within 2 years after enactment of the act; construction of a dam be commenced within a period of 1 year subsequent to the date of the issuance of a license; and that all dams be completed within 10 years from the date of the commencement of construction of the first dam, subject to the provisions of the Federal Power Act. On November 12, 1953, the conipany filed application with the Federal Power Commission for a preliminary permit for the Coosa River project. This permit was granted on July 27, 1954.

This series of dams, together with those already constructed by Alabama Power Co., will create a series of navigable pools from Wetumpka, Ala., to Rome, Ga., a distance of 275 river-miles.

Alabama Power Co. is undertaking the job of completing a program begun by it on the Coosa River many years ago. These new facilities will represent an investiment of over $100 million which will be provided by the company. Our plans call for a total installation of 482,000 horsepower of which 321,000 horsepower will be installed as the plants are developed.

The type of operation we propose on the Coosa River will make navigation possible when the necessary locks are provided by the Government, and by creating lakes with known water levels will make the area more inviting to industries considering Alabama as a location. Our plan of development will flood a minimum of territory and provide substantially all the other benefits which are

considered to be desirable in a river development program, including the measure of flood control provided for in the act of Congress. The manner in which the dams will be operated will provide a regulated flow for the benefit of navigation downstream. The lakes to be formed by the dams will provide additional recreational facilities for lovers of outdoor sports, and homesites for those who prefer a lakefront. Forest lands which will come into our ownership will be managed according to most modern forestry practice and with the idea of conservation in mind.

The company also proposes to construct a dam and powerhouse at or near the New Hope site on the Sipsey Fork of the Warrior River, approximately 12 miles northeast of Jasper, Ala., and the installation of electric generating facilities at the existing dam of the United States Government at lock 17 on the Warrior River, 21 miles north of Tuscaloosa, Ala.

The proposed Warrior River project will include major flood-control features and will provide a regulated flow in navigation channels from the mouth of the Sipsey Fork to tidewater and abundant water for the operation of modern locks on the river. The present system of Government navigation dams and locks is in process of modernization. The development of the headwaters of the Warrior will also be of great value to the citizens of Birmingham and Tuscaloosa by making available to them the water related resources of the valley, including an industrial water supply, and will increase the industrial potential of all other communities and counties adjacent to the Warrior-Tombigbee River system.

On July 27, 1954, the company filed an application with the Federal Power Commission for a preliminary permit for the proposed hydroelectric developments on the Warrior River, and the permit was issued on December 27, 1954. The plants we propose to build, including lands to be flooded, will be subject to State taxation. State taxes on the power produced at these plants will provide additional revenue for the State's educational trust fund. Full Federal taxes will also be paid on the revenues derived from the sale of power from these plants. and the power from them and other plants will be sold at rates approved by the Alabama Public Service Commission. These properties will, therefore, make their contribution to the cost of the proper functions of government.

The company's proposed Coosa and Warrior Rivers developments have received widespread and enthusiastic support. Many resolutions endorsing the projects have been adopted by many different types of organizations including municipal and county authorities, labor unions, chambers of commerce, civic organizations, and Legion organizations.

Preliminary work on the Coosa and Warrior Rivers is nearing completion, and it is the purpose of the company to file applications for licenses with the Federal Power Commission for the projects described herein sometime before the 1st of January 1956; and the company will, at the same time, file applications with Alabama Public Service Commission for certificates of convenience and necessity for these projects.

I am

Respectfully yours,

THOS. W. MARTIN, Chairman of the Board.

Mr. JONES. Mr. Quince Eddens, manager of the Decatur, Ala., Electric System. Mr. Eddens.

We are glad to have you, Quince.

STATEMENT OF QUINCE EDDENS, MANAGER, DECATUR ELECTRIC SYSTEM, DECATUR, ALA.

Mr. EDDENS. Mr. Chairman and ladies and gentlemen of the committee, my name is Quince Eddens. You will have to pardon this small-town politician voice I seem to have today. I have been on the stump too much, I am afraid.

Mr. JONES. You are on the big stump right now, Quince, so do not let your voice fail you.

Mr. EDDENS. I realize that.

I am manager of the Electric System of Decatur, Ala.

Mr. JONES. How long have you been manager?

Mr. EDDENS. Seventeen years.

Decatur is a city 45 miles east of us here, with a population of about 25,000. We are located on the Tennessee River and on the two railroads east, west, north, and south. We have a wonderful advantage as a growing city. I bring this up to bring out some reasons why power is so important to us. We think we have the possibilities of being a growing city, but without power we cannot

grow.

You asked me how long I have been manager. Seventeen years ago we created a municipal utility in Decatur, Ala. At that time the private utility was operating there and they did not care to sell out. So the city had to compete them out. That was my job at that time. I think the city was taking about 3,000 kilowatts of electricity at that time in 1939. Today the demand is 45,000 kilowatts. They were using about 1 million kilowatt-hours a month, and now it is 16 to 18 million.

Mr. JONES. Kilowatt-hours?

Mr. EDDENS. Kilowatt-hours. Kilowatt-hours a month.

I have seen this grow from 1 substation to 11 substations. We have about 8 substations serving the city with distribution, and 4 or 5 serving large industries.

Since I have been in Decatur these 17 years we have had 5 or 6 large industries move into our city. They are not plants moved from New England to Decatur. They are brandnew plants. One of them is a copper tubing finishing products plant. Another is a flour mill. Also we have the Chemstrand Corp. there now. All of these new industries are located there now. I have talked with each one of the people who heads these plants. After I got personally acquainted with them I asked them personally, did the cheapness of power bring them into our city. In no case was the answer "yes." The cheapness of power did not influence their coming into our city or into the South. Power constitutes a small percent of their production cost and it did not make too much difference. We sell power to plants as accessories, to kind of keep the load factor proper and right, so that we can give electricity to the homeowner user as cheaply as possible.

Mr. JONES. What percentage of electricity is used by industrial users?

Mr. EDDENS. What percentage of the total? I would say 35 percent of the total is used by industrials.

Mr. JONES. What percent of it 17 years ago was used by industry? Mr. EDDENS. Probably the same percentage, but they had 2 hosiery mill plants and 1 textile plant; but the percentage of both has grown immensely.

Mr. JONES. That factor has not changed, but it is the trend of increased consumption that you want to emphasize?

Mr. EDDENS. That is right.

I want to bring out that when I first started in at Decatur the approximate use was 600 kilowatt-hours a year to the home. Now it is over 7,500 kilowatt-hours a year. You know, we have a lot of homes which are heated by electricity. We have about 2,500 to 3,000 houses completely heated with electricity.

Mrs. GRIFFITHS. What do they heat it with? Little electric heaters! Mr. EDDENS. They use three types-the portable heater which varies

anywhere from 1, 2, 3, to 4 kilowatts, or 5 kilowatts. A kilowatt is a thousand watts. Then we use ceiling heat like in my home. It radiates the heat down. It is the only clean heat. It does not have any circulation of air.

Mrs. GRIFFITHS. What increased use has there been of other electrical appliances? A jump from 600 to 7,500 kilowatts is a long way. Mr. EDDENS. Yes. Of course, house heating brought that up. But let us say from 600 to 6,000 would be without the heating service. I suppose 90 percent of our homes are completely electrified with washers, driers, electric ranges, and every other type of electrical appliance. Mrs. GRIFFITHS. Air conditioning?

Mr. EDDENS. Air conditioning we take in our stride. Since we are prepared to serve all of the other heavy loads in the wintertime, when air conditioning comes in the summertime we do not have to spend a nickel to get it.

Mr. JONES. You have a plant there that manufactures air-conditioning equipment?

Mr. EDDENS. Yes. Worthington assembles air conditioning too. It is a new one.

I would like to tell you a story about that. When they came to town this man had picked his spot. If everything else was all right he was going to settle there. He did not use the chamber of commerce very much in trying to make up his mind. They called me and said they wanted to talk to me about power. I said, "All right, sir. You can have all you want, when you want it, and where you want it." He said, "No kidding? Can I have 2,500 kilowatts in 6 months?" I said, "Yes, sir. You can have it in 2 weeks." This impressed him a great deal because the availability of power was so essential. They had not found that in too many other places. We had it and we had it available. We buy power from TVA. Our average cost for power from TVA is 4 mills. We averaged last year on everything 0.88 mills. Mr. JONES. That is to all classes of users?

Mr. EDDENS. Everything. 0.88. I remember some time back I used to be with the Alabama Power Co. I was with them for 19 years. Mr. Martin raised me and educated me. I remember 25 years ago Birmingham's electric demand was about what Decatur's was-about 50,000 kilowatts. I remember they bought power from the Alabama Power Co. They were under the Nashville Power & Light Co. I think the Alabama Power Co. was Commonwealth & Southern. think they sold electricity to the Birmingham Electric Co. for 4 mills at that time.

I

We lowered our rates. In 1944 we were using the basic rates that we and TVA agreed upon using. At that time we were getting $140,000 a year. Then we lowered our rates to the low formula rate that was developed, which is some 30 percent cheaper than the basic rate, and we reduced our net from $140,000 to $70,000 overnight, just like this. We put the cheaper rate into effect and within 2 or 3 years we were back to the $140.000 net. We have never raised rates since 1944, even with all of this inflation that we have had since the Korean war. Mr. JONES. Instead of declaring dividends you give the consumers a rate reduction?

Mr. EDDENS. You might say "yes." That is right. That is the only thing we can do with our money, is pay our bills.

Mr. JONES. Would you mind explaining the type of contract you have with the Tennessee Valley Authority that makes it mandatory for the profits to be used in rate reductions?

Mr. EDDENS. This is the secret of our success, I think, in my opinion. When the city made a contract with TVA to buy power from TVA, TVA had stipulated in their power contract 4 or 5 different places where the money was to go after we took it away from the customer. First, of course, it would pay operating expenses. The second thing was to pay our bonded principal. The third was for contingencies, and so forth. Then there was a tax equivalent. Fifth, if we had more money than we could use or conserve we were to make a rate reduction. This is what we did in 1944. I claim that this is the secret of our success, because we have handled our business in a businesslike manner. The electric system is set up under a nonpolitical municipal utilities board. This municipal utilities board was created by an act of the legislature of Alabama, and it has its powers of operation. It keeps its money separate.

Mr. JONES. From the general revenues of the municipality? Mr. EDDENS. From the electric system. We pay a tax equivalent to the city of Decatur's general fund in lieu of taxation. We use the city, county, and State rate, which is $3.75 a hundred. That is very low. I know you people from Michigan and Wisconsin cannot understand that, but it happens to be that way, on a 100 percent valuation of the plant after depreciation. We pay that to the city. This year it amounts to $76,000. This $76,000 is more than the gas and the water departments and Southern Bell and the railroad and the largest textile mill in Decatur pay altogether. It represents about 82-percent. I will say it represents about 8 cents out of our gross dollar.

Our city is perfectly happy with this revenue. They have always been contented with this formula for paying them money out of our electric system.

We started out with $268,000 of capital. Today we have over $2,200,000 in capital. We paid off that little bond of $268,000 and we have made enough money not to borrow any more and to build this plant.

Mr. JONES. What is the value of your distribution plant? What do you estimate it is worth at the present time?

Mr. EDDENS. Well, we make $200,000 a year, which is 10 percent on the investment. I could rate it that way or tell you how much we have invested. We have about $212 million invested in plant, and when you can make 10 percent on your money you have something. We think 10 percent is too high but we are afraid to reduce rates again because inflation has not quit. We have been able to make enough money to expand our plant from $268,000 to $2,500,000 in all these years.

Mrs. GRIFFITHS. Has TVA ever raised the price to you?

Mr. EDDENS. TVA made one raise recently due to the fact that all new plants are steam plants now, and when you run steam plants for long hours, shall I say 2 shifts or 3 shifts, your expenses are increased. It is not like a hydro plant. This we passed on to the high-load factor customers the long-hour-use customer-who runs his load 500 hours. We automatically passed it on to him because hs was the one who