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Detroit has had interruption in service since the pipe line was built, as they will. Kansas City, on the other hand, has had some 15 years of uninterrupted service, although the pipes have repeatedly burst. But there are other differences between the two. Kansas City has had natural gas for quite a number of years and it is extensively used in the houses, and the winter peak in Kansas City is 70,000,000 cubic feet per day. In the summertime it drops down to 10,000,000. I am using approximate figures. So that if that distributing company was distributing entirely domestic gas the great part of its facilities and the greater part of its investment would be idle for a great part of the time.
In Detroit, which has had artificial gas, the use is practically limited to cooking and water heating which make a steady load on the company's investment which is employed practically all of the time.
The result is that in Kansas City the load factor, which was explained to you by one of the witnesses this morning, is 30, whereas in Detroit it is 70.
Now all of those things would in themselves make for a higher rate in Kansas City than in Detroit, but that still is not the fact. The statement was made that the city gate rate at Kansas City was 40 cents, the inference being that the pipe-line company gets 40 cents for delivering gas to the Kansas City company for all purposes. The pipe line gets for the gas it delivers, for all purposes, on an average of 25.9 cents as against 33 cents in Detroit.
Now if the city gate rate in Detroit is 33 cents, and if it is 40 cents in Kansas City, it would seem that the customers there would get the benefit of it. As I understand this bill the purpose is not to see that the pipe line makes more money, or the distributor makes more money, but that the consumer is fairly treated and gets a reasonably low rate. As I say, if this statement is true, and the rate to the city gate at Detroit is 33 cents, and the rate to Kansas City is 40 cents, then let us see what the consumer pays.
Now here are the comparative rates in Kansas City and Detroit. For the first thousand cubic feet Kansas City consumer pays $1.29; in Detroit, $1.54; Detroit being 13 percent higher in price.
For 2,000 feet, the Kansas City consumer pays $2.19, and the Detroit consumer $2.55; the Detroit rate being 16.9 percent higher.
On 3,000 cubic feet the Kansas City consumer pays $3.04; the Detroit consumer $3.63; the percentage of increase at Detroit being 19.7 percent.
Three thousand cubic feet is the average consumption of the small consumer. The consumer, I suppose, is the one you are interested in protecting, and so I say that the statements that have been made in this respect regarding the rates at Detroit and Kansas City are misleading and do not reflect what the consumer pays. I have the figures that will give the comparative rates from 1,000 cubic feet up to 10,000 cubic feet. For 10,000 cubic feet in Kansas City, for cooking, water heating, the charge is $7.50.
In Detroit the charge for the same amount is $11.18, or 49.06 percent increase.
Mr. Chairman, that is the situation existing between the two towns. In the first place, the pipe line company of Kansas City does not get 40 cents; it gets less than 30 cents, and the consumers in Kansas City
have a much better rate varying from 14 to almost 50 percent better than the Detroit consumer.
I simply wanted to show the facts for the record. I thank you.
STATEMENT OF RUSSELL G. HUNT, ON BEHALF OF THE SYRACUSE
LIGHT CO., SYRACUSE, N. Y.
Mr. HUNT. Mr. Chairman and gentlemen of the committee, my name is Russell G. Hunt. I am appearing here for the Syracuse Light Co., which is a local operating company in the city of Syracuse.
Mr. W ADSWORTH. Of New York.
Mr. Hunt. Yes. This company buys, at a point near Syracuse, natural gas from the New York State Natural Gas Corporation, which owns a pipe line running from Pennsylvania. The natural gas bought by the Syracuse company is mixed by it with artificial gas and the mixed gas is distributed locally, and wholesale sales are made to three affiliated companies and one nonaffiliated company for resale directly to consumers in localities outside of Syracuse, and where the Syracuse Lighting Co. does not operate. All of these companies are completely regulated by the Public Service Commission of New York and all of their operations are local and within the State of New York.
Because of these wholesale sales of the mixture of natural and artificial gas, it is possible that some question would be raised of Federal jurisdiction over the Syracuse Lighting Co. This arises because of the wording of the definition of natural gas company on page 3 of the bill. It might be claimed that the definition of “natural gas company” embraces two things—one, the transportation in interstate commerce of natural gas, and, two, the sale of natural gas or of mixed gas for resale to the public. My objection to the definition is to the second part, because it does not confine jurisdiction to gas sold in interstate commerce, but seems to leave open the claim at some future time that wholesale transactions of the type carried on by the Syracuse Lighting Co. could be subjected to Federal jurisdiction.
To avoid confusion and possible misunderstanding, I would like to submit for your consideration a very brief amendment in the nature of an insertion in line 3, page 3, after the word “sale”
Mr. HALLECK. What page is that?
Mr. Hunt. Page 3, third line from the top, insert, after the word "sale”, the words “in interstate commerce”, so that, as amended, the paragraph would read:
(b) "Natural gas company” means a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale to the public, whether or not such gas is mixed with artificial gas.
Mr. PETTENGILL. Do you not think that amendment is a little bit vague, “sale in interstate commerce”? What you mean is the sale of gas which has moved in interstate commerce previous to the sale.
Mr. Hunt. Not exactly that, Mr. Pettengill.
Mr. PETTENGILL. Here is your pipe-line company which comes in from outside the State of New York. Mr. HUNT. Yes. Mr. PETTENGILL. That is interstate commerce. Mr. HUNT. Yes.
Mr. PETTENGILL. That comes into the distributing company. You mix the gas with artificial gas.
Mr. HUNT. Yes.
Mr. PETTENGILL. And at that time there is not a sale in interstate commerce; that is a local transaction.
Mr. Hunt. The sale by the pipe line, interstate pipe-line company is to the Syracuse Light Co.
Mr. PETTENGILL. But you are not selling in interstate commerce; you are selling locally. You are selling at the point where interstate commerce leaves off.
Mr. HUNT. I was under the impression the situation is this, the sale by the interstate pipe-line company might be said to be in interstate commerce—the sales by the Syracuse Lighting Co. are, I believe, wholly intrastate. My point is that the wording of the definition is not entirely clear that such sales by the Syracuse Co. are exempted from the bill. The sales of natural gas to the Syracuse Co. might be said to be in interstate commerce.
Mr. WADSWORTH. The sale at the gate ?
Mr. WADSWORTH. Yes; my impression was the regulation of the gate rate was to be accomplished under the interstate-commerce clause.
Mr. Hunt. My point, Mr. Wadsworth, is not whether the sale at the city gate is involved but the subsequent sales by the purchasing utility company. To four local companies which distribute the mixed gas. Because of these sales it is possible that the definition as it now stands could be said to include those sales.
Mr. WADSWORTH. Those sales are now subject to the jurisdiction of the Public Service Commission of New York?
Mr. Hunt. They are subject to regulation by the Public Service Commission of New York. By inserting the words “in interstate commerce” after the word “sale” in line 3, on page 3, it would be perfectly clear just what the intent of that section is. I believe it is the intention of the committee not to include such sales as are made by the Syracuse Co. Mr. MARTIN. May I ask a question? The CHAIRMAN. Mr. Martin.
Mr. MARTIN. A somewhat analogous amendment was offered here yesterday to be inserted in line 9 on page 2, where the witness representing the company said they acquired gas in Illinois from the interstate line and then sold it to other local companies.
Mr. Hunt. I think so.
The CHAIRMAN. In that connection, I take it the particular object of the clause you refer to there is not to exempt natural gas simply because it was mixed with artificial gas, and your real object in offering that language is that as it now stands you are apprehensive that
it would bring in some intrastate transactions within the jurisdiction of the bill.
Mr. HUNT. Yes, Mr. Chairman; because the Syracuse Co. are selling at wholesale for resale the kind of gas which is referred to in this definition.
The CHAIRMAN. Of course, the purpose of this bill is to reach those sales where gas is transported across State lines for the purpose of resale. You might have an intervening company that is entirely a State company.
Mr. WADSWORTH. I do not think the proposed amendment would lift the Syracuse Gas Co. out from under Federal jurisdiction in the purchase of the gas from the interstate company,
Mr. Hunt. We are apprehensive about the sales of mixed gas by the Syracuse Light Co. to four companies wholly within the State.
The CHAIRMAN. You do not want the local distributing company to fall under the jurisdiction of the Federal Government.
Mr. HUNT. That is right.
Mr. Hunt. That is, the Federal jurisdiction does not extend to the Syracuse Light Co. and the companies to which it sells, none of whom are engaged in business across State lines.
The CHAIRMAN. Yes. Mr. Hunt. We are confining it to the Syracuse Light Co.; it buys from the pipe line and mixes the gas and
then sells it to other local operating companies for distribution locally.
Mr. W ADSWORTH. I would like to ask one question, Mr, Chairman. The CHAIRMAN. Mr. Wadsworth. Mr. WADSWORTH. In order to distribute gas in the State of New York you must obtain something in the nature of a certificate of convenience and necessity?
Mr. HunT. Oh, yes; that is obtained through the public service commission before they can operate.
Mr. WADSWORTH. And is it possible for a competing company to enter into the same market area without obtaining some such permission?
Mr. HUNT. I should say not.
Mr. WADSWORTH. That is from the Public Service Commission of New York?
Mr. HUNT. I should say not.
The CHAIRMAN. Our next witness is Mr. Bigelow, a Member of Congress from Ohio.
STATEMENT OF HON. HERBERT S. BIGELOW, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF OHIO
Mr. BIGELOW. Mr. Chairman and gentlemen of the committee, for the record my name is Herbert Bigelow. I am representing the second Ohio district. We do not know in Cincinnati whether we are paying too much or too little for gas, but we have no way of finding out. We are operating there under a short-time contract which expires in August of next year, a 3-year contract.
In 1931 we passed an ordinance fixing rates, and we were in the public-utility commission with that rate for 4 years and then we gave up in dispair of coming to any decision there. And the compromise was effected between the city and the company on a rate that has been in force, I say, for 2 years, and will expire next year. The city spent $200,000 of its money in the law suit and investigations required and in this litigation before the public-utilities commission, and our city attorney tells me that there seems to be no way of coming to any definite conclusion as to what the rate should be without putting the city to the expense of making a complete invoice of the company's property which would then take us clear into the State of West Virginia and other States to determine what their investments were, and we were, as one city, hardly in position to do that. And, I just wanted to put before your committee this statement, that Cincinnati is very much concerned with this legislation and we are delighted that it is in prospect and we are hoping that the law will go into effect, that it will be passed and go into effect and give us some remedy, which we do not now have, to ascertain what we should pay.
We are buying gas. We are buying gas through some company in Portsmouth, which is buying it from the Columbia Gas Co., through a subsidiary, the Cincinnati Gas & Electric Co.
The CHAIRMAN. I think you would agree, Mr. Bigelow, also, that the city attorney could not advise you that if you had sufficient money you would have no legal basis for going outside of your State to ascertain the value of property in another State.
Mr. BIGELOW. Yes. It is a perfectly unhappy situation we are in, if we have got to go into another rate case with these people. The present rate expires, as I say, next year, and we are hoping to get relief from such legislation as this.
The CHAIRMAN. Thank you, Mr. Bigelow.
'The CHAIRMAN. We will now hear hear Mr. Maltbie, chairman of the New York Public Service Commission.
STATEMENT OF MILO R. MALTBIE, CHAIRMAN, PUBLIC SERVICE
COMMISSION, NEW YORK
Mr. MALTBIE. Mr. Chairman and gentlemen of the committee, the position of the New York commission is to favor Federal regulation of interstate commerce.
Mr. COLE. As I understand, you are a member of the New York commission!
Mr. MALTBIE. I am chairman of the commission. And, as to the extent of that power, it should be adequate to deal with the subject; but it is also our position that the conference upon a Federal department, the authority to regulate interstate commerce, should not be made the excuse of using it as an agency for transferring the regulations to it of intrastate commerce in the same commodity.
Now, as to certain provisions in this bill, H. R. 4008: It seems to us that section 5 (b) violates the statement just made, for section 5 (b), on page 8, attempts to confer upon the Commission, acting under the law, at the request of the State commission, power to investigate