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result from traffic distribution in accordance with the advantages pertaining to each of the several types of carriers. It is submitted that the fair share of traffic doctrine is a prop to sustain the uneconomic carrier at the expense of the economic carrier and as such cannot be of long-range benefit, either to the carriers or to the general public.
The Presidential report is critical of the present procedures for the suspension of publicized rates, and we understand that the bill, H. R. 6141, would rectify this condition. Secretary Weeks testified that about 90 percent of all suspension requests now originate with competing carriers and only 10 percent are filed by shippers. The recommended remedy in the report and the bill is to shorten from 7 to 3 months the period of suspension and to shift the burden of proof from the carrier filing the rate to the protestant, when the protestant is a carrier, The delaying tactics that are now available to a carrier resisting rate changes by another through the suspension process are costly to the initiating carrier, deny the shipper and the public the benefit of economic rates and should be circumscribed in order that the suspension process may more nearly serve the purpose for which it was originally intended, that is, the protection of shippers from unreasonable and discriminatory rates.
Being investors in railroad securities rather than operators, we may not be well qualified to speak authoritatively on the effects of the Interstate Commerce Commission's exercise of power under the so-called long-and-short-haul clause. As we understand it, the report to the President recommends modification of this clause to eliminate procedural requirements that railroads obtain ICC prior approval in order to charge less for a longer than for a shorter haul, and to delete the prohibition against railroads from charging any greater compensa. tion as a through rate than an aggregate of the intermediate rates. Our understanding that these restrictions are applicable to railroads and water carriers but are not applicable to motor carriers. We are impressed with Ser: retary Weeks' statement of last September that these provisions of the long-andshort-haul clause should be modified in order to assist carriers to take on traffic from which they may have been excluded because of competing carriers whose services are confined to and concentrated between particular points. We are particularly impressed with Secretary Weeks' comments in this regard that "Where competing forms of transport are available, competition should effec. tively curb the development of unjust shipper discriminations. If they should develop, the law itself will provide adequate recourse."
When it comes to the treatment of volume and incentive rates, we think that the report to the President and the bill intended to implement it get back to one of the basic recommendations contained in the report, that is, greater reliance on competitive forces to reflect the economies of cost advantages. Certainly, as Secretary Weeks said, common carriers should be permitted to set up incentive and volume rates where necessary to meet competition so long as they are related to costs and subject to reasonable minimum standards. Where a carrier can haul larger shipments over longer routes, with cost advantages, that carrier should be permitted to resort to incentive pricing. With sufficient safeguards against unreasonableness and discrimination, the carrier should be able to benefit from its cost advantages and the public should receive the benefit of these savings.
We appreciate that the recommendations of the President's Committee on Transport Policy and Organization and the bill that is meant to give effect to it are being vigorously opposed by common carriers other than the railroads, notably by carriers by truck. We appreciate that the truckers may rightfully or wrongfully foresee some short-term loss of business if the recommendations of the report to the President became law. Nevertheless, we can see no justification for the continued overregulation of the railroads to their detriment under a system of law that was set up by Congress when the railroads were under criticism as a transportation monopoly. The report to the President points ont that there is no longer a monopoly in favor of the railroads and that competitive conditions have been substituted with the growth of new forms of transportation, both public and private. As Mr. Fort, speaking for the Association of American Railroads, said last September, “A large and increasing rart of the total traffic is moving by highway and inland waterway, while the rail. roads' share is steadily declining.” Mr. Fort also pointed out that the greater part of the traffic competing with railroads is entirely free of rate regulation by the ICC, but that all interstate railroad traffic is subject to such regilation. In a condition where a monopoly has entirely disappeared, it is unjust that
railroads be saddled with laws that treat them as such. The Government's role in transportation should be limited to that of an umpire except where a true monopoly exists, a situation long since past insofar as the railroads are concerned
The savings banks earnestly urge the enactment of legislation to give effect to the report to the President of his Advisory Committee on Transport Policy and Organization.
NASHVILLE, TENN., May 29, 1956. SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
House of Representatives, Washington, D.C. GENTLEMEN: My name is R. E. Bridges. I am vice president and general manager of the Ingram Barge Co., a towing company operating on the Mississippi River system, the intracoastal waterways, and the Gulf of Mexico. I was also with the Federal Barge Lines for 18 years as superintendent of floating equipment and marine superintendent operating on the Mississippi River system.
The Ingram Barge Co. has 5 river tows from 1,000 to 1,800 horsepower and from 35,000 to 60,000-barrel capacity and 1 coastwise tug of 900 horsepower and 2 coastwise barges, 15,000 barrels each. We transport petroleum products only.
We are affiliated with the Ingram Oil & Refining Co., which owns and operates a retinery at Meraux, La., in the New Orleans area, and transport their products. We also tow for others. Therefore, we are classed as both a private and a contract carrier.
We wish to register our objections to certain features of bills H. R. 6141 and 6142 pertaining to the extension of regulation to bulk carriers now exempt. While only dry-bulk commodities are mentioned in the bills, we feel that once dry bulk is regulated it will be only a matter of time before this regulation is extended to cover liquid bulk.
The petroleum carriers of the Mississippi River system and the intracoastal canal have built up a large fleet of towboats and barges embodying the latest and most advanced methods of design and operation. They have a large amount of capital invested in these fleets and furnish employment for a large number of American citizens. They are constantly improving their equipment and the efficiency of their operations. This is borne out by the fact that the rates today for towing petroleum on the rivers are less than they were at the close of World War II in spite of the increase in wages and other costs since that time. This has been accomplished by a number of small operators in free competition and unhampered by regulation.
We fear that the extension of regulation will stifle this competition and force many of the operators out of business and their equipment from the river. This will eventually result in higher towing rates and a higher cost to the consumer.
The importance of a large river fleet to carry petroleum is shown from our experience in the last World War when the subs made it impossible to ship petroleum from the gulf to New York and the eastern points via the coastwise route. They then turned to the inland routes to move this oil, gasoline, etc., to the eastern seaboard where it was needed but found that neither the railroads nor the river operators had sufficient equipment for this movement.
This equipment was eventually acquired through the use of shipyard facilities, steel, and other critical materials that were urgently needed for other phases of the war effort. Had the present fleet of towboats and barges been available, much valuable time and material would have been saved.
The building and maintaining of these fleets of towboats and barges make work for and keep in existence our inland shipyards which proved so helpful in the last World War. For example, 26 submarines were built in a shipyard on the Great Lakes and moved down the Mississippi River system to New Orleans. From here they were sent to sea and rendered a good account of themselves in bastening the end of the conflict.
By utilizing the inland shipyards with their trained personnel to build the small units required, the large shipyards on the seaboard were free to handle the larger units for which they were better equipped to build.
All of this we believe is necessary and essential not only to our present economy but to the welfare of the country at large in case of national emergency and it has all been accomplished without regulations.
We therefore urge that the provisions in these bills which tend to impose further regulation on the river industry and remove regulations from the rail lines not be adopted.
We fear that these bills, if enacted, would enable the rail lines by reducing their rates along the river to render the barge operations nonprofitable, while they recouped their losses with higher rates on inland moves. This has been done in the past and from our interpretation of these bills could be done again.
What we are trying to say is that the bulk carriers on the river and inland waterways of the country have built, without regulation and we believe without hurting any other form of transportation, a large and profitable business.
We believe this business contributes in no small way to the economy of the country in times of peace and in times of national emergency the equipment and trained personnel would be of invaluable aid. We therefore again protest the passage of these bills. Yours very truly,
INGRAM BARGE Co.,
AMERICAN Gas & ELECTRIC SERVICE COBP.,
New York, N. Y., June 1, 1956. Re hearings on H. R. 6141 CHAIRMAN OF THE SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS, OF THE HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
New House Office Building, Washington, D. C. Dear Sir: By letter of May 4, 1956, to Mr. Layton, we requested on behalf of three of our affiliated companies, namely Appalachian Electric Power Co., Ohio Power Co., and Indiana & Michigan Electric Co., permission to file a state ment with your committee setting forth their objections to H. R. 6141.
These companies are opposed to the bill on the ground that sections 13 and 14, if adopted, will in their pinion materially increase the cost of transporting the coal used by them in generating electricity which is furnished by them in large amounts to the public in West Virginia, Virginia, Ohio, and Indiana, and respecto fully request that this statement be inserted as a part of the hearings on the bill.
The companies mentioned above and American Gas & Electric Service Corp. are subsidiaries of American Gas & Electric Co., a holding company under the Public Utility Holding Company Act of 1935. The service corporation is a mutual service company under said act and renders engineering and other services, including major arrangements for coal supply, to its affiliates.
Appalachian Electric Power Co. owns and operates an electric public utility system in the western part of Virginia and the southwestern part of West Virginia. Ohio Power Co. owns and operates a similar system in the eastern and northern parts of Ohio. Indiana & Michigan Electric Co. owns and operates a similar system in the northern and central parts of Indiana and in the southwestern part of Michigan. They represent in considerable part what is known as the American Gas & Electric System which for convenience in this statement will be referred to as the A. G. & E. System, a map of which is attached hereto.
The attached table shows the amount of coal delivered by barge to four plants on the A. G. & E. system in the years 1946 through 1955. The "total" column shows a progressive increase each year. It will be noted that no barge coal was delivered to the Cabin Creek plant in 1954 and 1955. This is due to a reduction of the load at Cabin Creek in favor of those plants which are more efficient and more modern. The coal presently received at Cabin Creek is delivered by rail and truck under long-term contracts for the most part. It is estimated that in 1936 the A. G. & E. plants will receive about 4,400,000 tons of coal delivered by barge. It is further estimated that by 1959 the A. G. & E. plants will receive about 6,500,000 tons by barge.
The Sporn plant referred to in the attached table is owned by Appalachian Electric Power Co. and Ohio Power Co. and is located on the Ohio River Dear Point Pleasant, W. Va. The Tanners Creek plant is owned by Indiana & Michigan Electric Co. and is located on the Ohio River near Lawrenceburg, Ind. The Cabin Creek and Kanawha plants are located on the Kanawha River Dear Charleston, W. Va., and are owned by Appalachian.
Of the coal delivered by barge to the plants shown on the attached table, some is delivered by coal companies under a delivered price and some is delivered by contract barge carriers under agreements between our companies and the barge lines. Under one of these agreements, expiring October 31, 1961, a contract carrier delivered all of the barge coal used at the Sporn plant, some 1.500,000 tons in 1955, and delivered about 800,000 tons in 1955 to the Tanners Creek plant. Under another agreement expiring March 31, 1961, a contract carrier is delivering for us about 40,000 tons of coal per month to the Tanners Creek plant or about 500,000 tons per year. Under the contract carrier agreements our companies in 1955 paid approximately $1,500,000 for the transportation of such coal.
In addition to the plants listed in the attached table, we are planning to erect in the near future two new powerplants, each of which will use about 1,200,000 tons of coal per year, and we feel safe in predicting that a large portion of this coal will be supplied by river barge.
Seventy percent of the production cost of generating electric energy by steam is fuel cost and, unless the plant is located adjacent to a coalfield, the transportation of coal to the plant constitutes an important part of the fuel cost. Since transportation of coal by rail is considerably higher than transportation by water, we erect the plant, whenever possible, at a place to which barge coal is available, and this accounts considerably for our plant locations on the Ohio and Kanawha Rivers.
The saving to be effected by coal transportation economy is strikingly illustrated on the attached map in connection with the location of the Tanners Creek plant on the Ohio River near Lawrenceburg, Ind. It will be noted that this plant is located at quite a distance south of the service area of our Indiana company and one would wonder perhaps why it was placed so far away. A principal answer is that the transportation cost of railroad coal to a plant location in northern Indiana so greatly exceeds the transportation cost of barge coal that it is more economical to transmit the electric energy from the Ohio River to northern Indiana than to generate it in that part of the State with high-cost coal.
So far we have attempted to demonstrate the advisability of locaing our plants so that we may take full advantage of the economy to be effected by utilizing barge deliveries of coal. And thereby, we have hoped to show the importance to us and to our customers of the river transportation cost of the coal we use in such large quantities.
Keeping in mind that many of our tariff rates to consumers, especially large power users, contain a fuel-cost provision under which their cost of the energy we furnish them would be increased as our coal transportation cost is increased, it is apparent that any increase in such cost to us would directly effect an increase in cost of electricity to such customers. Many of these customers are firms which have located their factories in the Ohio River areas partially at least to take advantage of the economy to be effected by low power costs, and within the last year two large aluminum companies have begun to construct reduction plants in our territory for this reason.
During the past 10 years, as indicated by the attached table, barge deliveries of coal to our plants have considerably increased and it has been our experience that the reliability and availability of such method of delivery has become progressively better each year. It has been our further experience that in negotiating for this method of transportation, the charges submitted to us for such deliveries by common carrier barge lines range about 25 percent higher than the prices charged by contract carriers. This accounts for the fact that all of our present contracts for barge delivery are with contract carriers and indicates that if such carriers become regulated as proposed by H. R. 6141, their charges for such services would be considerably increased. If the 25 percent higher rates submitted to us by the common carriers is significant, regulation, based on our present barge transportation cost of about $1,500,000 a year at the Sporn and Tanners Creek plants, would result in an increase of about $375,000 a year. With the addition of two new powerplants in the near future, each using 1.200,000 tons of coal per year, a large portion of which would be delivered by barge, our coal transportation cost would be considerably increased further if the present eromption from regulation of contract carriers is removed as contemplated by H. R. 6141.
We sincerely believe that the present exemption has promoted the availability and reliability of contract carrier service; that it is by far the most economical method of coal transportation; and that in the economic interest of the public served by our companies the present exemption from regulation should be continued. Very truly yours,
H. A. KAMMER, Erecutive Vice President.
OHIO VALLEY ELECTRIC CORP.,
June 1, 1956. Re hearings on H. R. 6141. CHAIRMAN, SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS, House COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
New House Office Building, Washington, D. C. DEAR SIR: By letter of May 4, 1956, to Mr. Layton, we requested on behalf of Ohio Valley Electric Corp. and its subsidiary, Indiana-Kentucky Electric Corp., permission to file a statement with your committee setting forth our objections to H. R. 6141.
We are opposed to the bill on the ground that sections 13 and 14, if adopted, will in our opinion materially increase the cost of transporting the coal we use in generating the electric energy which we furnish in large amounts to the Atomic Energy Commission's Portsmouth project for the production of fissionable material, and respectfully request that this statement be inserted as a part of the hearings on the bill.
Ohio Valley Electric Corp. (herein sometimes called OVEC) owns and operates a large electric generating station, called the Kyger Creek plant, on the Obio River near Cheshire, Ohio, equipped with 5 turbo generators having a total net generating capacity of 1,075,000 kilowatts. This plant cost approximately $152 million.
Indiana-Kentucky Electric Corp. (herein sometimes called IKEC) owns and operates a similar station, called the Clifty Creek plant, on the Ohio River near Madison, Ind., equipped with 6 turbo generators having a total net generating capacity of 1,290,000 kilowatts. The Clifty Creek plant is the largest power station ever built by private enterprise and represents an investment of approxi. mately $173 million.
Practically all of the power produced by these plants is furnished to the Atomic Energy Commission under a 25-year agreement between OVEC and AEC signed October 15, 1952. Under that agreement the actual cost of transporting the coal consumed in the operation of the two stations is a direct component of the power cost so that if the coal transportation cost increases, a corresponding increase would be effected in the power cost to AEC.
The 2 plants have just been placed in full-scale operation this year and together with burn about 7,500,000 tons of coal per year, all of which is delivered by river barge via the Ohio River.
One of the important factors in selecting the locations of these power stations was the fact that coal deliveries by barge would be cheaper than other methods of transportation, and in arranging for barge deliveries, it was our experience in negotiating with various firms for this method of transportation, that the