Mr. BECKWORTH. Mr. Chairman, if it is in order, I would like to include at this point in the record a very short resolution passed by the Texas Senate stating that they are on record as favoring the amendments to the Natural Gas Act. It is only about a page.

The CHAIRMAN. That will be done.

(The resolution referred to, by the Texas Senate, is as follows:)

SENATE RESOLUTION No. 76

By Chadwick, Carney, Lane, Taylor, and Weinert

Whereas there is now pending in the Congress of the United States, certain proposed amendments to the Natural Gas Act, which among other things endeavor to clarify said act so as to insure that the Federal Power Commission shall have no authority to regulate the conservation, production, gathering, and processing of natural gas; and provides that the Federal Power Commission shall have no power to fix the field price of natural gas or the price at which the producer sells his gas, and that it shall have no control over the lawful use of natural gas or the local distribution thereof; and

Whereas the jurisdiction of the Federal Power Commission, in the regulation of the oil and gas industry, should be restricted solely to the regulation of the interstate transportation and sale of natural gas for resale, and the aforesaid clarifying amendments, insofar as they are designed to insure that the Federal Power Commission will have no authority to regulate the conservation, production, gathering, field price, use, and processing of natural gas, should be enacted: Now, therefore, be it

Resolved by the Senate of the State of Teras, That it endorses the aforesaid purposes and objectives, as stated in the paragraph next above, as amendments to the Natural Gas Act, and recommends to the Representatives of the State of Texas in the United Gas Act designed to accomplish such objectives and purposes; and, be it further

Resolved, That a copy of this resolution be transmitted by the clerk of the senate to the Committee on Interstate and Foreign Commerce of the House of Representatives, Congress of the United States, Washington, D. C., and to each Member of the Congress of the United States from the State of Texas.

ALLAN SHIVERS, President of the Senate.

I hereby certify that the above resolution was adopted by the Senate, April 10,

1947.

[SEAL]

CLAUDE ISBELL, Secretary of the Senate.

The CHAIRMAN. Will the gentlemen whose names I call kindly respond in order that I may know if they are present and prepared to testify and also be informed as to the length of their statements. Mr. Charles S. Thomas.

Mr. THOMAS. Yes, Mr. Chairman. I have a statement that will take about 5 minutes.

The CHAIRMAN. I notice sometimes that it takes less time to read a statement than it does to emphasize the statement.

Mr. THOMAS. I shall read my statement.

The CHAIRMAN. We are anxious to conserve time and it is your intention to hold to your statement?

Mr. THOMAS. Yes, sir.

The CHAIRMAN. Mr. Dale H. Fillmore. Is Mr. Fillmore present? (There was no response.)

The CHAIRMAN. Mr. Milo R. Maltbie. Is Mr. Maltbie, chairman of the State of New York Public Service Commission, present?

(There was no response.)

STATEMENT OF CHARLES S. THOMAS, CORPORATION COUNSEL FOR THE CITY OF ROCKFORD, ILL.

The CHAIRMAN. Mr. Thomas.

Mr. THOMAS. Mr. Chairman, may it please the committee, I have prepared five copies of my statement, but I do not have the other 45 finished.

The CHAIRMAN. That is all right; you may proceed.

Mr. THOMAS. I was before the Supreme Court Tuesday, in Springfield, Ill., and could not do it.

The CHAIRMAN. That is all right; you may proceed.

Mr. THOMAS. Mr. Chairman and members of the committee, I am Charles S. Thomas, corporation counsel of the city of Rockford, Ill. I am a member of the committee on electric and gas rates of the National Institute of Municipal Law Officers. I appear here at the request of the city council of the city of Rockford, as their official representative to express the opposition of the city of Rockford to H. R.

2185.

The city of Rockford is located approximately 90 miles west of the city of Chicago. It has a population at the present time of approximately 100,000 people. For about 2 years the city of Rockford has been furnished natural gas by the Central Illinois Electric and Gas Co., who in turn purchases it from the Natural Gas Pipe Line Co. of America.

Rather recently the entire gas facility of the Central Illinois Electric & Gas Co. was converted into natural gas and the entire city of Rockford has been furnished with natural gas since the conversion. The price paid for the gas by the Central Illinois Electric & Gas Co. to a large extent determines the price paid by the consumer in the city of Rockford.

We wish to call to the committee's attention that H. R. 2185, if adopted, would take from the Federal Power Commission certain regulatory powers which are greatly needed if the public utilities furninshing natural gas are to serve the interests of the consuming public.

The Federal Power Commission, by the provisions contained in subsection (a) of section 52, is stripped of the authority which it has formerly had to impartially regulate natural gas rates. The methods suggested by subsection (a) for computing the operating expenses of a natural-gas company are such that the ultimate figure will be extremely favorable to the natural-gas company.

Very little control over the ultimate figure is left with the Federal Power Commission. This section of H. R. 2185 is particularly obnoxious.

The proposed amendment to section (c) of section 7 of the Natural Gas Act will permit natural-gas companies to make unlimited expansions for the purpose of supplying increased demands in its existing markets without the necessity of first obtaining a certificate therefor from the Commission. This amendment would put a community like the city of Rockford at the mercy of the Pipe Line Co. of America in that that company could expand and furnish natural gas to other localities where the sale would net greater profits to the company.

Since the consumers of gas in the city of Rockford have been furnished natural gas, the demand for the use thereof has greatly exceeded the supply. So limited is the supply that for many months the local utility company has refused to supply any new customers with natural gas. They have forbidden the further use of natural gas in the city of Rockford for house-heating purposes.

Imagine what would happen if the natural-gas company could further limit the supply of natural gas by diminishing the amount furnished the local utility company so that some other locality could be furnished more natural gas. The consuming public needs the protection of the regulatory provisions now contained in the Natural Gas Act. None of these regulatory provisions should be changed; most certainly none should be abandoned.

On April 21, 1947, the City Council of the City of Rockford, Ill., unanimously adopted the following Resolution:

Whereas there is now before the House Interstate and Foreign Commerce Committee a pipe-line company bill, Rizley bill H. R. 2185, sponsored by the utility companies; and

Whereas sections of this law are not designed to benefit the public's interests, but instead to enrich the coffers of the natural-gas companies at the expense of the gas consumers and to expand the monopoly powers of these corporations without any regulation from the Federal Power Commission; and

Whereas the Federal Power Commission has carried out commendable action in its work of administrating the Natural Gas Act in the public's interest; and Whereas under the Natural Gas Act the Federal Power Commission has effected rate reductions of approximately $35,000,000 per year, or $157,000,000 to date, these reductions now being in effect; and

Whereas Rockford gas consumers are now being served by natural gas, many hundreds having installed gas heating units within the last year and many more hoping to do so when more natural gas becomes available; and

Whereas the cost of gas in the field is the basic point upon which consumer rates are ultimately fixed, hence thousands of Rockford's gas consumers will be vitally affected if this bill is enacted:

Resolved, therefore, That the city council, in behalf of the Rockford gas-using public, hereby protests removing the Federal Power Commission's control over the natural-gas pipe-line companies and any other action which might cripple the Commission's powers or the Natural Gas Act; and

Resolved further, That copies of this resolution be sent to the chairman of the House Interstate and Foreign Committee, as well as to Senators Brooks and Lucas and Congressman Mason.

A copy of this resolution was sent by the city clerk to Senator C. Wayland Brooks, Senator Scott W. Lucas, and Congressman Noah

Mason.

We respectfully urged this committee to reject the amendments proposed in H. R. 2185.

Now, if there are any questions of a more or less nontechnical nature, I will be glad to answer them. I am not competent to answer any technical questions.

Mr. HOWELL. Mr. Chairman.

The CHAIRMAN. Mr. Howell.

Mr. HOWELL. Mr. Thomas, it has been my impression from all of the witnesses who have appeared in behalf of the amendments to the Natural Gas Act, particularly H. R. 2185, to which you direct your testimony, that they have insisted that these amendments would in effect permit a greater sale of gas to the consumer and that the reason that there is a shortage of natural gas for the users at the present time is that because of too much Federal regulation.

Now, from your testimony I gather that you take exactly the opposite view; that the city of Rockford, as represented by you, is in favor of the present regulation of the use of natural gas, the end use of it by Federal Power Commission; that that is healthy regulation and should be maintained, and should be maintained without any change whatever. Mr. THOMAS. That is exactly our position and we believe that the shortage of gas is principally caused by the pipe-line companies not being able to get steel pipe from the manufacturers rather than any other cause that there might be.

We know that in our district, Chicago-Rockford-Milwaukee, and so forth, that you just cannot get steel pipe for any purpose and I think gas companies are having that same trouble.

I am very much of the opinion that we need regulation, particularly in Rockford, being as close as it is to Chicago and other large gasconsuming centers, because the gas companies might very well switch their gas to a more profitable market than the city of Rockford, leaving us sitting here without the necessary amount of gas to meet our needs, and we do have a large manufacturing center; in fact, the second largest machine tool center in the United States, next to Cincinnati, and the machine-tool industry uses natural gas almost exclusively for their furnaces and processing, and we do need regulation. We do not want to be put at the mercy of any pipe-line company, whether naturalgas pipe-line company or some other pipe-line company, and we feel that the Federal Power Commission under the present act has ample authority. They have done a fine job.

We have conferred with them in connection with problems arising in Rockford and we have always gotten the finest cooperation from the Federal Power. Commission offices and we certainly do not want to see any powers or any duties taken away from that commission either by this or any other bill at the present time.

Mr. HOWELL. To what extent does the Illinois Commerce Commission regulate natural gas?

Mr. THOMAS. The Illinois Commerce Commission had a preliminary hearing about a year or so ago to regulate the rates of gas to the consumers in the city of Rockford. You see, the Central Illinois Electric & Gas Co. is a local company that buys their gas from the Natural Gas Pipe Line Co. of America and they take off their line about 15 or 16 miles from the city of Rockford and then it comes into Rockford and is distributed through the pipes of a company which formerly furnished manufactured gas to the city of Rockford.

When the change-over came they applied to the Illinois Commerce Commission for authority to charge different rates. Well, as a matter of fact, the rates were worked out about 25 percent less under the natural gas than they were under the manufactured gas, but those rates have not been made permanent. They are temporary rates until the company has enough history behind its supplying natural gas so that they can come in with legitimate bona fide figures to tell us what the rates should be, either up or down from their present figure.

Mr. HOWELL. The State of Illinois, then, does regulate the price that can be charged by the natural-gas companies to the consumers? Mr. THOMAS. I do not know whether you could say that for the entire State of Illinois. They do regulate, so far as the city of Rock

ford is concerned, and the Central Illinois Electric & Gas Co. is concerned.

Mr. HOWELL. If they can regulate the rates for Rockford obviously they can regulate them for Springfield or Cairo or anybody else on a gas line. Is that not true?

Mr. THOMAS. Well, it would seem that that is obvious; yes. I am only speaking from my experience in Rockford. I do not know about other cities.

Mr. HOWELL. Now, if the Natural Gas Pipe Line Co. of America should decide to switch its gas from Rockford into the city of Chicago, would it not have to file some kind of an application with the Illinois Commerce Commission?

Mr. THOMAS. Yes. We do not want to be at the mercy of the Illinois Commerce Commission either.

Mr. HOWELL. Would it not have to file an application with somebody before they could make any switch like that?

Mr. THOMAS. I assume they would, because the Central Illinois Electric & Gas Co. filed an application with the Illinois Commerce Commission for permission to change over from manufactured to natural gas.

Whether that is legally required, I do not know. They did it. But I do not know whether it is legally necessary or not.

Mr. HOWELL. What sort of condition can you visualize that would cause a natural-gas company, pipe-line company, to switch its supplies of gas from one community into another, when under our system of free enterprise we would naturally assume that this company or any other company would want to increase the sale of its gas to just as many customers as possible, and the most logical thing that they could do from the standpoint of good business would be not to switch their gas supplies from one community to another, but to extend their lines so as to embrace the other community.

Mr. THOMAS. Well, that would seem to be the condition if it were not that the natural-gas companies cannot get enough gas in the various areas to supply the demands and they are all subject to the desire to make bigger and better profits for the utility companies, with the result that they are going to furnish gas, if they can, where they can get the most money for their product.

If they can get more money in Milwaukee than they can in Rockford, then, they could switch their gas and if they can switch their gas, they are going to switch it to Milwaukee. I do not understand that they can do that under the present Natural Gas Act without having the approval of the Federal Power Commission and I know that we have had great trouble in Rockford with getting enough gas right from the very start.

Mr. HOWELL. Do you have any specific provisions or at least proposed amendment in mind that would deprive the Federal Power Commission of the power to prevent a natural-gas company shutting off communities to supply others?

Mr. THOMAS. I think the provisions which permit them to extend their present facilities and extend their lines to other districts, as I understand it, if I understand the amendment right, without securing permission from the Federal Power Commission to do that; and my understanding was that that would permit them to shift that gas