The CHAIRMAN. Now this bill, as you pointed out, goes largely to protecting pools and interconnections. Many utilities, however, are merging. Would this bill have any impact on that situation?

Mr. WHITE. Certainly it would have no legal impact, authority over mergers would be the same. As to whether or not it would encourage companies contemplating merger to use this alternative path to the same end of coordination, it is very difficult to predict. The CHAIRMAN. Your report and your statement also mentioned a suggested amendment, a reconsideration of contracts in light of changed circumstances.

The industry is doubling about every 10 years, so this would indicate almost constant review, would it not, or at least authority for the Commission on their own initiative at any time they saw fit to reconsider and review the case?

Mr. WHITE, Yes. This is one of the concerns we have. In addition to the Commission acting on its own initiative or motion, of course, we would assume that if there are parties who regard themselves as aggrieved they, too, would petition the Commission for some review of contracts of this type.

The CHAIRMAN. Would that review be stimulated from the parties themselves or by the Commission itself or by third parties? Mr. WHITE. It seems to me that

The CHAIRMAN. Or a combination?

Mr. WHITE. Combination. Wherever the public interest is in-. volved we would listen to complaints. I would hope that the Commission would not respond to a frivolous complaint in the sense that it would continually keep the contracts in jeopardy.

Obviously one of the purposes-

The CHAIRMAN. That is what I was thinking, that people in this industry, public, private pools, or interchanges, in order to live up to their responsibilities for service to the consumers, have got to make some plans. And these plans have got to be projected for some period of time, financially and otherwise, and that they should have reasonable assurance that once you have approved a contract and it was in the public interest, that review wouldn't be hanging over their heads month to month or year to year, unless there was some strong evidence that you needed to review it.

Mr. WHITE. I think you have characterized it just right. I would expect that if this legislation were enacted and the Commission made a finding that a particular contract should be immunized, that it would take an exceedingly strong case to get the Commission to reverse itself, and I would expect, too, that the parties would be able to have considerable freedom of negotiation and discussion.

The CHAIRMAN. We would rely upon the good sense and discretion of the Commission in this case.

Mr. WHITE. We would hope we merit that confidence.

The CHAIRMAN. That varies from time to time. [Laughter.]

Mr. WHITE. I will refrain from asking how we stand at the moment, Mr. Chairman.

The CHAIRMAN. At the moment I guess you stand all right.

Now, you suggest that the bill would encourage voluntary interconnections. Could you elaborate a little on that?

Mr. WHITE. I think it goes to the basic point that the Legal Advisory Committee raised the question to which the Justice Depart

ment gave an answer. The lawyers who advise those who make decisions in the electric power industry are a little fearful about how far they could and should go without running afoul of expensive and time-consuming litigation.

As a consequence, were this to be enacted, there would be an avenue, a means by which these problems could be resolved and permit them to engage in certain types of arrangements, which we believe should be encouraged.

The CHAIRMAN. Wouldn't it be true that this sort of legal cloud, that now exists, might have the tendency to hamper voluntary interconnections that may be in the public interest?

Mr. WHITE. Yes, although in fairness we would have to say that many pooling arrangements have been worked out and satisfactorily. Had the Legal Advisory Committee gotten a different answer or had they not asked the question, lawyers might not be counseling their managements to be so cautious. But because the investments are great, there is indeed some cloud, as you have said, and this would help to dispel that.

The CHAIRMAN. What effect would the passage of this bill have on publicly owned utilities, if any?

Mr. WHITE. Presumably the publicly owned utilities are in the same situation. In many of the pooling arrangements, they are parties of interest, just the same as a privately owned or cooperatively owned company, and as far as I am aware they are not exempt from the antitrust laws. They are exempt from most provisions of the Federal Power Act, but would be eligible for immunity under the bill where they enter a pooling contract with a jurisdictional utility.

The CHAIRMAN. Out in my country the Bonneville pool has been very satisfactory to the consumers because we have been able to concentrate technologically and every other way, to make the best potential use of our own power resources.

But, and I am thinking out loud here a little bit, but were it not for the Bonneville Act in the law, I am afraid this might not have happened.

Mr. WHITE. Well

The CHAIRMAN. I mean a pool as integrated as it is.

Mr. WHITE. I am sure that it has helped tremendously, because of the fact that it has put under a single management a large volume of power and there have been evolved in that area very satisfactory relationships with all of the elements of the industry, privately, and publicly owned as well.

The CHAIRMAN. Now there are up to 20 times as many private antitrust suits as Government-inspired suits in the Federal courts. Do you think this bill would reduce the number of private utility antitrust suits brought by private parties?

Mr. WHITE. Well, I am no expert on this

The CHAIRMAN. I never realized this figure was that great, but it is. Mr. WHITE. I think that really relates to the whole sweep of antitrust laws. In the industry there have been comparatively few, practically no actions.

The CHAIRMAN. I think we ought to differentiate, because in this industry, this ratio would not exist at all?

Mr. WHITE. Clearly.

The CHAIRMAN. Thank you I have no further questions.

Senator Lausche?

Senator LAUSCHE. Yes; I would like to ask a question or two. I assume that you understand that any time you begin tinkering with the antitrust laws there arises a veritable wave of protest, and I anticipate that regardless of the merits of this bill such protest will arise on the floor of the Senate.

Now, having that in mind, I would like to ask a few questions. When did the Power Commission first undertake actively to explore the good that could come to the general consuming public if interconnections coordination were fostered?

Mr. WHITE. Well, if I can separate the question-the first part relates to when did the Commission first realize the large benefits that come from coordination, both in reliability and economy. That really was congressional mandate. The Congress itself, in amending the Federal Power Act in 1935, first put into the act section 202, which is a clear mandate to encourage and promote interconnection and coordination of systems.

As to the second part of the question, Senator, about when did we first focus on the impact of antitrust laws, if any, on the ability to achieve coordination, that really came from the national power survey which started in 1962 and concluded in 1964.

At that point this Advisory Committee began to raise the questions, and most recently the Commission reported on the chairman's bill, and in the process of preparing that report the Commission went through many deliberations.

The CHAIRMAN. We will insert in the record at this point, section 202(a).

SEC. 202. (a) For the purpose of assuring an abundant supply of electric energy throughout the United States with the greatest possible economy and with regard to the proper utilization and conservation of natural resources, the Commission is empowered and directed to divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy, and it may at any time thereafter, upon its own motion or upon application, make such modifications thereof as in its judgment will promote the public interest. Each such district shall embrace an area which, in the judgment of the Commission, can economically be served by such interconnected and coordinated electric facilities. It shall be the duty of the Commission to promote and encourage such interconnection and coordination within each such district and between such districts. Before establishing any such district and fixing or modifying the boundaries thereof the Commission shall give notice to the State commission of each State situated wholly or in part within such district, and shall afford each such State commission reasonable opportunity to present its views and recommendations, and shall receive and consider such views and recommendations.

Senator LAUSCHE. That is the Congress made a declaration in 1935, but not until the last 3 years did it become acute insofar as a consideration of the antitrust laws were concerned; is that correct?

Mr. WHITE. I say that is probably a fair statement, although I would not want to leave the impression that all of a sudden a switch was turned and there was trouble where before there had not been trouble.

Obviously lawyers are always concerned about the impact of the antitrust laws on the activities that the management they advise contemplate. There had been no significant legal action in this field. I think lawyers were more or less relaxed about the matter, and the National Power Survey focused attention on the increasing technology

and increasing capacity or ability or capability to interconnect. Then these questions arose.

Senator LAUSCHE. To put it a different way, what precipitated the need for this bill?

Mr. WHITE. I think the Chairman, who introduced the bill, perhaps could give you a good answer. I can give you my best guess. My best guess, Senator, is that the response from the Justice Department to the Legal Advisory Committee raised a considerable cloud and prompted many who were involved in the desirable coordinating and interconnecting of systems to see some legitimate way that this cloud could be dissolved.

Senator LAUSCHE. Do you discuss that matter in your paper? On page 7, the then Assistant Attorney General in charge of the Antitrust Division, Judge Loevinger, involved that power pooling provision would tend to raise serious antitrust questions.

Mr. WHITE. Yes, sir, that is precisely it.

Senator LAUSCHE. When was that, in 1962?
Mr. WHITE. 1964.

Senator LAUSCHE. 1964. All right.

The CHAIRMAN, I want to say that the bill has been introduced by request and part of the reason for it was since we have established the intertie, from the Pacific Northwest to the Southwest, many feel that some of these legal questions were seriously raised.

Senator LAUSCHE. All I am trying to do is establish the time when the question became acute.

Mr. WHITE. You have done so, Senator. It is when the National Power Survey report was published in 1964.

Senator LAUSCHE. It was then decided that you had to have some law that would prevent the use, by the Antitrust Division of the Department of Justice, of its prosecuting powers; is that correct?

Mr. WHITE. Whether it was quite that flat a fear or whether it was just the natural caution and prudence of lawyers, I can't say. Senator LAUSCHE. You have answered the question.

Senator LAUSCHE. You never can get a direct answer. [Laughter.] The CHAIRMAN. He is also an electrical engineer. He is a rare bird in that respect.

Senator LAUSCHE. Well, now, I am reading from your paper. Do you speak in behalf of the whole Commission?

Mr. WHITE. Yes, sir.

Senator LAUSCHE. The views expressed in this paper are the views of the whole Commission?

Mr. WHITE. Yes, sir.

Senator LAUSCHE. There is no dissent?

Mr. WHITE. No, sir.

Senator LAUSCHE. And the whole Commission recommends to the Congress that the adoption of this bill is advisable?

Mr. WHITE. Yes, sir; with the amendments we outline.

Senator LAUSCHE. And you do so because you believe that if it is adopted economic benefits will come to the general public?

Mr. WHITE. Yes, sir, and the additional benefits of coordination; namely, reliability of service.

Senator LAUSCHE. All right. Now you say:

Through technological developments in generation and transmission, the American consumer can realize tremendous benefits in the form of reduced costs and reliable service.

Mr. WHITE. Yes, sir.

Senator LAUSCHF. That is if they are allowed to coordinate.

With

out such coordination being declared to be a violation of the trust law per se, but subject to the safeguards which the Commission will impose before it gives approval this will inure to the benefit of the power consuming public. Is that correct?

Mr. WHITE. Yes, sir.

Senator LAUSCHE. Now, then, you further state:

These developments involve the use of large units which reduce the unit cost of generating electric energy and the use of new extra high voltage transmission lines which substantially cut the cost of transmitting this energy and permit more extensive transmission.

Is there involved in this statement impliedly the statement that duplication is costly and eventually must be paid for by the consumer and that if you can eliminate duplication you can reduce the cost to the consumer?

Mr. WHITE. Yes, sir. There is no misunderstanding about that, Senator, and I think this is accepted throughout the industry and by the public, that the nature of the electric industry is such that duplicatory facilities are simply wasteful.

Senator LAUSCHE. Now, you state that by 1980, "The consumption of electricity is expected to more than double and perhaps triple." Mr. WHITE. Yes, sir.

Senator LAUSCHE. Is it in view of that huge increase in the consumption of electricity that you have concluded that duplication must be eliminated and that coordination will produce reduction in prices that will benefit the public?

Mr. WHITE. Well, it is all tied together. It is very difficult to pinpoint quite that precisely. I would say that duplication would be bad even if we didn't increase by one iota our needs in the future. Our country simply must have the most efficient system. The fact that our demand is increasing and will continue to increase aggravates or increases the need to prepare for it.

Senator LAUSCHE. Now, it is the view of each of the members of your Power Commission that coordination is a vehicle by which groups of electrical systems through common action can obtain the benefits of economy of size in the planning and development of the sources of power supply and transmission.

Mr. WHITE. Yes, sir; unmistakably.

Senator LAUSCHE. Now, then, you further state:

One result of the Commission's National Power Survey issued in late 1964 was to suggest to the industry the possibilities of further coordination in planning, the large expansions of our power system in the decades ahead while retaining the benefits of pluralistic ownership pattern.

Did the Commission on its own initiative recommend the coordination of services so as to reduce prices to the consuming public?

Mr. WHITE. Yes, sir. First of all, in response to the congressional mandate of 1935 we spoke about, and secondly in the extra impetus given to it by the very exhaustive study that culminated in the National Power Survey in 1964. And I think there is virtually no