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<br />. <br /> <br />. <br /> <br />ARGUMENTS <br />AGAINST T.HE <br />PREFERENCE <br />CLAUSE <br /> <br />Investor-owned ulilities ha"", I1\'", the years, ad'.anl.ed a numb~r of <br />arguments in support of thcir pos;,i"n (hat (he preference' gr;lIl1l,d III <br />pnhlk power agencies should he ehlllinated. RCI.cnlly, that opp,,,itinll <br />has intensified. The private companies .Irgue that Fcdl'rally produced <br />power is low-cost power bl''':3U~C il i~ "illh~idl/ed. alld IIllfairly hencfits <br />cenain sectors of the pI'pulatlllli; Ihat it is unprllpcr tll dispose llf <br />national resourceS to "nly a Pllrtinu of Ihe Illtal poplllatillll, and that <br />lhe prereren~e dausl' is OIlIIIlOdt:d and lInnCCL'~sar~ hccau:...e oj ....lri...~lt.'1 <br />regulation of the privalc ulihls iudll\lry. <br />The arguments ~lrr. nol pL'r~lIasi\'I:. rh~ FI~dL'l'lIl !!O\'l:rl\llll~1I1 1.101':-; not <br />suh.sidize public utility agcndes; Iroukally. pril.alc utilities thcmselws <br />have in recent Yt.'ars received highly "ignifici.l1I1 la\ ......lIh~idll'....." As III <br />the charge that thc distrihution of e,ccss Fcder.,1 j1tl\\W i.s IInfa.r llr irra. <br />tional, there is no Constitutional nr ptlli.:y prohihitioll against public ,,,- <br />sources being lIsed in a mauna that henefits lkrilh~J ~ah.'g.()ril'~ lH bene- <br />ficiaries so long as [here art' valid hases for Ihe t"a_\\i"ica!;ol1.~ ~U1d so <br />long as there is general hellefit l\' thl' puhlic. finallv, thl' argulllcllIlhat <br />the preference clause i~ OlltllHxkd h~('au.\c privately ()\\ (h.'d utililil''' arc <br />more carefully rcglJlated (hall Ih(')' \"I~rL' "llrmcrf~' res,,", 1m :-H1 1Il1rrO\,(~f1 <br />assumplion that in any ('velll llnL' thaI i\ IllH lIni\L'r\ally \"alid. ~1llrc. <br />over, the point, even if it w~rc pnl\i.lhk and ~uJ1P(lrt"hk', Ignore.... ~llnlL' <br />of Ihe most hasic reasons underlying lIlt, prr,...rcrL'llc~ ~Iall~l.', n~aS(llh <br />which have nothing 10 do with th<' qllality 01 Slale 1':~lIlottinn. <br /> <br />A. <br /> <br />Public Power Agencies 00 Not Recein an llnf"ir <br />Subsidy in Purcbasing Federal Power. <br /> <br />I. Federally genera led power rates are set at lel.e!' Ihat filII). repay lhe <br />Federal investment in (he power facilirie,. <br />The argument most central to the privatc utili!y company charges of <br />"unfair subsidies" is the eontention thai Federal power i., .sold a! rate.' <br />below what it costs 10 produce this power. This argulllcnl, inaCl'lJrale in <br />its premise, does not come grac~fully from the sallie private utilillcs <br />which for years claimed a substantial portion or Fcdcrally-generated <br />power for themselves at those same "unfairly subsidiled" ralCs. It wa, <br />only when preference customers hegan chliming an inereased share of <br /> <br />25 <br />