Business: Storm over Kansas

For several years there has been a tense attitude of waiting along the public utility front. Stirrings in Congress and many a local skirmish have hinted that a decisive battle would some day be fought between Private Enterprise and Public Regulation. Last week in the Midwest the sharpest utility conflict of years was in full swing, one with giants as principals.

Leading the forces of regulation was young Governor Harry Woodring of Kansas, backed by the crusading Kansas City Star, in turn reinforced by Missouri's grim fight-loving onetime (1911-29) Senator James A. Reed. In Missouri Governor Henry Stewart Caulfield prepared to jump into action. From Tulsa came the encouraging yells of Governor William Henry ("Alfalfa Bill") Murray, recently victor in a similar but less spectacular fight against Oklahoma Natural Gas Corp.

Attacked, and immediately counterattacking, was the great $1,282,000,000 Cities Service Co.. led into battle by its wily, picturesque generalissimo Henry Latham Doherty. Some 150 companies form the Cities Service group. Butt of the attack last week was Cities Service Gas Co., formed in 1922 as Empire Natural Gas Co., rechristened in 1927. Chief business of this unit is the transportation of natural gas from wells in Kansas. Oklahoma and the Texas Panhandle. The gas is piped and sold to local companies in some 175 Kansas, Oklahoma and Missouri communities. Most of these, including the distributors in such important centres as the two Kansas Cities, St. Joseph, Joplin, Leavenworth, Atchison, Topeka and Wichita, are also owned by Cities Service Gas Co. Governor Woodring contends that the wholesale rate of gas sold to Kansas City Gas Co. is 10¢ too high at the present rate of 40¢ per 1,000-cu. ft., that lower commodity prices all around should find reflection in lower rates, that industrial consumers get gas cheaper from Cities Service than the city does. The company maintains that the Kansas and Missouri Public Service Commissions have no power to regulate pipelines since they do an interstate business. The courts seemed to have upheld this but it has not been entirely clarified and last week the Kansas Public Service Commission had investigators ready to go over the Doherty system. A bitter point with Governor Woodring is that in Oklahoma, Cities Service's retail rate is around 50¢ per 1,000-cu. ft., that it jumps to 85¢ a few hundred miles across the Kansas border, then to $1 at Kansas City.