UTILITIES: Power Politics

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In the Pacific Northwest, where hydroelectric power is king, a fierce battle for the throne rages between private and public power companies. But private power is fast losing out. The biggest private company in Washington, Puget Sound Power & Light, nine months ago sold a $26.9 million chunk of its facilities to the city of Seattle, is now trying to unload the rest in one $97 million package to seven tax-free Public Utility Districts. "The P.U.D.s are crucifying private operators," says Puget Sound Power President Frank McLaughlin, and fighting them "is like trying to live in a house while the workmen are tearing it down."

Last week the second biggest private company in the state, Washington Water Power, was getting ready to sell out, too. Washington Water Power, whose 113,500 customers are served by a network of dams, lines and power stations covering all of eastern Washington and sweeping into northern Idaho, made a deal to sell its holdings for $65 million to three P.U.D.s in Washington's Chelan, Stevens and Pend Oreille counties (see map).

Shotgun Sale. To some extent, it was a shotgun sale. American Power & Light Co., which owns Washington Water Power, must get rid of its subsidiary under the "death sentence" of the Public Utilities Holding Company act. American Power & Light could comply simply by turning its subsidiary over to the stockholders. But Howard Aller, American's president, doesn't want to do that. He has found he can make a fat profit by selling his companies into socialism. Although the book value of Washington Water Power is only $37 million, the P.U.D.s are so eager to buy that they are willing to pay almost twice that much. They think they can afford to do so because they pay no federal taxes, thus can afford to carry a big bonded debt.

Aller is an old hand at making a profit from public power. Seven years ago, he and Guy C. Meyers, a utilities promoter who specializes in private-into-public-power deals (TIME, Jan. 8, 1945), sold American's Nebraska Power Co. to a public-power group for $14 million. (Meyers' fee: $500,000.)

Aller's deal with the P.U.D.s still faces a long legal battle before it can be finally okayed. Last week more than a dozen protests came from stockholders and state politicos, who bitterly oppose public power. The same kind of opposition has blocked the sale before. But this time Aller thinks his plan is nearly foolproof. One big obstacle in the past was Idaho's law banning out-of-state public ownership of utilities. Aller hopes to get around that obstacle by selling the Idaho property separately to a nonprofit corporation.