Hells Canyon (Contd.)

When Defense Mobilizer Gordon Gray granted Idaho Power Co. a fast tax write-off on two Snake River dams (TIME, May 13), he handed public powermen and the Democrats a political grenade. Last week Democratic Senator Estes Kefauver's antitrust and monopoly subcommittee pulled the pin.

After Gray claimed executive privilege, refusing to say whether the White House influenced him in giving Idaho Power what amounts to an interest-free loan for five years, Interior Secretary Fred Seaton testified. He said that he had been against the write-off from the start, that Idaho Power did not need the tax break. While Seaton conceded that Gray's action was legally correct, "I reiterate that I did recommend against issuance of the certificates and would do so again."

Federal Power Commission Chairman Jerome Kuykendall also sounded unhappy about the write-off. He said that FPC licensed the dams "on the premise that financing was going to be conventional.'' Though FPC knew that Idaho Power had applied for rapid amortization four years ago, it accepted the company's statement that there was "faint" chance of getting it, even defended the license in court on the ground that no Government money was involved. Embarrassed, Kuykendall admitted that "we made a mistake." It was a sizable one.

FPC Chief Accountant Russell Rainwater estimated that the write-off will cost the Government $83.5 million in interest on money (v. Seaton's estimate of $17 million) that the Government would have to borrow to make up for the delayed taxes. The company, said he, could save as much as $254 million by delaying payment of its taxes, even though it must pay them back later.

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