Dam Flap

With the U.S. Supreme Court decision upholding Idaho Power Co.'s private three-dam plan (TIME, April 15), the bitter battle over Hells Canyon seemed over at last. But last week the fight flared anew after the Office of Defense Mobilization granted Idaho Power a fast tax write-off on 65% of the cost of its $67.1 million Brownlee dam and on 60% of its $35.9 million Oxbow dam. In effect the write-off gives Idaho Power an interest-free loan of about $30 million for five years.

"An utterly indefensible act," cried Virginia's conservative Democrat Harry F. Byrd, whose Finance Committee quickly began hearings on his bill to limit all federal fast-amortization plans to defense, AEC and research projects. "A shocking political theft," added Oregon's liberal Democrat Wayne Morse, whose bill calling for a public power dam at Hells Canyon was defeated in Congress last July 51 to 41. It was promptly reported out of the Senate Interior Committee by Montana's Democratic Chairman James E. Murray as "our answer to the Administration's action."

The write-off was hardly a "political theft" since 913 power projects, including some in Byrd's own state, have received similar tax breaks in the past seven years. Furthermore, while the company will save in taxes in the dam's less profitable early years, its depreciation deductions will later shrink just when its profits rise, and eventually it will pay the tax saving back.

But the timing of the announcement was a political blunder by the Eisenhower Administration that was bound to hurt the cause of private power in the Northwest. Idaho Power had applied for the write-off four years ago, was still eligible under an ODM Korean war expansion goal, even though the program was closed out at the end of 1955. Knowing that the company's application was still on file, Virginia's Democratic Senator A. Willis Robertson, chairman of the Joint Defense Production Committee, had asked ODM not to grant the write-off until the committee investigated. In granting the award, ODM Director Gordon Gray said that no commitment had been made to the committee, attributed the delay to the fact that the Hells Canyon case was bogged down in litigation until the Supreme Court ruling. But since Idaho Power had already gone ahead with construction to the extent of $19.5 million, that explanation seemed tenuous at best. Whatever the reasons for the delay, it had effectively eliminated a fast tax write-off as a serious issue during the long Hells Canyon debate.

But it gave public powermen a new issue. They pointed to the case of the Northwest's Washington Water Power Co., which got a fast tax write-off on its Cabinet Gorge dam project. The company told stockholders that 71% of their most recent dividend was due to fast amortization, could be reported as a capital gain.

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