Public's utility yardstick: preference clause spurs competition, permits local control

The preference clause, which establishes a priority system for distributing Federal power, is credited with maintaining competition among utilities and permitting local control. Examples from the Midwest illustrate how municipal utilities are protected by their guaranteed access to federal power. The preference clause dates to Theodore Roosevelt's assertion that the Federal government has the right to control water-related resources. This led to legislation granting preference to those organizations which benefit the public and includes the Tennessee Valley Authority Act, the Rural Electrification Act, and the Bonneville Project Act. Post World War II policy shifts sought to make better use of non-preference power, but later administrations shifted policies back. The arguments presented by invester-owned utilities are examined and found to be invalid.