Minimum annual payments: Load-building provisions.-A minimum annual payment is required of each contractor for the firm energy allocated, equivalent to the number of kilowatt-hours allocated to it multiplied by 1.63 mills. Nevertheless, to provide an absorption period at the beginning of each lease period the requirement for the first year is fixed at 55 per cent of the ultimate obligation; for the second year, 70 per cent; for the third year, 85 per cent; and for the fourth year and subsequent years, 100 per cent. Energy taken in excess of these quantities will be paid for at the rate of secondary energy. Duration of the leases. Under article 9 the first energy available (expected some time in advance of completion of the dam) shall go to the city, with the district commencing to take one year thereafter and the company three years thereafter. Under article 26 all contracts terminate when the city contract ends, which means that the company is given a 47-year lease and the district a 49-year contract. Nevertheless, the rental paid by the company for its 47-year term is the same as that paid by the city for its 50-year term, per kilowatt of capacity; that is, an amount equal to the cost of the machinery used. (Art. 9.) Remedies of the United States.-Under articles 19 and 20 generation of energy for any allottee in arrears must be stopped on demand by the Secretary. If the lessees themselves are in arrears more than 12 months or fail to furnish energy in accordance with the allocations to other contractors, the United States can enter and operate the plant and, on two years' notice, terminate the lease and make other disposition of the power, subject to a 10-year right of redemption under the lease. The lessees' prepayment of rent for the whole 50year period in the first 10 years (art. 9) leaves the United States in possession of the machinery as a substantial guarantee of performance. A provision for posting of security bond when and if required by the United States is inserted in the district contract, as it provides no machinery. Monthly payments and penalties.-Under article 18 power bills must be paid monthly, subject to a 1 per cent penalty per month in arrears. Interruptions in the delivery of water. Under article 21 the United States is not liable for interruptions in the delivery of water caused by drought, act of God, etc., but the power bills are reduced to the extent of such interruption. All contracts are made subject to the Colorado River compact, subordinating the use of water for power to use for irrigation, flood control, navigation, etc. Measurement and record of energy.-Records of energy generated and its distribution to the various allottees are to be kept by the lessees and reported monthly. (Arts. 22, 23.) Meters will be Government tested and inspected. Inspection by the United States.---Full right of entry and inspection of all machinery and books is reserved by the United States. (Art. 24.) issio Transmission. The city agrees to transmit for the district and the smaller municipalities. The company agrees to transmit for the other utilities. Transmission for the States will be a separate problem, as the lines will run in different directions from those of the city, company, and the district. (Art. 25.) 597 Title to remain in the United States.-Under article 27 title to the dam, power plant, and incidental works, as required by section 6 of the act, remain in the United States forever. Power reserved for United States.-Five thousand kilowatts from each lessee is reserved for the United States for construction purposes on this or other dams. (Art. 28.) Use of public lands for transmission lines, as provided in the act (sec. 5), is permitted. (Art. 29.) Claims of the United States have priority over all others, as required by section 17 of the act. (Art. 30.) Contracts between the city and the company now in force are modified so as to remove any restrictions on either of them from entering into this contract with the United States. (Art. 31.) Transfers of interests under these contracts are forbidden without the Secretary's consent. (Art. 32.) The contracts are subject to the Secretary's rules and regulations, with a right of hearing to the contractors before modifications are made. (Art. 33.) Agreement is subject to the Colorado River compact (art. 34). Arbitration of disputes between contractors is provided; and also the procedure for arbitration between the United States and contractors, if both the United States and the disputant agree to arbitrate. (Art. 35.) Performance by the United States and contractors is made contingent on appropriations. (Art. 36.) Modifications in favor of one contractor shall not be denied to another. (Art. 37.) Members of Congress are excluded from benefits in the contracts, except as shareholders of corporations, in accordance with specific statutory requirement. [APPENDIX 45] LETTER OF JUNE 17, 1930 SECRETARY WILBUR TO THE SENATE COMMITTEE ON APPROPRIATIONS 599 |