Mr. LEAVY. Their former supply of water for irrigation purposes was water pumped from wells?

Mr. PAGE. Yes; almost wholly.

Mr. LEAVY. Will the sum that is asked for there carry on that work, or has that work been undertaken?

Mr. PAGE. In a preliminary way. Yes; the work is in progress. None of the large contracts have as yet been awarded. The contracts for camps and the first contract on one of the canals is being awarded. The delay in getting the large structures started has been occasioned by problems of water rights, and rights-of-way, and agreements for the best solution of the many problems which confront that Central Valley.

Mr. LEAVY. Are you encountering any local difficulties? That is, of any consequence?

Mr. PAGE. No; it is just a matter of the many details which we feel should be ironed out before we proceed too rapidly with construction.

Mr. LEAVY. Are the local residents quite cooperative, then?

Mr. PAGE. Oh, the pressure is very great for immediate, aggressive, construction of the project because of its very great benefit to that whole section of California.

NUMBER OF RESIDENTS IN CENTRAL VALLEY

Mr. LEAVY. About how many people living in this region would be affected?

Mr. PAGE. Something over a million, I think it is.

Mr. LEAVY. Is this salty condition of the water or the land one that is progressive in its nature constantly growing worse?

Mr. PAGE. Oh, yes; the area is growing at the rate of about 20,000 acres a year. More than that.

Mr. LEAVY. What happens to a farm when the water there becomes salt or when its water supply is cut off?

Mr. PAGE. It goes back to desert, and there is no production on it whatever.

CROPS IN CENTRAL VALLEY

Mr. LEAVY. What is the production there generally, Mr. Page? Mr. PAGE. It is grapes, fruits, citrus fruits, melons, vegetables, alfalfa, dairy products, and similar crops. Almost 90 percent of the wine produced in this country, and nearly all of the raisins come from the Central Valley.

Mr. LEAVY. It is one of the great grape-growing regions of America, is it not?

Mr. PAGE. Yes; it is the greatest area of wine and raisin grapes in the United States; perhaps in the world.

TOTAL COST OF PROJECT

Mr. LEAVY. What will it cost to carry this project through, as you have outlined it?

Mr. PAGE. The total cost of the project, estimated, is $170,000,000.

REIMBURSEMENTS

Mr. LEAVY. What method of reimbursement, if any, is provided. for here?

Mr. PAGE. It is contemplated that the users of the water through their regularly organized water users' associations, plus the revenues from the power plant to be installed, on the Sacramento River, will fully repay the cost to the United States. The detailed rates on both of those have not yet been worked out. On the other hand, the value of the water, and the value of the power is so great in that section that there can be no doubt that the cost will be repaid.

REQUESTS MADE FOR PURCHASES OF POWER

We have a striking example of the current need for power there. Recently the president of the Pacific Gas & Electric Co. of San Francisco requested that it be permitted to buy all the power to be generated on this project.

Mr. SCRUGHAM. Have they made written application to purchase this power?

Mr. PAGE. They have made it in the form of a letter to the State water authority, and I have copies of that letter.

Mr. SCRUGHAM. Are there copies of these letters in the record, or has anything been submitted by you to date on that?

Mr. PAGE. No. I have copies here which I would be glad to put in the record.

Mr. SCRUGHAM. Yes. That is somewhat important, because the claim has been made that there would be no market for the power generated in these undertakings.

(The letter is as follows:)

Mr. EARL LEE KELLY,

Director, State Department of Public Works,

Sacramento, Calif.

MY DEAR MR. KELLY: In order to consolidate and confirm the several conversations we have had and the statement made by Mr. Downing and myself at the hearing before the Water Project Authority on December 4, 1936, I am taking the liberty of addressing you.

In 1933 it appeared, and it was our belief, that the electric power facilities then developed in California, together with the Boulder Dam supply, would provide sufficient power to meet all demands until 1943. No one then knew when recovery would commence nor what the rate of growth in electric power demands would be.

For various reasons the amount of power created by the Boulder Dam development, considered possible of transference to the northern California market, has been reduced. Furthermore, the rate of recovery and of growth of the electric power sales have exceeded the estimates of 1933.

It will, therefore, be necessary for us to provide additional production capacity on our system in 1938, and assuming a continuation of this growth, we must provide approximately 400,000 kilowatts of additional capacity during the next 6 years. It is, of course, our purpose to construct this capacity only as needed from time to time and in the most economical way.

As you know, we have already arranged for an interconnection with the system of Southern California Edison Co., Ltd., which is expected to be completed on July 1 of this year. The contract calls for the initial delivery of a maximum of 75,000 kilowatts. We have just placed an order for a 50,000 kilowatt-ampere steam turbine to be ready for operation in Oakland on July 1 of 1938.

It is our present plan to undertake the construction of some hydroelectric development in the near future in order that it may be operative in 1939. Our

engineers' recommendations indicate that, in consideration of all of the many factors involved, a combination of purchased power from Southern California Edison Co., Ltd., steam generated power, and hydroelectric development on the North Fork of the Feather River, present the most economical and satisfactory means for development over the immediate future.

Power sites on the North Fork of the Feather River, which were the subject of discussion at the meeting of the Central Valley Water Authority on December 4, have been under permit in one form or another by the Great Western Power Co., a former subsidiary, for over 30 years, and the current applications merely provide for a change in the form of these permits. As you know, we have already constructed three large plants and reservoirs on this river and its tributaries.

As a public utility, we have an obligation to endeavor to develop the use of electricity and to provide service for this demand as it occurs.

It is and has been the fixed policy of our company to aid and cooperate in the development of all worthy public projects which mean the building and growth of California. As California grows, so will our company grow and benefit. We recognize the desirability and the necessity of conserving and putting to maximum beneficial use the waters of the States and we are anxious to assist in every possible way the final realization of this worthy objective.

We are ready and willing to take delivery of all electric power that can be produced at Kennett plant of the Central Valley project just as fast as a market can be found for it, paying therefore a price equal to what equivalent power would cost this company if obtained from other sources, and insofar as our present program of obtaining additional power is concerned, we will revise said program so that the entire power output of the Kennett plant can be absorbed into our power market at the earliest practicable date. In that connection we shall be glad to initiate at an early date and conduct joint studies and negotiations with your engineers for the purpose of adjusting our proposed program to fit in with the Kennett program.

With respect to probable growth of load, it is, as you well know, very difficult to estimate beyond the next 5 or 6 years. It is our belief, however, that the demand for electric energy will continue its upward trend beyond this 5 or 6-year period, subject, of course, to interruptions resulting from economic or political disturbances.

Very truly yours,

J. B. BLACK.

Mr. PAGE. The Pacific Gas & Electric Co. recently made application for a permit from the Federal Power Commission to install six plants on the Feather River. On the protest of the California State Water Authority the officials of the company have agreed that they will not expedite that construction, and will reserve the market for power from the Central Valley Project.

Mr. LEAVY. Have you obligated the Department in any way in the sale of this power.

Mr. PAGE. Oh, not at all. I submit this letter only to show the demand. We have not promised the power company anything. There are municipalities which also want power. All will be considered when the time comes. I quote this to show that there is demand and that we will have no trouble in disposing of the power. It is needed now.

I will submit also a letter which I have and which was written by the resident of the Southern California Edison Co., Ltd., of Los Angeles. It is indicative of the attitude of the power companies, at this time. This power is needed and this project is needed badly.

Mr. M. W. PHILLIPS,

LOS ANGELES, CALIF., February 15, 1937.

Division Manager, Southern California Edison Co., Ltd.,

Tulare, Calif.

DEAR MR. PHILLIPS: For many years this company has been making a continued study of the underground water supply for irrigation in the territory

we serve in the south San Joaquin Valley. This study shows conclusively the necessity of obtaining additional water for that area from new sources. The Central Valley project was designed to remedy this condition. While there may be some disagreement as to the particular method to be employed to accomplish this result, there can be no question concerning the desirability of the object to be attained. In our opinion, the Central Valley project is the best solution of the problem that has been offered, and we are in favor of its early completion. Our position in this matter is determined by the rule that under all circumstances must we favor that which is the greatest good to the community. The welfare of our company is so bound up with the general welfare of the communities it serves, that any other course is suicidal.

Inasmuch as it appears that in the past our position concerning the Central Valley project has not received sufficient publicity so that all those interested in the project would have knowledge of it, I suggest that you give this letter such publicity as the situation may warrant.

Yours sincerely,

HARRY J. BAUER,

President, Southern California Edison Co., Ltd.

EXTENT TO WHICH POWER WILL BE DEVELOPED

Mr. LEAVY. To what extent will power be developed there, Mr. Page?

Mr. PAGE. A plant to ultimately develop about 400.000 kilowatts can be installed at Kennett, and immediately below at Keswick. Mr. LEAVY. Four hundred thousand kilowatts?

Mr. PAGE. Yes, sir.

Mr. LEAVY. And at what cost per kilowatt for installation? Mr. PAGE. I do not know that I have a figure for the cost per kilowatt.

Mr. LEAVY. Or in any other unit that you can give it, horsepower. Mr. PAGE. I know the total cost of the Kennett division, which includes the power development and the dam, and all works there is about $100,000,000, but I have not computed the cost of the power plants separately. The Kennett dam will run $70,000,000. The Kennett power plant will cost $18,000,000, and the Keswick dam and power plant, which is a small dam immediately below the Kennett dam for power generation, and is included in the balance for the total cost of the Kennett division, or about $11,000,000 to $12,000,000. Mr. LEAVY. But your engineers nowhere calculate the cost per unit?

Mr. PAGE. No; not on that basis.

TITLE TO PROPERTY WHEN AMORTIZED

Mr. LEAVY. Let me ask you this question: If and when this project is completed, if it does amortize itself through the sale of power, does the power project and the plant then belong to the Reclamation Service or does it belong to the power district or to the irrigation district?

Mr. PAGE. It belongs to the United States. On none of our projects is title to the works transferred away from the United States.

INCOMING REVENUE

Mr. LEAVY. And the revenue that it would produce in after years would be revenue that would be covered into the United States Treasury rather than into the irrigation district?

139751-37--pt. 1-19

Mr. PAGE. Yes; insofar as we know. The policy at this time, unless it is changed, will accomplish this purpose.

Mr. LEAVY. Yes.

ABUNDANT WATER SUPPLY

Mr. LEAVY. Now, is there an ample water supply to meet this rather extensive development that you have outlined here?

Mr. PAGE. Yes; there would be some waste water.

Mr. LEAVY. Mr. Page, those streams carry sufficient water?

Mr. PAGE. Yes; they carry more water than will be stored under the present plans. Our big job is to distribute the water in accordance with the needs.

FLOOD-CONTROL FEATURES OF PROJECT

Mr. LEAVY. Does this project in any manner become a flood-control project?

Mr. PAGE. Yes.

Mr. LEAVY. In what respect?

Mr. PAGE. It helps to control floods both on the San Joaquin River and on the Sacramento River. Right now there are 24 sections of high-class land around Hanford that are under water from floods in the San Joaquin and much more near Merced and Madera. The Sacramento River also has flooded this year. The flood in the Sacramento Valley was not as damaging as those of previous years, but it was serious. The floods on both these rivers would have been greatly reduced this year had the Central Valley project been completed.

AID TO NAVIGATION

Mr. LEAVY. Is it in any way a factor in aiding navigation? Mr. PAGE. Yes; it increases the depth of the river for navigation above Sacramento. A 6-foot channel will be provided for 125 miles and a 4-foot channel for 50 miles with the head of navigation near Red Bluff. This section of the river is not navigable now. This has been valued by the Chief of Engineers in his surveys for navigation purposes on the river, at $12,000.000. Congress has authorized an appropriation for this project to the extent of $12,000,000 on account of the benefits to navigation and flood control in the Rivers and Harbors Act of 1935.

PREVENTION OF ENCROACHMENT OF SALT WATER ON LAND

Mr. SCRUGHAM. Is the factor of the backing up of the salt water and the tides of the Sacramento River, and the adverse effect of that on lands in the lower Sacramento Valley, a feature of this Central Valley project? Is that considered in any sense whatever as a part of the calculations?

Mr. PAGE. Yes, sir. By regulation of the flow of the Sacrament River the project will prevent the encroachment of salt water or about 400,000 acres of the delta lands. Perhaps a little explanation would be advisable to show how that is accomplished. A large

The delta is almost at sea level, practically at sea level. part of their cultivated land, because of its composition-that is, it is composed, to a large extent, of peat-settles as it is cultivated.

Some