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Mr. LEAVY. That is on the basis that they would install two units. Mr. O'SULLIVAN. Yes, sir.
Mr. LEAVY. How many additional generating units would be installed?
Mr. O'SULLIVAN. Sixteen.
Mr. LEAVY. How much power would be developed when all of those units were installed? How much power would be generated if all of them were installed?
Mr. O'SULLIVAN. 2,700,000 horsepower.
Mr. LEAVY. That would be the largest hydroelectric project of the kind in the world; would it not?
Mr. O'SULLIVAN. Yes, sir. It would generate one-third more power than is generated at Niagara Falls, and about twice as much firm power as will be generated at Boulder Dam.
Mr. LEAVY. After the completion of the dam, there is also a landdevelopment project that is likewise provided ?
Mr. O'SULLIVAN. Yes, sir.
Mr. LEAVY. That would develop how much land, when the dam is completed?
Mr. O'SULLIVAN. One million two hundred thousand acres. This land, as Dr. Mead said, is the finest body of land susceptible of reclamation in the West, possessing a superabundant water supply, a very rich soil, and a long growing season.
Mr. LEAVY. How long a time would it take to develop it completely?
Mr. O'SULLIVAN. From 1,250 feet at the north end of the project to 500 feet at its southern tip.
Mr. FITZPATRICK. What population do you think will be necessary to consume that amount of power?
Mr. O'SULLIVAN. The present population, considering the increasing use of electricity, should be able to use that extra amount of power. Then, as the project is being developed, it will probably bring about 1,500,000 additional consumers into the Pacific Northwest. Mr. LEAVY. Within the next 30 years? Mr. O'SULLIVAN. Yes, sir. Mr. FITZPATRICK. Assuming that the State of Washington was in a financial condition to complete this project itself, would you, as a representative of the State, recommend the project to the State of Washington and to the taxpayers as a self-liquidating project, and would you advise them to invest $186,000,000 in it?
Mr. O'SULLIVAN. I certainly would if they were in a position to do so.
Mr. Johnson. How much money has heretofore been invested in the project?
Mr. O'Sullivan. Up to January 1, 1937, the State of Washington and the United States have spent $45,350,600.95 on the project. The United States has allocated or appropriated $55,000,000 for construction of the dam and $250,000 for economic surveys of the land.
Mr. LEAVY. How much has been authorized by Congress? Mr. O'SULLIVAN. It is my opinion that when Congress, on August 30, 1935, by an amendment to the Rivers and Harbors Act, authorized and adopted the Grand Coulee Dam and incidental works, it authorized appropriations necessary for the construction of the project.
Mr. LEAVY. Did not the authorization, at the last session of the Seventy-fourth Congress, specifically provide $63,000,000, with a proviso that other funds should come from further appropriations by Congress?
Mr. O'Sullivan. The Seventy-fourth Congress, by an amendment to the Interior supply bill, provided that no obligations in excess of $63,000,000 should be incurred in connection with the project "until appropriations, or contract authorizations, or both, therefor are hereafter specifically granted by Congress.” On June 18, 1936, Senator Carl M. Hayden, of the conference committee that drafted the amendment, in explaining its effect to the Senate, said: “It is evident that this restriction cannot in any manner affect the law authorizing the construction of the project. It merely provides that no money shall be appropriated to continue the construction of that dam and incidental works, once it is completed to the height that is now contracted for, unless Congress shall make a specific grant for that purpose. In other words, the basic law authorizing the construction of the Grand Coulee Dam is not changed by this limitation."
Mr. LEAVY. That would carry the work to what stage?
Mr. O'SULLIVAN. $63,000,000 will complete the foundations of the dam and of the two power-houses, or more than one-half of the dam as far as costs are concerned. Since the lowest point of the foundations will be but 12 feet above low-water level, they will create only a ripple in the river and will be absolutely worthless unless the dam is completed. They will contain 4,500,000 cubic yards of concrete or 200,000 cubic yards more than is in Boulder Dam.
Mr. LEAVY. Would an appropriation of $7,200,000, which makes up the $63,000,000—with that appropriation, will they be able to continue work during all of the fiscal year 1938?
Mr. O'SULLIVAN. No, sir; the contractor will probably finish the foundations in December 1937 and not later than in February 1938. There will be a stoppage of work in the middle of the fiscal year 1938 unless additional funds are provided.
Mr. LEAVY. What would the cessation of the work mean, not only as affecting the project but the people who live there? How many people are actually employed on that project?
Mr. O'SULLIVAN. It would be a major calamity. An average of 4,000 men are working on the dam and 10,000 are employed in more than 40 States in furnishing material, supplies and equipment for the project, that have cost, to January 1, 1937, $23,000,000. Fifteen thousand people in new communities near the dam depend wholly upon it for their support and many older communities in that area count heavily upon it for their prosperity. I believe I am conservative in saying that if work on the Grand Coulee Dam should stop the well being of at least 100,000 people throughout the country would be affected.
Mr. Leavy. If the work is continued in an orderly manner, with sufficient appropriations, when will the first power be ready to be placed on the market for sale?
Mr. O'SULLIVAN. The official estimates state 1941. I am inclined to believe that power can be ready for delivery at an earlier date judging by the progress being made by the contractors.
Mr. LEAVY. Then it would begin at once to return revenue to the Federal Government?
Mr. O'SULLIVAN. Yes, sir; there will be a market for the power. Army and Bureau of Reclamation engineers who have made a careful study of the power market have predicted that there will be a market sufficient to absorb all of Grand Coulee power within 15 or 20 years after the completion of the dam.
Mr. SCRUGHAM. Can you bring out any information as to where the power can be contracted for, who will be the buyers?
Mr. O'SULLIVAN. This is the financial set-up. The engineers, assuming that the firm power could be sold at the dam for 2 mills per kilowatt-hour and the surplus secondary power for 0.5 mill and that the power would be absorbed within 15 years after the completion of the dam, found that the revenues would pay for the dam and power plant, with 4 percent interest, within 30 years after the completion of the dam and would, during the next 20 years, build up a surplus of $144,000,000 to pay for one-half of the cost of the reclamation project. leaving the farmer to pay about $88 per acre for his water right.
Mr. SCRUGHAM. Explain just what those conclusions are based on. or what is the supporting information?
Mr. O'SULLIVAN. The engineers found the price of the power would be so attarctive the electric utilities would secure power at Grand Coulee rather than develop new power themselves; that the power market in the Grand Coulee area, which includes Washington, the northern half of Oregon and Idaho and the western part of Montana, had increased between 1905 and 1930 at the rate of 9.5 percent compounded annually or had doubled every 8 years; and that there was no indication of any cessation in growth in the near future. To be conservative, however, they assumed that the rate of growth would gradually decline, beginning with the rate of 9 percent in 1930 and reaching a rate of about 43 percent in 1960 and that saturation would be reached in 1990.
Mr. ScrUGHAM. In other words, it would stop at the saturation point, which is reached in everything of that kind?
Mr. O'SULLIVAN. Yes, sir: in the year 1990. From a table of future power requirements based upon the rate of growth mentioned, the engineers found there would be a demand for twice as much new electric power as can be generated at Grand Coulee, thus providing a market for all existing and contemplated power developments in the area. Even if these estimates should be reduced one third there will be an ample market.
A study of the market sustains this prediction. Prior to 1901 the installed capacity of central electric generating stations in Washington, Oregon, Idaho, and Montana was but 8,000 horsepower and in 1902 but 60,000 horsepower. On January 1, 1936, it was 2,384,717 in. stalled horsepower. In 1902, the installed capacity of central electric generating stations in the United States was 1,616,000 horsepower. On January 1, 1936, the installed capacity of plants producing electric power for public use in the United States was 48,177,483 horsepower. Mr. SCRUGHAM. What did you say the horsepower was in 1932? Mr. LEAVY. I understood him to say what it was in 1902.
Mr. O'SULLIVAN. In 1902, it was 60,000 in the Pacific Northwest, and 1,616,000 in the United States. Between 1920 and 1935, clusive, the increase in the State of Washington was 836,178, and m
the Pacific Northwest 1,383,384 horsepower. Had the depression not intervened and a rate of growth of 9 percent obtained after 1929, the increase in the Pacific Northwest would have amounted to 2,383,112 horsepower.
The growth is now breaking all previous records. The increase in the production of electric power for public use in the State of Washington for 1936 over 1929, the predepression peak year of record, was 27.8 percent; in Washington, Oregon, and Idaho, 15.3 percent; and in the United States almost 17 percent. Using the output in 1926 as 100, the production of electric power in the United States in 1929 was 135; in 1932, 113; and in 1936, 165.
Today, the electric utilities in the Pacific Northwest are compelled to operate their steam stand-by plants, even one that has been discarded, to meet the demand for power. These plants which generate 192,393 horsepower are never used when there is sufficient water power. Since 1934 Seattle has purchased large quantities of oil for its steam plant because of low water on the Skagit River. The Puget Sound Power & Light Co. is loaded to capacity and one-third of its power is generated by steam. The Washington Water Power Co. of Spokane has been supplying power to Portland and recently made a contract for 20,000 horsepower generated by steam on Puget Sound to enable it to supply some of the needs of Montana. The Montana Power Co. is rushing to completion its 160,000 horsepower dam on the Flathead River near Polson, Mont. Were Bonneville or Grand Coulee power available today it could economically replace the load of 500,000 horsepower now carried by the steam plants.
The Columbia River is the only dependable source of hydro power left in the Pacific Northwest. Deforestation in the watersheds of other streams has brought about recurring shortages of precipitation or erratic run-offs. In 1929, the Pacific Northwest was on the verge of a disastrous shutting off of electric service. Tacoma was getting power from the airplane carrier Lexington. Other companies were securing power from the Bremerton Navy Yard and closed industrial plants. The Puget Sound Power & Light Co. rushed Rock Island Dam on the Columbia River to completion stating that its power sites on the Puget Sound were no longer economic. The building of steam plants on Puget Sound was hurriedly undertaken. These shortages of precipitation occurred again in 1935 and 1936 and still exist.
Taking all factors into consideration, there is a shortage of at least 1,000,000 horsepower of installed capacity in the Pacific Northwest today.
Mr. SCRUGHAM. Do you have any information as to the cost of installing the average horsepower unit in a steam plant, and the average cost of installing a horsepower under the Grand Coulee project?
Mr. O'SULLIVAN. I do not have those figures with me.
Mr. O'SULLIVAN. Yes, sir; I can give you the estimates of the engineers regarding the relative cost of generating Grand Coulee power and that developed by steam. Mr. SCRUGHAM. I mean the cost of installing a horsepower.
Mr. LEAVY. That figure you have in mind is the cost under the Grand Coulee project?
Mr. O'Sullivan. Yes, sir.
Mr. SCRUGHAM. I want the installation cost of a horsepower. I want the cost per horsepower. I am endeavoring to get the capital cost of installation per horsepower unit.
Mr. O'SULLIVAN. I do not have those figures fresh in mind.
Mr. O'SULLIVAN. The cost at Grand Coulee would be around $70 per horsepower.
Mr. SCRUGHAM. Without credit for the storage, what would be the cost?
Mr. O'Sullivan. Without contribution from the lower developments?
Mr. SCRUGHAM. What would be the cost without that contribution
Mr. O'SULLIVAN. I do not remember the figures, but I think it would be somewhere around $70 to $100.
Mr. SCRUGHAM. That was my impression. Data Re Cost OF GRAND COULEE AND STEAM DEVELOPMENT FURNISHED ET
Mr. O'SULLIVAN Without credit from down-stream developments and flood or navigation bere fits, the capital cost, per installed horsepower, at Grand Coulee will be slightly less than $70. The capital cost of hydroplants usually runs from $95 to $190 per hore power. The capital cost of steam-electric plants, according to the authorities, ranges from $56 to $95 per installed horsepower. The capital cost of the most efficient steam plant on the Pacific coast, which is located at Long Beach, Calif.. is $58.65 per horsepower. The Shuffleton steam plant of the Puget Sound Power & Light Co. at Seattle is said to have cost about $105 per horsepower.
The Bureau of Reclamation says that Grand Coulee prime power can be generated at a cost of between 1.14 and 1.4 mills per kilowatt-hour, depending upon the load factor, and that the cost of secondary power will be 0.5 of a mill. The average cost of steam generation is given by the authorities at 5 mills per kilowatthour. The average life of a steam plant is but 16 years, while that of a hydroplant is at least from 40 to 50 years and the operating cost of a hydroplant is very much less than that of a steam plant. The Bureau of Reclamation states that the cost of generating power at Long Beach, with a load factor of 60 percent, with fuel oil costing $1 per barrel, and with interest on the investment figured at 6 percent, 15 4.345 mills per kilowatt-hour. Grand Coulee will produce 8, 100 million kilowatt hours of commercial and 5,000 millions of secondary power annually. The annuis! saving in the cost of producing Grand Coulee commercial power over the cost of producing a similar amount of power at Long Beach, with fuel oil costing 55 cents a barrel, would amount to $19,440,000.
Mr. LEAVY. I may have already asked this question, but at the risk of repetition, I will ask it again: Is there ever any hope of the United States Government getting back any of the money put into this project unless it makes appropriations for developing the project
Mr. O'SULLIVAN. The investment will be a tremendous loss if the dam is not completed without interruption. Delay in completion spells interest charges of about $2,000,000 per year and increased cost of construction ranging from $2,000,000 to $5,000,000; the loss of & power market that is now knocking at the door of Grand Coulee; the construction of other plants to serve the market that could better be served by Grand Coulee; and the loss of the principal means of liqui: dating the cost of not only the dam but of the Reclamation project as well.
It may be said that the United States could salvage some of its investment by turning the Grand Coulee foundations over to the State of Washington or the private electric utilities. Even it the State could finance the completion of the dam it could not do so m