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Cost of completing dam and first unit power plant. In addition to the $55,000,000 already set aside for the project, $7,250,000 will be needed to complete the present contract for the construction of the foundations of the dam and the two power. houses. This work will be completed in the middle of the fiscal year ending June 30, 1938. If work is to continue during all of the fiscal year 1938, $7,750,000 additional will be required or a total of $15,000,000. Thereafter $55,000,000 will be required, during a period of 3 years, to complete the dam and to install two units of the power plant that will generate 300,000 horsepower, making a total of $125,000,000 for the dam and the two power units. At this stage the project will be on a self-liquidating basis.

Cost of completing power plant. The cost of the remaining 16 units of the power plant, to be installed over a period of 15 or 20 years, is estimated at $60,000,000, requiring an investment of about $3,000,000 a year. The total cost of the dari and power plant should therefore be $185,000,000. This is the top figure. It will be nearer $175,000,000.

Cost of reclamation.—The Grand Coulee power plant will, in time, not only pay for itself but also finance the cost of the reclamation of the 1,200,000 acres of land involved. These lands, however, may be needed sooner and their development would accelerate the absorption of the power and the liquidation of the project. The maximum estimated cost of irrigating these lands is $208,000,000, making the total cost of the dam, power plant, and irrigation project, $393,000,000

Maximum investment required. - The Bureau of Reclamation estimates, after taking into consideration receipts from the sale of power and water, that the maximum total investment required for the Grand Coulee Dam power plant and reclamation project, to be made over a period of 30 to 40 years, will not exceed $260,000,000. This is on the assumption that reclamation would begin soon after the completion of the Grand Coulee Dam.

SELF-LIQUIDATING FEATURES OF THE PROJECT Foreword.—The self-liquidating features of the project, especially with reference to the revenues to be derived from the sale of Grand Coulee power, have been discussed at considerable length, as appears in the record. This statement will supplement the testimony given.

Financial operations of the project.- Testimony in the record already sets forth the financial operations of the project. This testimony shows that if the prime power sells at the dam at 2.25 mills per kilowatt-hour and is absorbed by the market within 15 or 20 years after the completion of the dam, the dam and power plant, with 4 percent interest on the investment, will be paid for in 30 years after the completion of the dam and in 50 years there will be a surplus of $144,000,000 with which to liquidate one-half of the cost of reclaiming the Columbia Basin lands. Under this set-up the farmer would be expected to pay $88 per acre for his water rights, payable over 40 years, and an annual maintenance fee of not to exceed $3.19 per acre, which includes the cost of pumping into the Grand Coulee, estimated at $1 per acre per annum. In support of the foregoing statement regarding the financial operations of the project there is herewith filed with the committee a copy of the hearings before the Committee on Irrigation and Reclamation, House of Representatives, Seventy-second Congress, first session, on the bill (H. R. 7446), to provide for the construction, etc., of the Columbia Basin project. This document contains a summary by Maj. John S. Butler of the survey by the War Department of the upper Columbia River and minor tributaries reported in House Document No. 103, Seventy-third Congress, first session, and a copy of the report of the Chief Engineer, Bureau of Reclamation, dated January 7, 1932, on the Columbia Basin project. See pages 43, 142, and 143 of said document showing the repayment curves made by the War Department and table 15, made by the Bureau of Reclamation, showing the expected project revenues from the sale of Grand Coulee power and water.

Sale price of power attractive. -As shown in the record, the proposed sale price of Grand Coulee power will be so attractive as to induce the electric utilities to purchase the power rather than to construct new developments for themselves,

Power market area and cost of transmission. The record shows that Grand Coulee power can be economically transmitted a distance of 300 miles and, there, fore, can serve all of the State of Washington, the northern half of Oregon ang Idaho, and western Montana. As a matter of fact, Grand Coulee power w serve all of Washington, Oregon, and Idaho and a large part of Montana.lt common practice in the Pacific Northwest to have electric power, through er change, do service at distances up to 900 miles and progress being made in the

transmission of power may soon make it economic to transmit power directly a distance of 1,000 miles. The Puget Sound region, within 170 miles transmission distance of Grand Coulee, is at present the largest market for Grand Coulee power. The Bureau of Reclamation shows that the power can be transmitted to Puget Sound for 0.5 of a mill per kilowatt-hour without a steam stand-by plant and 0.7 of a mill with a steam stand-by and with a load factor of 60 percent. Grand Coulee prime power could, therefore, be sold at Seattle at a price of less than 3 mills and the secondary power at 1.2 mills. The Army report shows that the cost of transmitting a distance of 250 miles with a load factor of 55 percent and with 4-percent interest on the investment is 0.965 of a mill. Grand Coulee power could, therefore, be generated and transmitted a distance of 250 miles, with the load factor mentioned, at a price of 3.215 mills for the primary and 1.465 mills for the secondary.

Cost of distribution. Since lowered costs to the consumer would increase the market for Grand Coulee power, it is advisable to discuss the cost of the distribution of power. The Federal Power Commission, in Power Series No. 3, gives the cost of distribution at widely separated points in the United States. The Commission shows the average cost of distribution of electricity, from the substation to the customers' meters, for residential, commercial, and industrial purposes in Los Angeles, Pasadena, the San Joaquin Valley (Calif.), Washington (D. C.), Seattle, Tacoma, Portland (Oreg.), Lansing (Mich.), Springfield (Ohio), and Superior (Wis.) is 1.08 cents per kilowatt-hour with no allowance being made for a 7-percent loss of power in distribution, with interest at 6 percent on the investment and 3 percent for depreciation. Tacoma has a cost of but 0.50 of a cent; Lansing, 0.62 of a cent; and Pasadena, 1.49 cents. Making due allowance for the loss of power in distribution, etc., it would appear that Grand Coulee prime power could be delivered to customers having a distribution system as efficient as that of Tacoma at a price of about 1 cent per kilowatt-hour and with a distribution system with an average efficiency at a price of about 1.5 cents per kilowatthour. Since this price is about one-half the average price charged consumers in the Pacific Northwest it may readily be seen that if Grand Coulee power were made available to the consumer, with a substantial profit allowed for distribution, there would be a rapid expansion in the power market.

Past rate of growth.The past rate of growth is shown by the following table:

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Prior to 1930 the rate of growth in the Pacific Northwest was 9.5 percent, compounded annually, the power market doubling every 8 years. Since 1932 the market has been rapidly recovering from the depression. In 1936 the increase in the production of power for public use in the State of Washington was 27.8 percent over 1929. Today every electric utility in the region is crowded to capacity, there being a load of about 500,000 horsepower on the steam plants of the region, which are never used when there is adequate hydropower. A number of plants in the region are obsolete. The Columbia River is the only dependable source of hydropower in the Pacific Northwest. The area should have without delay 1,000,000 additional horsepower of installed capacity.

Future growth.--From a careful study of the power market, engineers of the War Department and Bureau of Reclamation predicted that there would be a demand for twice as much new power as could be produced at Grand Coulee. Assuming that the rate of growth of the power market in the Pacific Northwest would gradually decline until it reached a rate of growth of but 4.5 percent, compounded annually, by 1960, Maj. John S. Butler, who made the survey of the

1950.----
1955 -----

-------

upper Columbia River for the War Department, predicted the future demand in the Grand Coulee power market area, as follows:

Kilowatt-hours 1935.

6, 480,000,000 1940.

10, 230, 000, 000 1945.

15, 650, 000, 000

22, 930,000,000

-- 31, 830, 000, 000 1960------------

----------- 41, 630, 000, 000 Present electric plants in the Pacific Northwest, plus those now under develop ment or contemplated, including the Skagit, Bonneville, and Grand Coulee, wl produce annually about 20 billion kilowatt-hours of dependable power or olsthird less than what Major Butler predicted would be needed by 1955. Il ne deduct the capacity of the present steam plants, which as stated are used only as standbys, the capacity would be about 17 billion kilowatt-hours.

Possible additional markets.-It is apparent that the natural increase in the use of electric power will be sufficient to absorb all the new power being produced or contemplated in the Pacific Northwest. In addition there is possible the following uses of Grand Coulee power: New uses:

Increased consumption resulting from a 25-percent reduction in
rates.------

596,00
Secondary power required for pumping for irrigation at Grand
Coulee.--

650,00 Low cost, secondary power required for pumping for irrigation

elsewhere in State of Washington.---
Power in electro chemical and electro-metallurigical processing-

500,000 Power that might be used in part time heating ----

500,000 Power to be used by increased population of Pacific Northwest

resulting from construction of project as per present per capita
use------
----

1,000,000 Total.-----

------------3, 446,00 Payments by settlers.—The price to be charged the farmer for his water right, if and when reclamation is undertaken, will be a little more than one-half whats water right is costing the farmer on several of the units of the successful Federal Yakima project in the same State. Columbia Basin lands will be just as productive as those in the Yakima Valley, where the soil and climatic conditions are the same.

Horsepowe

200, OM

ELECTRIC POWER IN ELECTROCHEMICAL AND ELECTROMETALLURGICAL PROCESSES,

ETC. Power used in 1929.-In 1929 more than 7 billion kilowatt-hours of electricity were used in the United States in the electrochemical processes required to produce 50 substances. According to Dean A. E. Drucker, School of Mines, State College of Washington, there is a possibility of using 3,800,000,000 kilowatt-hours annually for a period of 25 years in processing the mineral resources of the Pacific Northwest

Raw materials. The State of Washington contains 57 different minerals, metallic and nonmetallic, and the extensive mineral resources of Idaho and Montana are well known. Washington contains large deposits of bituminous coal, including coking coal, lime, clays, including clay with a high alumina content manganese, magnesite, copper, and of low grade ores containing gold and silver, It also has zinc, lead, mercury, platinum, graphite, nickel, chromite, tungsten molybdenum, silica, etc. The State also has a large pulp industry and the Pacitie coast forests of spruce, fir and hemlock used in the pulp industry are the largest in the country.

Uses for electric power.---Grand Coulee power could be used for mechanical power and for the processing of the minerals and other resources of the Northwest, & follows:

(1) Aluminum.-As shown in the record, it is possible to use a large amount o Grand Coulee power in the production of aluminum from the clays of Washington or from bauxite that could be economically shipped in by water transportation, The Bohn Aluminum Co. of Detroit, Mich. made application for the purchase all the power to be produced at the Bonneville Dam on the lower Colum River. The company may have planned to produce aluminum from the leucite

rock of Wyoming or from imported bauxite. There being no authority created for the sale of Bonneville power, the negotiations have not matured.

(2) Magnesium. There is a large deposit of magnesium north of Spokane, Wash. It is being mined at Chewelah, Wash. It can be secured also by the electrolysis of salt brine.

(3) Magnesite. There is a large deposit of magnesite in the Olympic Mountains, Wash. Coke and electricity are needed for the processing of this ore.

(4) Iron.-While Washington has no considerable deposits of iron, it can be economically imported from China and other countries. Increasing amounts of electric power are being used in the production of pig iron and its products. Electric furnaces in Seattle with power costing 3 mills per kilowatt-hour are proving more economic than the coke furnace.

(5) Calcium carbide. The production of calcium carbide requires coke, limestone, and cheap electric power. Washington has all three. One plant in Quebec, Canada, uses 75,000 horsepower, producing calcium carbide.

(6) Chlorine and caustic soda. -The Hooker Chemical Co. is producing caustic soda and chlorine in Tacoma by the electrolysis of brine. The caustic soda is used in the pulp industry. There is a possibility of extending the production by the use of Grand Coulee power.

(7) Refining copper and zinc.-Electricity is used in the refining of copper and zinc.

(8) Phosphate fertilizer.-The possibility of using Grand Coulee power for the production of phosphate fertilizer from the phosphate rock of Idaho, Montana, Wyoming, and l'tah has already been referred to.

(9) Synthetic ammonia.---Grand Coulee power can be used for nitrogen fixation and the production of hydrogen by the electrolysis of water. These elements are used in the production of ammonia.

(10) Mining.-The mining of the low-grade ores of the State of Washington, and of the ores of Idaho and Montana, requires a large amount of mechanical power. More energy is required constantly as the mines proceed in depth. Grand Coulee power can replace the power produced in western Montana for mining operations in the vicinity of Butte.

(11) Products from pulp.- Many products are produced as a byproduct from the pulp industry, such as synthetic lumber, tannin, cellulose, acetate for the rayon, plastic, and lacquer industries, and acetic acid.

(12) Manufacturing.- As the population of the Pacific Northwest grows the manufacturing plants of the region will increase and will consume more electric power.

EFFECT OF GRAND COULEE DAM ON THE SALMON INDUSTRY To evaluate the effect of the Grand Coulee Dam on the salmon industry on the Columbia River, it is necessary to bear in mind the location of Grand Coulee and two other dams on this river. Proceeding upstream, the first dam is at Bonneville, about 190 miles from the mouth of the river. The next dam is located at Rock Island, about 475 miles from the sea. Grand Coulee is situated 600 miles from the mouth of the river. In a recent newspaper statement, Hon. Frank T. Bell, L'nited States Commissioner of Fisheries, said:

"Fish ladders built at the Bonneville and Rock Island Dams already have solved the salmon-run problems at those points on the Columbia, but these won't be practical or advisable at Grand Coulee. Because a relatively small portion of the Columbia River salmon run reaches the Coulee, it is practical to capture fish in traps, transport them to large holding ponds, and keep them until the spawn is ripe."

* The large hatchery would be constructed for propagation of the fish eggs, with the young to be raised to fingerling stages. The young salmon would then be placed in the streams tributary to the Columbia downstream from Grand Coulee Dam. Following the habits of the salmon, it is expected that the salmon placed in these tributary streams would return thereto to spawn and die.

It is believed that more young salmon will be hatched and returned to the stream by this method than if the salmon were allowed to proceed upstream past the Grand Coulee site to spawn and die.

Several years ago, by actual count, 60,000 salmon passed over the fish ladders at Rock Island Dam on their way upstream. It is estimated that one-half of these spawned in tributary streams and the other half reached the Grand Coulee site.

The construction of the Grand Coulee Dam will not injure the salmon industry on the Columbia River.

139751-37-pt. 2----9

Mr. Rich. I want to follow up some questions that Mr. O'Neal asked, because I think they are very vital in our determination of the extent that we ought to go when you ask the Government to make contributions to this project. Also, in connection with the statement requested by Mr. O'Neal as to the price that you should expect to charge for the power which you sell, including both primary and secondary power, I think your statement should show the localities where you think you can sell this power, the distance at which you will have to transmit the current in order to find a market for it, and then, after you have completed that statement, which should be a pretty definite statement, you should show the amount of anticipated revenues. We should have that information in order that we can form an opinion in our own minds as to whether this will be a self-liquidating project. If you cannot break that down, then I cannot see where you can find the authority to make the statement that it will be a sell. liquidating project. We want to see that in black and white. Furthermore, are the people of the State of Washington interested in this project?

Mr. O'SULLIVAN. Yes, sir; very much so.

Mr. Rich. Are the companies that are furnishing power to the municipalities and for all kinds of industries, also interested in the construction of this power project?

Mr. O'SULLIVAN. They are interested in it in this way: If they can buy power from Grand Coulee cheaper than they can produce it themselves, they are interested.

Mr. Rich. Do you expect that the people would be in favor of the expenditure for this project if they realized that it would put those companies out of business?

Mr. O'SULLIVAN. That is difficult to answer. The people do not believe that Grand Coulee will put the electric utilities out of business.

Mr. Rich. What authority have you for making the statement that they are going to see that it is carried out?

Mr. O'SULLIVAN. From my studies of the power market there will be an ample power market for private developments, and there will also be a market for the power developed at Grand Coulee and Bonneville..

Mr. Rich. You do not mean to say by that that the private interests are going to be able to compete with Grand Coulee at half a mill per kilowatt-hour? They cannot, of course, compete with Grand Coulee in the cost of generating electricity. I see no reason, however, why they cannot buy Grand Coulee power and give their customers the benefit of its low cost. I believe the Washington Water Power Co. is depending somewhat on Bonneville and Grand Coulee to supply its future needs.

Mr. Rich. Go on and elaborate on the statement of what you expect to do, and what authority you have for making the statement that you are going to deal with your people in Washington. You are the secretary of this commission and you should have those facts pretty well in mind. I want you to develop that thought to the extent that the people who are already in business are not going to be set aside and thrown completely out of business as a result of this development.

Mr. O'SULLIVAN. The National Government will, of course, determine the policy regarding the disposition of Grand Coulee power.

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