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In summary, I would like to emphasize the following points :
1. We strongly urge that funds already appropriated by Congress be immediately released for the construction of Table Rock Dam. The Corps of Engi. neers has reported in compliance with the requests made by the House and Senate Appropriations Committees last year. The report indicates that construction of Table Rock is desirable from every standpoint. Power is needed in the area, power can be produced at the project at less cost than it would be available from alternative sources the project can be built at the present estimated cost, and money to continue construction has already been appropriated. The people of the Southwest are depending on Congress to carry out a moral obligation that was incurred when Bull Shoals power was diverted from the rural electric cooperatives for delivery to a defense load. Construction of the dam would help alleviate a critical economic situation in that area.
2. We ask that 15 of the power projects for which new money is being requested to carry forward construction during 1955, and which are in their most expensive stages of construction, be continued. We call special attention to the fact that delays have already occurred in the dates at which initial generation can be expected to be available from Cheatham Dam in Tennessee, Gavins Point Dam on the Nebraska-South Dakota border, Buford Dam in Georgia, and the Dalles Dam on the Washington-Oregon border, and that the last units of Chief Joseph Dam in Washington have also been delayed. We urge the subcommittee to allow at least the funds that have been requested for these 15 projects, and to do everything within its power to restore original construction schedules to those projects which have been delayed.
3. We ask that the relatively small amount of carryover money that has been requested during fiscal 1955 to continue and in some cases complete construction of nine projects be allowed. The rural electric cooperatives in the areas served by these projects, with the exception of Bull Shoals, are receiving very substantial benefits from them.
4. We ask that adequate planning funds be recommended so that the six projects we have listed in this category may go forward. We call the attention of the subcommittee to the fact that the Hartwell Dam on the Georgia-South Carolina border and the Ice Harbor Dam in Washington have previously been in the budget for construction funds, and we feel that the plans for these projects must be, therefore, well developed. We urge that these and additional projects be placed under construction at the earliest possible date to assure that rural electric systems and other recipients of Federal hydroelectric energy may be assured of adequate supplies.
5. Finally I would like to include for the record Resolution No. 24 unanimously passed by the 12th meeting of members of the National Rural Electric Cooperative Association. The meeting was held in Miami, Fla., January 11-14, 1954. Nearly 6,000 of our people attended, and this resolution urges appropriation for multiple-purpose projects which will benefit the rural electric systems throughout the country.
I would also like to include for the record a copy of resolution No. 23 unanimously passed by our people in Miami urging that the fair and equitable allocation of the costs of multipurpose dam development be established and that geographical and local conditions be recognized in such cost allocation.
RESOLUTION No. 23—-URGING REASONABLE FORMULA FOR ALLOCATION OF PROJECT
COSTS TO POWER
Whereas the development of river basins, with reference to multipurpose dams, has been delegated to more than one Government agency; and
Whereas only one Government agency is designated as the marketing body for electric energy generated at these dams; and
Whereas too much of the total cost of some of these dams has been charged to generating facilities : Now, therefore, be it
Resolved by the members of the National Rural Electric Cooperative Associative Association, that a coordination committee selected from the agencies be created to establish a fair and equitable allocation of the costs in all phases of multipurpose dum development, recognizing any geographical or local conditions.
RESOLUTION No. 24
Whereas there are a great number of hydroprojects throughout the United States for the development of low-cost electric power; and
Whereas these projects are needed to meet the requirements for electric power in the Nation; and
Whereas there is a need for the acceleration of the program of conservation and control of our river-basin waters for power, irrigation, and flood control, the benefits of which are essential for the long-term prosperity of the Nation : Now, there fore, be it
Resolved, That we, the delegates to this 12th annual meeting of the NRECA, assembled January 11-14, 1954, do hereby urge Congress to:
1. Appropriate necessary funds for the construction and completion of all multipurpose hydroprojects approved by proper authorities and meeting the specifications laid down for feasible multipurpose dam construction, and by way of illustration, but not exclusive of other such projects as the following dams:
Alabama-Coosa, Jim Woodruff, St. Lawrence, Niagara, Missouri Basin, Oahe, Buffalo Rapids, Glendo, Yellowtail, Frying Pan-Arkansas, Table Rock, Kerstone, McGee Bend, Grier Ferry, Eufala, Hells Canyon, Ice Harbor, Hartwell. Upper Columbia, Buford, Devils Canyon, and Colorado River storage project: Be it further
Resolved, That Congress enact the necessary legislation to assure the people that development of hydro sites solely for power-production purposes, by commercial utilities, or non-Federal agencies may be undertaken only when such derel. opment will not interfere with ultimate comprehensive regional or river-basin development, which because of size and complexity of purpose should be properly undertaken only by Federal agencies; and be it further
Resolved, That we urgently request Congress to appropriate necessary funds for transmission facilities to integrate river-basin-project power facilities, and de livery of power to preference customers' load centers; and be it further
Resolved, That rights of preference customers, under the Flood Control Act of 1944, be recognized, and that preference customers be advised that power is available, and their needs met before contracts or interim agreements are made with commercial utilities for disposal of power from various power projects
GENERAL STATEMENT Mr. ROBINSON. The interest of the rural electric systems in the Corps of Engineers power-construction program arises from two principal factors: First, many of our systems buy their entire require ments of power from these dams, and secondly those systems that are located close to the dams and in adjacent areas which do not purchase Federal power find that the very existence of the Federal project brings about rate reductions and improved operating practices on the part of the commercial utility compaines.
The fact that we were able to purchase Federal power during fiscal 1953 in the amount of 3.8 billion kilowatt-hours enabled us to save over $10 million on our total power bill for the year as compared to what we would have paid had all of our energy been purchased from commercial utility companies at their higher prevailing rate.
In general, the average rural electric system pays about 32 percent of its entire power-sales revenue for wholesale energy. That is the largest single unit of operating cost, and is therefore a logical place to look toward for saving money and, by the same token, it is the place to be careful of increases.
We are in a period at the present time of rapid vertical expansion. There are very few new rural electric systems being placed under construction, but those that are in existence are having to double their capacity almost every 4 years to serve the existing farmloads and to reach out and serve the areas that are very sparsely settled and where construction costs are high. So where they can save money on their wholesale power it is very desirable for them to do so.
TRENDS IN CONSTRUCTION PROGRAM
We feel that there are three principal trends in the Corps of Engineers construction program that if allowed to continue and develop may prove very damaging to our supply of wholesale energy. The first of these is the no new-start policy which has been in effect for several years and during which time there have been no starts on new power-producing facilities by the Corps of Engineers. We see that Ice Harbor and Hartwell are in the budget for planning funds this year. They have been in for construction before, and except for the Table Rock project which has been started and stopped, there have been no new starts.
Second, is the trend of slowing down projects already under construction. We understand that the Dalles, Chief Joe, Gavins Point, Cheatham, and Buford projects will be slowed down for periods of 6 months to a year if the budget recommendations this year are not increased.
The third trend that faces us is that of cost reallocation studies for these multiple purpose projects. It is our understanding that the legislation authorizing most of these projects did not fix any final responsibility for the determination of cost allocations at them and at the present time the rates being paid for the power from these projects reflects an interim cost allocation arrived at by the agency of the Government responsible for marketing the power.
POWER ALLOCATION FORMULA
The Corps of Engineers also, of course, have their own cost allocations for these projects, and in many cases the corps' allocation charges a higher percentage of the project construction cost to power than does the power marketing agencies' allocation formula.
We heard during testimony before the Senate Judiciary Committee, by Interior Department officials, that conversations are now underway between the Interior Department and the Corps of Engineers, looking toward an ultimate solution of this double cost allocation problem, and that the outcome would probably be that the cost allocation formula developed by the agency constructing the project would be made final in many cases. That would be the Corps of Engineers in many instances.
If that eventuality occurs, it will probably mean that the rates for Federal power will be reassigned to our people, and if that happens all of our rates will probably go up.
Senator KNOWLAND. I might say that this committee, with members from both sides of the aisle, has been trying to get some uniform method of allocation of costs so that we would deal in facts and not in theories. Many of us served not only on this committee but also on the Interior Subcommittee. We feel that it is quite confusing, I think not only to the Congress but to the country, to have one yardstick used on some projects and another yardstick used on another type of a project, that it should be ascertainable as to what the facts are and then if we are going to deal in facts, we should use an honest yardstick that would be applied to all of them.
While undoubtedly both the engineers and the Department of the Interior have also recognized the problem and given thought to it, this
committee formally has requested that urgent consideration and priority consideration be given to getting us a yardstick which everyone can understand.
Mr. ROBINSON. I certainly agree with you, Senator. Of course, the separable costs of the power, the actual cost of the generators is pretty easy to fix at the projects. But the joint cost of the construction Í think varies somewhat according to what formula is used. I am not an expert on the subject-I am sure that Colonel Whipple is—but we hope that any final formula that is adopted will not price the power above the ability of the preference customers to purchase it. Of course, we want the Government to receive a return on its investment in the power portion of the project, but the power portion of the project as fixed will, of course, be the result of whatever formula is adopted, and it might vary considerably between different philosophies in applying the formulas .
SUPPORT OF MULTIPLE-PURPOSE PROJECTS
Senator KNOWLAND. Of course, on both this committee and the Interior Committee I have supported the construction of the multiplepurpose projects which have been constructed, and expect to continue to do so. But I think that the committee is entitled to be, as I said, dealt with with the factual situation and not with a rubber yardsick.
That does not serve the purpose of either the Congress or the American people who have to pay the costs and who, of course, also get the benefits. This committee during the period of time that I have served on it, as both a minority and majority member, has never been wedded to the recommendations of the Bureau of the Budget. We of course give great weight to them as we properly should, but we have never taken the position that this committee was going to surrender its responsibilities, or prerogatives, to any agency of the executive branch of the Government.
If a sufficiently strong case is made, we have on numerous occasions exercised our judgment in either eliminating items which the budget had included or including items which the Director of the Budget had not recommended.
I think we will continue to use our discretion in that regard.
CEILING ON POWER AVAILABILITY
So these 3 factors, these 3 trends, we think, form a pattern. First, the policy of no new starts, secondly, the slowdown of projects under way as it appears they may be, and, thirdly, the cost reallocation program, are eventually going to form a ceiling on the arailability of Federal power to our rural electric systems, beyond which there will be no more.
As the growing loads of these systems approach that ceiling, those that are receiving direct service from the Government are going to have to look elsewhere for a source of supply at probably higher rates Also as their growing loads approach the ceiling, the yardstick of Federal hydroelectric development is going to vanish, because whether the rate differential between Federal and commercial disappears or whether there are no new projects coming on the line, the competitive effect of the Federal program is going to disappear, and the cooperatives, we feel, will suffer all the way around.
Therefore, we would hope that the subcommittee would recommend sufficient funds to keep the projects under construction, on schedule. We would suggest the serious consideration, possibly, of starting one of the new projects which is ready to go, such as Ice Harbor, or Hartwell. We hope also that the subcommittee will, within its jurisdiction, do what is possible to avoid the eventuality of unreasonably increasing the price of Federal power from these projects by arbitrary assigning to the cost of power from them an unreasonable portion of the construction cost of the project.
Thank you very much.
New CUMLERLAND AND HILDEBRAND LOCKS AND DAM
STATEMENT OF HON. EDWARD MARTIN, A UNITED STATES
SENATOR FROM THE STATE OF PENNSYLVANIA
Senator MARTIN. Mr. Chairman, we have several witnesses here, and most of them will submit their statements.
Senator KNOWLAND. I will say to the Senator there are three distinguished United States Senators appearing in person who will have the time necessary to present their case. Our usual practice is for the outside witnesses that have written statements to file them for the record, and they will be printed in full. We ask them, because of the time element of all Senators having responsibilities, to make their extemporaneous statement reasonably brief. If you could let me know the number of witnesses who have statements or who desire to file them, we will certainly allow whatever reasonable time is necessary.
Senator KILGORE. There are some 13 witnesses aside from the 3 of us here, and I believe that 7 of them have prepared written statements.
Senator MARTIN. Mr. Chairman, I would like to say that the Senators from Ohio, the Senators from West Virginia, and the Senators from Pennsylvania are all working together for these projects. Of course, I know how long these hearings are, and we want to be very brief.
I would like to say to the witnesses to submit their written statements and make their oral statements just as brief as they can.
Senator KNOWLAND. Certainly. I think if we could generally operate under the 5-minute rule on oral statements, and have their full statement printed, we would be glad to do that. If any Senator feels that something cannot be covered in that length of time, please indicate it.
Senator MARTIN. You may wish to ask questions. The Senators here, and the others who are not here are all very familiar with these