Senator KNOWLAND. Any further questions on this Cheatham lock and dam? If not, you may proceed with the Old Hickory project. 1 Reflects loan of $1,264,820 to this project through Dec. 31, 1953. • Reflects contemplated additional loan of $1 million to this project through June 30, 1954. Approximate cost distribution among project purposes Total estimated first cost___ Distribution: Flood control- Power Navigation__. $53, 200, 000 43, 324, 000 9, 616, 000 Irrigation Recreation_-_ 260,000 Colonel WHIPPLE. The Old Hickory project is further upstream on the Cumberland River, about 23 miles above Nashville. It is primarily a power dam. It has a lock and some navigation benefits, although the amount of traffic above Nashville is not as great as that below. It replaces 5 old dams in the river which are obsolete, and has an overall benefit-cost ratio of 1.63 to 1. TRANSFER OF FUNDS Senator CORDON. May I go back for a moment to this transfer of funds? Will that transfer by which you increase your amount on Old Hickory by the amount you decrease what you had originally suggested for Cheatham, keep Old Hickory on schedule or will it posibly advance that schedule of construction? Colonel WHIPPLE. It will not advance it, sir. It will keep it exactly on schedule. Otherwise, we would have had both projects falling behind the schedule, instead of only one. POWER DELIVERY SCHEDULE Senator CORDON. What is the schedule now with reference to bringing the power on the line at Old Hickory? Colonel WHIPPLE. First power will come on the line in March 1956, with the dam closure scheduled in the fall of 1955. Senator CORDON. That closure is essential to power ever getting on the line here, is it not? Colonel WHIPPLE. It is not only essential to this power getting on the line, but it is very closely related to the Galatin steam plant of the Tennessee Valley Authority further upstream. : Senator CORDON. Thank you. Senator ELLENDER. I wonder if we can assume that the amounts that you have recommended for each of these projects is about the minimum that we ought to appropriate in order to carry on the projects in the time limit that you have in mind? General CHORPENING. That is correct, sir. We have scrutinized our requests this year even more carefully than past years to asure that. Should we get favorable bids we will have savings and I am sure the Congress will appreciate that, if we show an unexpended balance. This may well happen inasmuch as we are basing our requirements on what we see now as the costs. We have exercised more precise judgment this year, however, in estimating these costs than we have, perhaps, in some earlier years in order to avoid just that kind of a condition existing. Senator ELLENDER. I hope you have made that showing with the House. General CHORPENING. We certainly have, sir. We have done our best to present that very clearly and forcefully to the House committee. Colonel WHIPPLE. As a matter of fact, in reviewing the status of this project shortly before appearing before the House, it developed that we had received favorable bids. The total estimated cost which you have before you is $53,200,000 but it is now reduced to $50,900,000, by reason of those favorable bids received a short time before the presentation started. As you will note on both of these projects, we will be exhausting available funds by the end of the year and we feel that these amounts are required to keep these projects on this schedule. The Galatin steam plant which I would like to refer to again is an extremely important and large steam plant. There is over $21 million in the President's budget for this project in fiscal year 1955. In the event we do not meet the projected closure date on the Old Hickory project, it will be necessary for the Tennessee Valley Authority to spend $750,000 additional for temporary pumping facilities for water from the pool, purely on account of our failure to meet the schedule. So that the funds requested for the Old Hickory project are not only required to get its 100,000 kilowatts on the line as scheduled, but are required to avoid the wasteful expenditure of threequarters of a million dollars in connection with the Galatin steam plant. The construction is going extremely well. The unexpended balance which, by reason of loans, is recorded as minus $1,174,000 as of June 30 last year, stands as of December 31 at $5,313,000, and is expected to be reduced to approximately zero by June 30 of this year. Senator KNOWLAND. What is the reason that its costs are up about $1,300,000? Colonel WHIPPLE. The costs are actually down, sir. They were given last year as $51,900,000. The figure that is in your book should be corrected to read $50,900,000, as a result of the favorable bids. Senator ELLENDER. Was it due entirely to favorable bids? Colonel WHIPPLE. Due entirely to favorable bids. Senator ELLENDER. No short cuts of any kind? Colonel WHIPPLE. We had previously expected that the costs would have to be increased as the chairman indicates, but after the printing of these justification sheets, these bids were received and allowed us to reduce the cost estimate by that amount. Senator KNOWLAND. The next project is Chief Joseph. Colonel WHIPPLE. The Chief Joseph Dam is an element of the main control plan on the Columbia River a short distance downstream from Grand Coulee and above the McNary project. POWER CAPACITY This project is the only one of our program in which power is the only material benefit. There is no appreciable navigation or floodcontrol benefit in connection with this project. The installed capacity will be 1,024,000 kilowatts, and it will produce over 5 billion kilowatthours of primary energy initially and more later when further storage will be provided upstream. Senator CORDON. 5 billion? Senator CORDON. What is that figure you divide that by to get kilowatt-years? Colonel WHIPPLE. 8,760, sir. Senator CORDON. 8,760. That is 24 times 365? Colonel WHIPPLE. Yes, sir. Senator CORDON. All right. Senator ELLENDER. I notice here that the initial number of units. will be 16, and you have 20 intermediate. Does that mean that you contemplate putting four more in the future? Colonel WHIPPLE. We expect, sir, that with the future development of storage by the Libby Reservoir and possibly other storage upstream in Canada, that something like 20 units can be foreseen as probable to be required in the future. Senator ELLENDER. Then in the cost of $186 million plus, have you made provisions in order to obtain the places where these four addi tional units are going to be erected if and when that determination is made, that you can put them there because of more storage upstream? Colonel WHIPPLE. Sir, we have planned the powerhouse so as to allow the installation of 27 units. Not only the 20 that you refer to but 7 more at some possible future date. Senator ELLENDER. Why so many? Do you anticipate that the 27 might be usable at one time? Colonel WHIPPLE. We think that possibly that would be the case, and since this is such a favorable place to put additional peaking capacity for the system as a whole, we feel that minimum provisions should be made at this time to allow that powerhouse to be extended even though we have no definite plans for its extension at this time. Senator ELLENDER. But the amounts that you now are asking for contemplate only 16 of those possible 27? Colonel WHIPPLE. It will provide for the installation of 16 and minimum provisions at this time for the future installation of as many as 27. Senator ELLENDER. Are we to understand, then, that the only provision that will have to be made in the future by way of appropriations will be to obtain money sufficient to pay for the machinery? Colonel WHIPPLE. No, sir; it will be necessary to extend the powerhouse and install the machinery. It will be less than the full cost of a powerhouse, because part of the excavation has been made. Senator ELLENDER. You mean that work will be done in connection with the 16 units? Colonel WHIPPLE. Yes, sir. BENEFIT-COST RATIO This project is of rather unusual economy. The benefit-cost ratio is 2.5 to 1, and the energy will be produced at a cost of 1.7 mills per kilowatt-hour. It is a very, very cheap project. That power costs less than one-third of the cost of producing that same power from steam plants. The construction contracts are generally ahead of schedule. Actually, at the beginning of the year, we had $2 million placed in budgetary reserve which we are now contemplating to request being released later on in the year because obviously we are going to need that money. We had a minor strike in connection with the powerhouse construction. That strike was terminated on the 20th of January without having seriously interfered with construction progress. All of the work for the supply of the power-plant units is on schedule. The amount requested is $27 million, which we believe will probably not be sufficient to maintain the schedule on this project. DELAY IN CONSTRUCTION Senator CORDON. How much will the construction program be delayed by the reduction in the appropriation this year and tell the committee also whether that delay, whatever it may be, can be picked up at any future time. Colonel WHIPPLE. If the money is not provided now, and if this delay occurs, which we think it probable, it will not be possible to pick it up at a later time. The amount of the delay that we think is probable from this would not interfere with the production of the first four units. They would come on the line as scheduled. The other 12 units would probably be delayed by 12 months each and once those units are set back by that period of time, it will not be possible to recoup that time on account of the necessary time that elapses between the construction of one unit and another. Senator KNOWLAND. Your cost is down what, $6,370,000? General CHORPENING. Yes, approximately a $6,400,000 reduction in cost estimate since last year. Senator KNOWLAND. Is that all the result of favorable bids or a change in structure or what? General CHORPENING. Favorable bids, excellent construction procedure here. We have had very fine luck with this project, with no untoward circumstances during construction. It will be recalled by the chairman that last year we had also made a reduction in the cost estimate. I am hopeful that we can come up next year with possibly a further reduction. As we get closer toward the end of these projects, we see our way clear. We have opened more bids and are able to show these reductions in some cases. Senator CORDON. Could you tell the committee now what would be the loss in income resulting from that year's delay in putting in the 12 additional generators in there? Colonel WHIPPLE. If that delay occurs, sir, it will result in a cash loss of $7,900,000. Senator CORDON. $7,900,000. Colonel WHIPPLE. Yes, sir; at the current Bonneville Power Administration rates. Senator CORDON. That is what I wanted. Now, what amount of money would be necessary at this time to add to the $27 million requested to put the construction schedule on time so as to pick up what would otherwise be a year's delay! Colonel WHIPPLE. As near as we can estimate, sir, $3 million will be required to keep that schedule. That is, over and above the $27 million allowed by the budget. Senator CORDON. Mr. Chairman, we have a situation where facts are also presented with reference to the Dalles Dam. Here, again, we have a loss that we know will be a loss if the delay is incurred. It is $7,900,000 of income that could be averted by an additional $3 million appropriation this year, and the $3 million is going to have to be appropriated within the next couple of years anyway. BUDGET REQUEST General CHORPENING. I think I should mention now that our budget request within ceiling was $22 million, which was on the basis that all units would have been delayed 1 year. Our overceiling request was $8 million, a total of $30 million. The amount allowed was $27 million which would provide for the first 4 units going on the line as scheduled, but with the probable postponement of the remaining 12 units 1 year. Senator KNOWLAND. Well, I think that is one of these matters the committee will want to look into as we get along. |