Mr. WEAVER. That is all that has been submitted by the Commission. I could supplement that this way: In 1955, again at the request of the International Boundary Commission, the Fort Worth office made a power market study for the utilization and value of this power. That report was made available to the International Boundary Commission in 1955.

Mr. FASCELL. That is the power market study of 1955 and they made an original study of what kind?

Mr. WEAVER. For the value of the power that could be produced at the project, monetary value.

Mr. FASCELL. When was that?

Mr. WEAVER. That was in 1955.

Mr. FASCELL. Are there any other studies?

Mr. WEAVER. October 1955. This other study was made in 1958. This culminated in the letter that is on page 81.

all.

Mr. FASCELL. That is the power market study.

Mr. WEAVER. That is the comments generally on the proposal over

Mr. FASCELL. That was in 1958.

Mr. WEAVER. Yes; from our regional office. Subsequent to that, the Commission received a formal request from the Secretary of State for the Commission's formal comments on the proposed project, particularly with reference, of course, to the power facilities. That culminated in the letter which is on page 138.

Mr. FASCELL. That is also October 1958.

Mr. WEAVER. December 16, 1958.

Mr. FASCELL. Let me see if I have this straight. The power market study and the monetary value power study were both in 1955.

Mr. WEAVER. Yes.

Mr. FASCELL. Are the conclusions of those studies made part of the subsequent reports either in the regional office letter or in the Commission's letter?

Mr. WEAVER. Yes. The conclusions with respect to market was that there was a market for the power that could be developed by this project; second, in the evaluation of the project as to whether or not the power should be installed at this time.

Mr. FASCELL. The Commission's determination there was it had a zero value.

Mr. WEAVER. It had steam replacement value, in that if you would operate the Amistad project; then the steamplants in the area could shut down their operations to the extent that they would otherwise generate that amount of electric energy. But the opinion was that the project could not be credited, for purposes of economic justification at this time, with any capacity value, which makes up the bulk of the value in a project of this kind.

This project is for peaking; if you compute the capacity factor on the basis of the average annual generation from this project, you will get around 20 percent. That means that with 75,000 kilowatts, if you are assuming that, the capacity factor would be about 20 percent, having available on the average the amount of energy that this project would generate. That means it would not be available around the clock during the day. It could be used for peaking purand that would be its value.

poses

In addition to that consideration, it is not baseload power. It is a peaking type of power. On top of that, there is the consideration that examining the period for the operation of this project for water supply and irrigation, you find in 4 years of the total period of record that during the time of peakload there will be no power available from this project at all. It would be reduced to zero because the water would not be there.

Power of that kind is not considered power that you can give a monetary value to. In the consideration of Federal projects, Corps of Engineers, Bureau of Reclamation, and those of this kind, and in the Commission's consideration of non-Federal projects and in its licensing activities, we apply the same criterion for capacity as is applied in this case.

Mr. SELDEN. Mr. Weaver, yesterday the subcommttee heard testimony from Mr. Krezdorn, consulting engineer for the Texas Electric Cooperatives, to the effect that the estimated net income from the sale of power from the Amistad Dam should be about $668,000 annually.

In arriving at his estimate, the witness stated that he considered 75,000 kilowatts of dependable capacity as being available. You have just stated that the Power Commission concluded that the dam could not be credited with any dependable capacity at this time.

Mr. WEAVER. That is right.

Mr. SELDEN. Could you comment further with respect to the computation of dependable capacity and explain the reason for the variance between your estimates and the estimates of the REA engineer?

Mr. WEAVER. It is not too simple. Let me read two definitions. They are rather complicated within themselves. I am reading here from a glossary of important power and rate terms, dated 1949, which was prepared by a committee of representatives and experts from the various Federal agencies interested in power. These were representatives from the Federal Power Commission, from the Corps of Engineers, from the Department of Agriculture-at that time their representative was REA-Department of the Interior, and Department of Commerce. That is definition No. 44 on page 5 of this glossary.

Dependable capacity: The load-carrying ability for the time interval and periods specified when related to the characteristics of the load to be supplied. Dependable capacity of a station is determined by such factors as capability, operating power factor, and portion of the load which the station is to supply.

In order to assign a dependable capacity for a hydroproject, you must find it possible to take that capacity and the energy that goes with it under the most critical conditions-under the most unfavorable conditions, and find a place for it on the load curve. The load curve is a curve which shows the duration of time for which any particular capacity is required.

The vertical ordinate is capacity and the abscissa is time, and the general shape is like this. The hydro goes up in that very narrow part at the top of the curve. The steam-generated power goes around the clock. So hydro of this kind or any hydro must find a place on that load curve where you can put it and say that this hydro-this capacity in this case being 100,000 kilowatts-this capacity must have

sufficient energy with it to occupy this particular place on the load at the time of system peak.

There were 4 years during the time of system peak, which comes in the summer in that area, I think, when this plant would not be operating, either due to lack of head or water or some other factor. I don't know whether that illustrates it or not.

I might say, Mr. Chairman, that I have also before me a copy of the Federal Power Commission's power system statement which is a series of forms on which all operating utilities in the United States must report to the Commission annually. Here is a definition for dependable capacity which is essentially the same as I have read from the glossary. They are in agreement.

I would add that as far as I know, among the agencies with whom we deal through the interagency committee on water resources, and under our statutory authority, acting with the Corps of Engineers and the Department of the Interior, there is no essential difference in thinking with respect to the thing I am talking about; that is, dependable capacity.

I have not mentioned another factor, but it has been mentioned here this morning, and it is of some importance, certainly, that in order to assign dependable capacity to some sector of generating capacity in a station you must have some assurance of water. There has been discussion here this morning in connection with that, as to the releases of water.

It is our view, and I think what is intended is proper as far as I am personally concerned, that this project is being built for flood control, water supply, and irrigation. Power should in my judgment take the back seat with respect to the operation of this project.

The first demand will be irrigation and water supply.

I could also add this: That one of the troublesome problems in the Pacific Northwest within the Columbia River Basin has to do with the thing that I am talking about; not, however, in understanding what dependable capacity is, but in operating that large system of multiple ownerships in such a way that the aggregate power in the Columbia River Basin will be at its maximum.

One of the difficulties we are finding in order to secure that maximum is that there are various ownerships of storage capacity, and today there is no definitely assured plan of releasing water from all of those storages.

Generally, the ownerships will reserve to themselves the right to operate their storage to their own best value.

There is legislation proposed in connection with the Federal Power Commission's headwater benefits in the Columbia River Basin which would tend to correct that situation. That legislation, I think, will be before this Congress in this session.

Mr. FASCELL. The priorities in this case are, first, flood control? Mr. WEAVER. Certainly.

Mr. FASCELL. And second, irrigation? Is that set out some place? Are there priorities assigned in this case?

Mr. WEAVER. I think it is in the treaty.
Mr. FASCEL. And third, electric power?
Mr. WEAVER. I think power is last.

Colonel HEWITT. If I might quote from the treaty, article 2, the priorities are: Domestic and municipal use; agricultural and stockraising; third, electric power; fourth, other industrial use; fifth, navigation; sixth, fishing and hunting; and, seventh, any other beneficial use which may be determined by the Commission.

Mr. FASCELL. Thank you.

Mr. SELDEN. Do you have any further questions?

Mr. FASCELL. So I can understand, Mr. Weaver, the mechanics of the operation by the Federal Power Commission, pursuant to the requests which have been made, What data was used for the power market study and a monetary value study in 1955?

Mr. WEAVER. Mr. Fascell, the Commission collects the data on a continuing basis and I think it is the only agency in the power field to do so. Complete information systemwise, public or private, with respect to their loads, with respect to their power-generating facilities, the type of generating facilities, hydro, steam, or internal combustion, and with respect to transmission facilities. The Commission regularly is making estimates of load as to what they are today, the division of loads between the various classes of service, and makes projections of loads into the future in cooperation with the utilities.

The Commission gets information with respect to future loads from utilities and makes its own estimates.

Mr. FASCELL. Excuse me, sir. Before we get into value, is what you are telling me, then, Mr. Weaver, that the Federal Power Commission in the instant case made an independent power market study based on its material and data which it collects all the time.

Mr. WEAVER. Yes; that is right.

Mr. FASCELL. And its evaluation and conclusions were made independent of the study made by the International Commission, if any? Mr. WEAVER. That is right.

Mr. FASCELL. Right there, if I can just clear this point, Colonel Hewitt, is there an independent study by the Commission on the power market?

Colonel HEWITT. No, sir.

Mr. FASCELL. In other words, your position as a commission is based on the studies of the FPC and its conclusions?

Mr. WEAVER. I think it is pointed out in the report that they relied upon the Commission for advice in those matters.

Mr. FASCELL. I am just trying to find out whether they had the benefit of any other information.

Colonel HEWITT. I would like to have Mr.

Mr. FASCELL. I had understood earlier there were other studies.

STATEMENT OF JOSEPH F. FRIEDKIN, PRINCIPAL ENGINEER, SUPERVISING, U.S. SECTION, INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO

Mr. FRIEDKIN. There were two phases to this study. We are talking about power. In this study the Boundary Commission, U.S. Section, made the part of the study relating to the availability of water and the availability of head for power-making purposes, and our studies related to availability of water and head were submitted to the Federal Power Commission to evaluate how much it was worth.

Mr. FASCELL. That is on the monetary value. I am trying to nail down the power market aspects of this thing first.

Mr. FRIEDKIN. The power aspects are conclusions of the Federal Power Commission.

Mr. FASCELL. You had no part of that at all?

Mr. FRIEDKIN. None whatsoever.

Mr. FASCELL. The conclusions and the recommendations, whatever they were, of the FPC, are accepted as submitted?

Mr. FRIEDKIN. Yes, sir.

Mr. FASCELL. Without comment, modification or otherwise?

Mr. FRIEDKIN. That is right.

Mr. FASCELL. Now, go ahead if you will, Mr. Weaver.

Mr. WEAVER. I didn't know if you understood.

Mr. FASCELL. I probably didn't.

Mr. WEAVER. I think I said, and if I didn't, I want to say that the power market study showed there is a ready market within the region that could be served from this project. That is definite.

Mr. FASCELL. You did say it and I understood that.

Mr. WEAVER. With respect to value, Mr. Fascell, it is accepted practice to value hydropower in general on the basis of what it would cost you to get that power from some alternative source.

Mr. FASCELL. Such as the steam-generating plant?

Mr. WEAVER. And the most likely generating source. In this case it is steam. What the Commission does is to estimate the capital cost and then the annual cost of operating a steam-electric plant. That is computed on a dollar per kilowatt basis of capacity.

That is bringing in all costs, the capital charges plus operation and maintenance. That is what we call the capacity component of power value.

The other component of power value is what is the energy worth. It is also computed on the basis of what the cost for generating incremental energy is to the alternative steam-electric plant. So we come up with the power values which we say have two components, capacity and energy. That is again, Mr. Fascell, in accord generally with the contracts for the sale of power which are generally on what we call a demand and energy basis.

You may have in your home, say, an electric water heater, so that even for domestic service sometimes there is a demand charge and an energy charge.

Mr. FASCELL. The difference between those two terms

Mr. WEAVER. One is capacity and the other is energy. The capacity is ability to do work; that is, this project, Amistad, with 100,000 kilowatts installed, having the water available, has the capacity in its machine to develop 100,000 kilowatts. If it hasn't any water, it can't develop any energy. Energy brings in the time element. A kilowatt working for an hour develops 1 kilowatt-hour of energy. If you don't have water, you have the kilowatt standing there, but it doesn't have any water to make it available.

If you have water available for 20 percent of the time, we say it has a 20 percent capacity factor. If you have water around the clock, then you can operate around the clock, 1,440 minutes of the day.