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Mr. Weaver. I presume that could be done because depending how much—I don't know how much water would be taken out for irrigation use between Amistad and Falcon—but to the extent that water goes down to Falcon and is taken out for irrigation and presumably can be reregulated, that is the advantage of Falcon, as far as peaking is concerned, to Amistad. You get that pond down there that takes the varying flows and smooths them out for irrigation.
Mr. Kilgore. I do know from some previous experience below Falcon that efforts to release irrigation waters from Falcon on the basis of creating peaking power were not entirely satisfactory because those wads, as you referred to them, still existed to some extent in the area where the diversion needed to be made.
This would be the water passing and the lesser flow of water which wouldn't meet the diverter's demand.
Have you had access to the information that was given to the subcommittee yesterday by the two engineers?
Mr. Weaver. No.
Mr. Kilgore. One of them, as I think the chairman indicated, projected a net income to the United States in the event the United States built a powerplant at this site, a net income of $668,000, and the other a similar figure of $524,400 on an annual basis.
Are those conclusions inconsistent with the conclusions the Commission reached?
Mr. Weaver. Those figures sound to me like figures that we have. We say in our letter that if 75,000 kilowatts could be considered as fully dependable, then the benefit to cost ratio would be 1.1 to 1. In other words, the installation of power would be economically feasible. That computation was made having regard for the inclusion on the cost size of the ledger for the Federal project the item for taxes foregone, which you may have heard about.
In 1954 the Departments of Interior and Army and FPC agreed that taxes foregone were a proper item for inclusion on the cost size of a Federal project as an economic loss.
I think these figures are right. I will ask Mr. Crum about that. Does the figures that Congressman Kilgore mentioned of around $600,000—is that about the gross value less the taxes, or what is the situation with that?
STATEMENT OF STEWART P. CRUM, CHIEF, SECTION OF BASIN AND PROJECT PLANS, DIVISION OF RIVER BASINS, BUREAU OF POWER, FEDERAL POWER COMMISSION
Mr. Crum. I would say it is apparent that the REA's have considered a project having a dependable capacity value in arriving at that $600,000-odd figure. We figure it is worth 1.7 mills per hour. That would only amount to about $200,000 a year on the average.
Their figure of $600,000 no doubt considers a capacity component. They must be relying on some steam support to carry them over periods when they have no power available at Amistad.
Mr. Fascell. Are they saying that power is available all the time?
Mr. Crum. Yes.
Mr. Selden. Are there any further questions?
Mr. Mason. I would like to add one comment. I would like to point out that reporting on this dam isn't an isolated case. Over the years the Commission has reported on projects with respect to power values, on Corps of Engineer projects and on reclamation projects, as well as this project, and any other project which might come up. It is a custom and habit to do that. We have a section set up to handle this work called the River Basin Division.
Congress has recognized it every year by appropriating money to carry on the work. It is directly related to our licensing function of the private and State and municipal projects because the information that this group gathers is used in licensing private properties.
Mr. Fascell. You have done a good job of qualifying yourself as an expert.
Mr. Chairman, I have a question that I want to ask Mr. Weaver. You have put into the record the Commission's definition of dependable capacity, and the Commission takes the position as to the data supplied to them that the rating for dependable capacity is zero.
You have further concluded that the sale of the power then could only be as dump power and that it would bring a much lesser monetary cash value.
Mr. Weaver. That is correct.
Mr. Fascell. If another engineer on the same set of data arrives at a conclusion that there would be 75,000 kilowatts of peaking ca^ pacity at any time, are these two positions in conflict?
Mr. Weaver. They are, because he must have a completely different definition of what dependable capacity is. I don't think he would disagree with the routing studies, the flow studies of the International Boundary Commission. I think he would accept the fact that in those months that I am talking about, in those 4 years there would be no power.
Mr. Fascell. This is what I am trying to get at: First of all, the positions are completely opposite.
Mr. Weaver. That is right.
Mr. Fascell. Because in one case the Commission has assigned a zero rating of dependable capacity and in another case an engineer has said that there are 75,000 kilowatts of peaking capacity at any time.
The variable factors, and I just want to list them, that would go up into—that are used in arriving at either decision, it doesn't make any difference what it is, I just would like to have them listed 1, 2, 3, 4,5,6,7, et cetera.
Is water availability one of the factors over the lifetime period of the project for 50 years?
Mr. Weaver. One is water.
Mr. Fascell. Another is availability of head for the same period of time.
Mr. Weaver. Yes.
Mr. Fascell. Go ahead.
Mr. Weaver. That is about it, as related to ability to generate power at the time you say it can be available to the purchaser.
Mr. Fascell. Then what is really at issue is an interpretation of the same set of facts?
Mr. Weaver. I would think so, and I would put it mayba in these terms, Mr. Fascell. I think we look upon it, when we say that we have some dependable capacity and we want to sell it to you, we will guarantee to make that delivery to you under the most adverse conditions that will come to our plant.
Mr. Fascell. Any conditions? You just agree to deliver to me X number of units of power. I don't care what the conditions are if I have a contract with a damage clause for nondelivery. So then am I correct from a technical standpoint, that is, as engineer to engineer, the thing that is at issue between these two statements is an interpretation of the same set of facts or a disagreement with the basic facts on water availability and availability of head?
Mr. Weaver. Correct.
Mr. Fascell. If that is the case then, Mr. Chairman, I think that what we need would be, if we don't already have it some place, would be that data. Is it already in the report?
Colonel Hewitt. It is already in the report.
Mr. Fascell. "Water availability and head availability?
Colonel Hewitt. Yes, sir.
Mr. Fascell. Those are only part of the factors. That is (b) of the capacity component of our power value. We need the other half which has to come from the Federal Power Commission, which is (a); that is capacity, cost, and annual cost on a dollar basis per kilowatt of capacity. That is not available to us any place?
Mr. Weaver. You mean the cost
Mr. Fascell. Capital cost.
Mr. Weaver. To the Federal Government?
Mr. Fascell. I am talking about the capital component of power value. Which is the capital cost and the annual cost based upon the dollars of kilowatt capacity? That is your study?
Mr. Weaver. That is right.
Mr. Fascell. We don't have that.
Mr. Weaver. We could supply it to you.
Mr. Fascell. We would like to have it because it is in dispute.
Mr. Crum. We used $15.50 for kilowatt and 1.7 mills for energy. Those were made available to the International Boundary and Water Commission.
Mr. Fascell. If I, as another engineer, come up with $50 all we have is a disagreement on conclusion. I can't evaluate this unless I know what you base your $15.50 on.
Mr. Weaver. We can give you the makeup of that.
Mr. Fascell. Otherwise I can't challenge the other man's makeup or yours.
Mr. Seldest. Without objection, Mr. Fascell, when that information is supplied, we will include it in the record at this point.
(The information requested is as follows:)
Federal Poweb Commission, Washington, February 16, 1960. Hon. Armistead I. Selden, Jr.,
Chairman, Subcommittee on Inter-American Affairs, Committee on Foreign Affairs, House of Representatives, Washington, D.C. Dear Mr. Chairman: Reference is made to the testimony given by Mr. Frank L. Weaver, Chief of this Commission's Division of River Basins, before the •Subcommittee on Inter-American Affairs, House Committee on Foreign Affairs, on February 10, 1960, pertaining to H.R. 8080, 86th Congress, 1st session, a bill to authorize the conclusion of an agreement for the joint construction by the United States and Mexico of a major international storage dam on the Rio Grande in accordance with the provisions of the treaty of February 3, 1944, with Mexico, and for other purposes. It is understood that you wish to have for insertion in the record of this hearing the backup data for the power values used by the Commission's staff in its analysis of the power aspects of the Diablo project.
The total annual value of hydroelectric power supply is considered to be made up of two components: (1) a "capacity value" which corresponds to the fixed elements of the cost of power supply from alternative new steam-electric plants, which in the case of Diablo would be the most likely alternative supply; and (2) an "energy value" which corresponds to the variable elements of the cost of power supply, mostly fuel, from such alternative plants. These capacity and energy components of power value are expressed in terms of dollars per kilowatt per year of dependable capacity and mills per kilowatt-hour of average annual energy, respectively.
In the case of the Diablo project, as well as for most other hydroelectric projects, the estimated "at site" cost of producing electric power at modern steamelectric plants was developed as a first step. This basic cost was then increased by transmission costs and losses to arrive at the cost of steam-electric power at the market, this cost representing the value of the power at market. This value at market was then reduced by the hydroelectric transmission costs and losses to obtain the value of hydroelectric power at the site of the Diablo project.
The detailed computation of the power values used by the staff in its analysis of the Diablo project are given below.
Alternative steam-electric plant
Size of plant 525,000 kilowatts.
Size of units 175,000 kilowatts.
Type of structure Outdoor.
Kind of fuel Gas.
Cost of fuel, cents per million British thermal units 18.
Investment cost, dollars per kw 105.
Derivation of annual capacity value
Annual capacity cost of steam-electric plant:
Fixed charges (13.03 percent of investment: includes 6.25 percent for cost of money, 0.85 percent for depreciation, 0.35 percent for interim replacements, 0.25 percent for insurance, and 5.33 percent for Federal, State, and local taxes) $13. 68
Fixed operating costs (includes costs of fuel, operation and maintenance, and administrative and general) 2.53
Annual cost of transmitting steam-electric capacity to market 2. 62
Annual cost of steam-electric capacity at market, or value of Diablo capacity at market 18. 83
Annual cost of transmitting Diablo power to market 3.14
At-site value of Diablo capacity 15. 69
Derivation of energy value
[In mills per kilowatt-hour]
Incremental energy cost at steam-electric plant:
Fuel 1. 82
Operation and maintenance . 18
Allowance for losses in transmitting steam-electric power to market . 05
Incremental cost of steam-electric energy at market 2- 05
Allowance for losses in transmitting Diablo power to market and adjustment for lower plant factor of Diablo as compared with steam-electric
plant , .33
At-site value of Diablo energy 1. 72
Use , L 70
Jerome K. Kuykendall, Chairman.
tee to make that delivery to you under the most adverse conditions
(The information requested is as follows:) - -
Hon. ARMISTEAD I. SELDEN, Jr., -