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Water, then it must send the dam on its way for the time being, at least, without the authorization of this paragraph of section 2.
As I see it, another course open to the committee is to follow the precedent Congress employed on the Trinity River project in California. The act which authorized that proiect (H.R. 4063, 84th Cong. 1st sess., ch. 872; 69 Stat. 719), provided in 1955 that the Secretary of the Interior could pursue the consideration of a partnership arrangement with the non-Federal entity, and then, if he saw fit, come back to Congress with such a proposal. Such a proposal was framed and returned to Congress in 1958 (H.R. 6997, H.R. 7407, H.R. 10005, 85th Cong.. 2d sess.) but Congress has apparently chosen to lay this to rest.
While that is a constitutional course by which the issue may be postponed, I have no reason to expect the attitude of Congress to be any different as to the Rio Grande than it was as to the Trinity. It seems that the issue could be resolved right now. Of course, I am ready to do it.
The issue as we see it is not one of public versus private power. We view the "partnership" label as misleading. To us, the question is whether a natural resource belonging to all the people shall be taken from them and given to the control and exclusive advantage of one company or a relatively few persons.
We regard the course now proposed to be a departure from the 50-year-old tradition and policy of the preference principle. Here are some words of the champion of that principle, President Theodore Roosevelt:
The great natural resources which are vital to the welfare of the whole people should be kept either in the hands or under the full control of the whole 1 people * * * for the benefit of all our people, and not monopolized for the benefit of the few * * *. This applies to coal, oil, timber, waterpower, natural gas. (From "The Free Citizen," edited by Hermann Hagedorn, p. 151.)
This policy has been applied to waterpower specifically on many occasions, but a landmark was the Flood Control Act of 1944 (Dec. 22,1944, ch. 665, sec. 5; U.S.C.A., title 16, sec. 825s).
Please note that this policy is not a preference for the highest bidder. It is not designed to make the most money. Its purpose, in the words of the Flood Control Act of 1944, is—
to encourage the most widespread use (of the power) at the lowest possible rates to consumers consistent with sound business principles.
At this point let me quote again, if I may, from the words of Senator Thomas H. Kuchel, who was one of the leaders in the most recent successful defense of this policy—on the Trinity River project in California. He has said:
The reclamation projects of the United States are not built for profit. Their purpose is to serve the needs of the people. They incidentally—and importantly—assist in controlling floods and in controlling salinity. They provide new recreational opportunities. And, utilizing the inevitable hydro head, they produce power. * * *
If the private power industry succeeded in preventing the Government from making electricity from the Trinity available to "preference" customers, I think it only logical to expect that a like attempt would be made with respect to all Federal reclamation projects, in being or in prospectus. The efforts of the community of people to accelerate the economy of rural America through electric cooperatives would suffer a disastrous reversal (Congressional Record, Thursday, Mar. 5, 1959; pp. 499633-69713).
While this was applied particularly to the electric cooperatives, the same would be true of any other State or municipal organization or utility. What was said about the issue there is equally true here.
I am not forgetting the appraisal of the Federal Power Commission. They have told the Congress—told this committee—that a Federal powerplant on Amistad would be bad business. We have presented engineers who see this differently. Most of that debate is over my head, but I take heart from some words of Mr. Newcomb B. Bennett, Jr., Assistant Commissioner of the Bureau of Reclamation, who has been one of the witnesses at this hearing. Since that appearance, I heard him say, in speaking of these hydroprojects, that "economic feasibility is more a matter of philosophy than a matter of science."
Mr. Selden. Where did he make this statement?
Mr. Reavley. In the speech he made at the National Rural Electric Cooperatives Association annual meeting at St. Louis. It was part of his published speech.
In the present picture, even a layman can spot some places where philosophy shows through.
As I understand the basis for the FPC rejection of Amistad power, it is that despite there being "the potential of large quantities of hydroelectric energy at the Diablo site" (p. 50 of the IBWC report), according to the figures they assume (taken from the IBWC) the river has not always had the flow for the generation required. Since that power is not entirely dependable, it can only be sold at the price paid for dump power. The FPC says the dump rate is 1.7 mills per kilowatt hour. This would not pay for the powerplant.
I am neither disposed nor qualified to wade into this part of the debate, but there are some questions I want to ask which it seems to me this committee would want answered before accepting this partnership plan put forward by the executive agencies.
On the 10th page of my prepared statement, you will see a chart which shows in the left column the actual annual historic riverflows at Del Rio, and then the two middle columns are taken from table 2 on page 72 of the IBWC report.
I have not understood why they used the year they used to place alongside their future estimate as to the flow at the Amistad site, but these two columns are what appear in table 2 on that page. Perhaps they have used the actual flow in these corresponding years of 1901, 1902, and so forth, for some purpose in figuring out the prediction for future 57 years.
In any event, I suppose that the figures which the IBWC has used in this column on the right here, in my exhibit, are the figures which the FPC has relied on, and they have assumed there will be actually this waterflow available for generation use over the next 57 years.
We are already familiar with the IBWC reports conclusion that whereas the actual past historically recorded annual average flow at the Amistad site is 2,985,000 acre-feet, the future expected—and I suppose the basis on which the FPC has made its computation—will be 2,294,000 acre-feet. The future is assumed to be far worse than the past.
And you look back at some of these individual years, if there is a correspondence between 1901 and 1948 and so forth, between the actual and the future, and I don't know why else they use the years alongside their figures, then you will see that this is very irregular. In some places their estimate is less than 50 percent, even, of the actual; sometimes, 100 percent. There is no regular difference, so far as I can detect.
(The exhibit referred to appears on p. 230.)
Mr. Reavley. The IBWC report at page 64, as I understand it, indicates the dry years which reduce us to 81 percent of dependable 75,000-kilowatt capacity. As I read the statement on page 64 these dry years were, or will be in the corresponding years in the future: 1912,1913,1918, and 1919.
I don't understand that, because the actual record shows 3,269,000 acre-feet of flow in 1912, and the figure they have estimated for 1912 or the corresponding future year is less than half of that.
In 1913 it was 2,249,000.
And in the years 1918 and 1919, there were not any official records kept.
I not only know that from the bureau of water commissioners in Texas, but the IBWC report has said so—except it indicates a record during some months in 1919, when I believe there was a flood.
The actual average annual flow, as I said, has been 2.9 million-plus, but the IBWC predicts 2.2 million-plus. Their prediction is only 76.8 percent of the actual. Why? What is the basis for these predicted decreases % I am sure there is an explanation, but as yet I have not seen it.
This problem of no dependable supply of water for generation exists at Falcon even more than at Amistad, yet the Federal Government has put its own plant at Falcon.
At Falcon, we were told (on p. 52 of the Commission's report) that capacity is available only 68 percent of the time, but with the help of Amistad the lower dam will be raised to 79 percent. Yet the FPC found Falcon feasible, and the prediction was made that, over 100 years of operation, the power installation would pay not only for itself, but 47 percent of the cost of construction of the entire dam as well. (SeeH.Rept. 1299, 81st Cong., 1st sess.)
I think also there has been a curious lack of detailed information about the cost of the Falcon powerplant, and about the detailed revenues received from the sale of the power at Falcon. Commissioner Hewitt says Falcon is not amortizing its costs, but Assistant Commissioner Bennett of the Bureau of Reclamation says they cannot tell yet.
I predict Falcon will prove to be a profitable investment to the Federal Government.
But more than this, the part of this package which seems most conspicuous and untenable to us is the insistence that a powerplant would not be feasible for the Federal Government while, on the other hand, we are assured that Central Power & Light Co. is prepared to build that plant for itself and pay enough extra to help defray the Government's cost of conservation storage. If that company would build the plant and pay for the fall of the water, why would it not have need of power produced there by the Government?
Forget for a moment these municipal powerplants and the farms and ranches served by the cooperatives. How can the Government say only dump power will be available at Amistad, while at the same time waving the proposition of Central Power & Light which expressly assumes the power is to be 100-percent peaking power? I suppose Central Power & Light would have no more control over the release of the water for power purposes than the Government would permit its own plant. Perhaps Central Power & Light has made an assumption that will not fit the facts. The Commission seems to think this is all scientific and solid. Colonel Hewitt has told the committee he thinks this is a reliable proposal upon which the Commission can act, and in his report, this $337,000 amount for falling water rental is treated as assured to the Government. This flat statement is made at page 65:
Therefore, the total direct hydroelectric power-producing benefits of the Diablo Reservoir to the Government would amount to $340,000 annually on the average.
Perhaps such an arrangement is assured, but it surely takes something more than the letter of April 14, 1958, to assure it. No legal background is required to see that the president of that company by this letter on that date only discusses some aspects of a future project surrounded with uncertainty.
If this letter tells the whole story and if Central Power & Light has made inaccurate assumptions, then what happens to this reliance upon that company to pay the incremental cost of conservation? Does it mean either the falling water will bring the project less money, or perhaps that there will be no powerplant constructed at all at Diablo or Amistad?
I suspect that it does not mean the latter. I believe Central Power & Light knows the future needs of this developing area of Texas, and knows that a powerplant is feasible and will be put there by someone.
The issue remains, then, as to who that someone will be. Who will control this sale of power, and how many of our people will enjoy its widest benefits?
In conclusion, we think the second paragraph of section 2 of H.R. 8080 cannot be justified. Certainly we don't believe the record yet justifies it. We believe it should be stricken.
Mr. Selden. Thank you, Mr. Reavley. In your statement you have made your position very clear.
Are there any questions by members of the committee? Mr. O'Hara.
Mr. O'hara. I am very much interested in your statement, Mr. Reavley, and appreciate your help in clarifying the situation.
You state in the event the bill stands as it is now worded, that in effect it amounts to a gift of this facility to the private utilities company; is that your statement?
Mr. Reavley. Well, I think in practice the only thing that could result will be a powerplant by the Central Power & Light Co. on the Amistad Dam, and I think that will probably be on an advantageous basis for Central Power & Light Co.—some gift, therefore; yes, sir.
Mr. O'hara. Are you fearful that the price at which water is furnished the cooperatives will be excessive?
Mr. Reavley. You mean waterpower?
Mr. O'hara. Yes. Waterpower.
Mr. Reavley. We have had this experience recently: The cooperatives who buy their wholesale power from our friend, the Central Power & Light Co.—and we hope they are our friends, they are good citizens of Texas—but the contracts were about to expire between the Central Power & Light Co. and a number of those electric cooperatives. We were advised by Mr. Bates that the rates that would be used for the new contracts woud be considerably higher. They varied from 30 percent to a raise for Mr. Hurd's co-op of 36 percent.
However, fortunately, one change has come into the picture, and this is the source—limited, but a source—of steampower from Mr. Shepperd's new plant, now under construction. Mr. Shepperd testified here the second day. That changed the picture and our contracts have been changed so we are able to buy that power at something like a 5-percent increase. I think Mr. Hurd is having to pay 16 percent more, but still that is a saving of more than half, to him. In other words, when there is only one supplier of power, it makes a lot of difference.
Mr. O'hara. As I understand your statement, you have no public utilities commission in Texas.
Mr. Reavley. None at all. No regulation.
Mr. O'hara. How does that happen?
Mr. Reavley. I do not know that I can explain. I think we need some expert rate advice for the consumers of the State that we do not have. But for whatever reason, political or philosophical, we do not have any.
Mr. O'hara. In Illinois, as long ago as 1913, we created a public utilities commission. That was in keeping with the trend at that time. I was surprised to learn from you that Texas never fell in line with the trend.
When you are competing with a private utility company, what do you have to back up your requests for reasonable rates? Do you have to take the rate dictated by the private utility?
Mr. Reavley. Well, not quite, but almost that, Congressman.
Mr. O'hara. There is a difference between "not quite and "almost."
Mr. Reavley. I suppose there are rates beyond which the Central Power & Light Co. would not go regardless of what they might think about the electric cooperatives and the areas they serve. There is always the matter of public relations; there is always the matter of making a record that might bring forth rate regulation; and then again there is under the present situation the possibility that a loan would