140,000 to 150,000, under maximum head condition-so that the available water could be used through the peaking hours of the day rather than on a 24-hour basis.

The International Boundary and Water Commission's estimated cost of this size plant was about $15 million and this company's evaluation of the falling water is based on that estimate. Although a generating plant with smaller capacity might be installed for around $10 million as has been testified at this hearing, a plant of smaller capacity would require during irrigating seasons more nearly continuous operation and then might not be adequate to use all of the available water. This would provide substantially more dump power and less peaking power. This company made the evaluation for the Commission on the basis that the highest and best use of the power would produce the most revenue and that even though a larger capacity plant would be required, more revenue would be produced by installing such larger plant and using the falling water for peaking capacity rather than to produce and sell substantially all of the hydroelectric energy as dump energy.

This company is buying power and energy produced at Falcon Dam under a short-term contract. Here let me say that originally the electric facility was not in the original authorization for the Falcon Dam. It was the second, it came in later. This power is being treated and paid for as peaking capacity even though it is contracted on a very low 20 hours per week use factor. This arrangement was accepted on an experimental basis because of other special circumstances and so that both parties to the contract could determine the value of the Falcon power and energy on a long-term basis. More water has been available during the operation under this shortterm contract than can be anticipated on a long-range average. This company is not able to predict the value to it of the power and energy at Falcon after the expiration of the present temporary contract. Such value will depend on various considerations, including the flow into Falcon Lake, the availability of certain lakes in Mexico for storage and may I say here that is the only off river storage available and because it is in Mexico I possibly should not have even mentioned it. But it has been useful in the past, in making peaking power available at Falcon, that is, the use of the storage lakes in Mexico and the possibility of the construction of other storage facilities that could be used to permit generation of the power and energy more timely in the light of the needs of the using system. It seems likely, based on our experience under the present short-term experimental contract, that Falcon hydropower will produce less annual revenue in the future than in the past.

The service area of Central Power & Light Co. includes substantially all of that part of Texas located along the Rio Grande below the proposed Amistad Dam site. As a result I have been familiar with the area over a number of years and, as previously stated, I believe that the proposed Amistad Dam is needed badly for flood control and conservation of water for irrigation and municipal use. I appreciate this opportunity to make this statement, concerning primarily the hydroelectric power phase of the project, and I hope that it will be helpful to the committee.

Mr. SELDEN. Thank you very much.

Mr. BATES. May I say one thing. The Central Power & Light Co.-I wrote this letter after exhaustive study by engineers, which did not anticipate that there would be hydroelectric facilities in Amistad. We did make some suggestions.

I would like to say that here this afternoon, I have heard the statement that there is no utility regulation in Texas. I would like to correct that. Mr. Reavley knows about it. The municipalities do control rates. Every town in which we operate, we must have a franchise and we must obtain a rate increase, if we want a rate increase. That is not true outside of municipalities, but they do have access to courts, if we are out of line. Of course, Mr. Reavley being an attorney—I am not-he knows what that is, he is familiar with that.

But do not think that the utilities-we do not want this committee to feel the Central Power & Light Co., whose name has been bandied around here liberally and freely, or any other privately operated utility in Texas-can charge any rates they desire or feel the traffic will bear.

Thank you.

Mr. SELDEN. Your company does purchase the power from Falcon Dam, is that correct?

Mr. BATES. Yes, sir.

Mr. SELDEN. Do you estimate that the power that you are securing from Falcon Dam under the present arrangement is costing your company less than it would have cost had your company installed generating facilities, or is it costing more?

Mr. BATES. It is costing us slightly more. It is not meeting what Congress was told. The testimony, when they asked for the electric facilities, referred to I believe by Mr. Reavley, he said it would amortize the electric facilities in, I believe, 40 years and pay for 47 percent of the rest of the dam. That was when they got the money from the Federal Government. It has not done that. It will not do that.

I think Congress has been quite disappointed, I know the Commissions have. But understand, we must buy this power from the Department of the Interior. The State Department owns this facility, and it is operated by the State Department, Falcon, that is, but our purchase contract must be made with Interior, under your marketing law.

Mr. SELDEN. Mr. O'Hara?

Mr. O'HARA. Mr. Bates, I am interested in your statement. Somebody referred to the Public Utilities Commission. The witness before you stated that the enactment of this bill would be a gift of this site to your company. Naturally, I wish as much information as possible on both sides.

In your statement you furnish figures on a steam plant and two hydroelectric plants of your company which would be flooded and rendered inoperative by the proposed dam. Are you to be recompensed for such loss as you might suffer there?

Mr. BATES. We would expect to be, yes, sir. It would mean removal of a lot of transmission lines, a lot of

Mr. O'HARA. Do you propose in case this dam is authorized and built, to bid for this power concession or power use? Mr. BATES. Yes, sir.

Mr. O'HARA. As I understand, there are probably no other bidders in the field, is that the fact?

Mr. BATES. No, sir, I would not say that. They are here today. Mr. O'HARA. They have said previously they cannot bid because they haven't the funds.

Mr. BATES. The facility to answer your question the best I can, Mr. O'Hara, the best I can, you might be interested to know we operate about as many miles on this river as Mr. Hurd said he did, only we operate in the towns, largely. The town of Del Rio, which was terribly hurt, the town of Piedras Negras, the town of Laredo, all those were hurt by this flood, which incidentally has provided some of the additional water that is still behind Falcon. We operate in those towns. We have steam generation at Laredo, and at Del Rio; I believe it was testified there was none in that area, but there is.

Our interest in this matter largely is in water conservation and in flood control. That is where our interest lies. We serve the Rio Grande Valley of Texas which represents approximately 25 percent of my company's load.

Mr. O'HARA. Well, you have wide experience, you have organization, you have capital. Therefore, would there be in reality anybody bidding against you?

Mr. BATES. I could not answer that, sir.

Mr. O'HARA. Well, what do you expect?

Mr. BATES. I will say this, before this study was made, in original discussion, when they were talking about a tremendous amount of power-I do not know who Mr. Hurd referred to-but I had discussion with neighboring utilities companies when it looked as if it would have to be marketed.

I will say to you, I do not know of any company in the area who could use the amount of power that would be generated there on peak unless they have a system of around 1 million kilowatts, which is about our system. So I would say we would be the only one that could use that power.

Mr. O'HARA. I am trying to simplify the proposal in my mind, Mr. Chairman. As I get it, everybody wants this dam--that is agreed oneverybody wants it. No disagreement there at all. Every good and loyal Texan wants this dam.

Mr. BATES. And the neighboring Republic wants it.

Mr. O'HARA. You might not be able to get authorization to build this other facility with Government money; is that the situation?

Mr. FISHER. Mr. O'Hara, the bill I introduced is in exact accordance with the official report of the International Boundary and Water Commission, that is, that it could not justify the Government in building a plant itself. As to whether that finding is true, I don't know. The bill conforms with the report, precisely.

I put in the bill, however, a preference right of the electric cooperatives to buy the falling water if they wanted to do so, ahead of any private company. They say they don't want that privilege.

There is certainly a value attached to the generating potential there, the power potential, and naturally I think it would be to the interest of the committee and the Government to make the best deal possible, whether that means selling the falling water or building a plant. The Congress has always followed that policy.

Mr. O'HARA. That is something not to be decided by this subcommittee.

Mr. FISHER. I assume the subcommittee will decide whether to authorize the sale of falling water, which is included in the bill, to whoever will bid to the best advantage, or whether the Government would want to invest the $15 million for the construction of a plant and build it. That would be, I think, for the committee to consider.

Mr. O'HARA. I am trying to establish in my own mind how much validity there is to the issue. This is an issue between the public utilities and the Federal control of the national resources and power. Some of these witnesses have said that is the issue.

Mr. FISHER. I wouldn't know how to evalute that issue. It happens that this utility company does operate in that area, and it is a potential buyer of power.

Mr. BATES. Maybe I could

Mr. O'HARA. I would appreciate it.

Mr. BATES. May I say something about this power?

Under this treaty, one-half of this power belongs to Mexico. Let's discuss a moment what has happened at Falcon.

At Falcon there are two powerplants. It was originally contemplated there would be one, but the Republic of Mexico put in one, and we put in one, duplicate powerplants, one on each side of the river. They were short of power in Mexico.

After the plant started, after the project was tied on to our lines on a temporary basis, Mexico entered into a contract to buy firm power from Central Power & Light Co., from us, on the Texas side, and they bought such power in lieu of depending on Falcon.

One-half of the power belonged to Mexico, though, at times-at times there was no place to put power water when it rained, we didn't need the water for irrigation, so we would have to shut down the American production entirely.

So the Mexicans took this water and stored it down in Lake Culebron and used it for irrigation purposes later.

I might say also Falcon power is delivered to us, as I recall it, 4 months of the year for only 20 hours a week, and we still call it peaking power.

We believe that without this storage in Mexico the Falcon project would be a great deal like Elephant Butte, which was without power for many years. As you know, that is a Federal project.

We have had some complaints from Members of Congress that we weren't paying enough for Falcon power. We are paying more than it would cost to generate it in our own stations, and we have to have a steam powerplant rolling ready to go to pick up when they do shut the thing down. And they do shut it down. Because they are not going to waste irrigation water from that river.

Mr. O'HARA. Your company does supply the cooperatives with power?

Mr. BATES. Yes, sir; at one of the lowest rates in the Nation. The average was a little over 6 mills last year.

Mr. O'HARA. Have your relationships with the cooperatives been amiable on the whole?

Mr. BATES. I would say on the whole they have been amiable, they have been good. We now serve these cooperatives at 91 separate points.

Reference has been made to about a 35-percent rate increase. It depends on where you start. In my definition, I asked a man the other day if he was a liberal or a conservative and his answer depended on where you start from, whether he was a liberal or conservative.

Now, we started with one of the lowest rates in the Nation. We started to raise the rates 30-some-odd percent. According to their figures, this was too high. They did obtain money for a steamplant, and our relations with that cooperative, and with Mr. Hurd's cooperative, the two here today, have deteriorated. In fact, Mr. Hurd last week asked if we would release him from power contracts he has with this company which do not expire until about 1962. But he has contracted in advance to buy from the Medina plant.

Now, those are things that we had a little difficulty with. I have not discussed this with you, Mr. Congressmen (Mr. Kilgore), although it would be in your district.

Mr. O'HARA. I deeply appreciate your information.

Mr. BATES. I would say on the whole our relations have been very good with the cooperatives.

Mr. O'HARA. It has been nice to be with the Texans here, but shortly I am leaving for the floor of the House, where in the debate on civil rights the sons of Illinois may not be on the same plane of amity.

Mr. SELDEN. Mr. Fascell.

Mr. FASCELL. Mr. Bates, a couple of things here that are confusing to me. I hope you will help me get them straight in my mind. I understood you to say cost of the power from the Falcon Dam to you was more than what you could generate it for yourself, and that leads me to ask a very logical question of: "Why do you continue to buy it?"

Mr. BATES. I am under contract.

Mr. FASCELL. When the contract expires?

Mr. BATES. I don't know that I will.

Mr. FASCELL. You said your estimate of experience with that contract leads you to the conclusion it is going to get worse before it gets better. And your answer just now indicates to me you do have under consideration perhaps something else. Yet your testimony indicates you have more power available because there has been more water available at Falcon than was anticipated. And I find it very difficult to reconcile these statements.

Mr. BATES. Perhaps Mr. Jones has the answer.

STATEMENT OF A. P. JONES, PLANNING ENGINEER, CENTRAL POWER & LIGHT CO., CORPUS CHRISTI, TEX.

Mr. JONES. Mr. Congressman, I think your question is well taken. It is a matter of timing and availability.

About 75 percent or so and Congressman Kilgore could check this. I am not too sure of the figure, but about 75 percent of the water released for irrigation from Falcon is released in the first 6 months