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Co. paid the Government $337,000 a year for the falling water, the net Federal revenue from power under the partnership proposal would be a maximum of $247,000 annually. And the International Commission's estimates are based on interest and amortization at 22 percent, while the language of H.R. 8080 indicates that interest on power facilities would be charged at 4 to 5 percent. In fact, Mr. Robinson used 4 percent interest in his computations, and Mr. Krezdorn used 5 percent.

INTEREST COSTS

H.R. 8080 requires a higher rate of interest on the features chargeable to power revenues than it does to other features, assuming Federal construction of the power facilities.

Section 5 of H.R. 8080 states that the interest on construction costs charged to power and water conservation "shall be equal to the average rate (as certified by the Secretary of the Treasury) paid by the United States on its marketable long-term loans outstanding at the time the first appropriation for construction *** is made." The International Boundary Commission assumes in its report that 22 percent interest would be charged on the dam during construction and during the 50-year amortization period, following procedures on U.S. Army Corps of Engineers projects. And yet a different criterion-the average interest rate on marketable long-term Treasury loans would be applied to the power features. This difference is highlighted in the estimates made by Mr. Robinson and Mr. Krezdorn on the annual interest costs under Federal construction of the power facilities. Mr. Robinson uses 4-percent interest, Mr. Krezdorn, 5 percent. If the annual interest costs on Federal power facilities were placed at 22 percent-the same basis as that used on the rest of the project-the annual costs to the Government would be reduced substantially below the amounts estimated by Mr. Robinson and Mr. Krezdorn. Therefore, surplus power revenues would be substantially increased, the feasibility of Federal generation would be further enhanced, and additional revenue would be available to help defray other project features including conservation of water.

SUMMARY

The apparent basis for the proposed "partnership" arrangement with Central Power & Light Co. is the assumption that no firm power will be available from Amistad Dam. This assumption is contradicted by the "partnership" proposal itself, since the private power company places a sizable dollar value on Amistad power, and since the company further states that its offer is "based on 100-percent availability of peaking capacity." Further contradiction is the Federal Power Commission statement that a capability of at least 75,000 kilowatts would be available some 81 percent of the years, including a continuous period of 28 years.

Testimony submitted to your committee shows further that, if the FPC figures on power availability are correct, Federal construction of the power facilities would produce much more revenue for the Government than the "partnership” proposal.

In view of these facts, we urge the committee to delete language from H.R. 8080 which would permit "the lease of the power privilege." This would permit Federal construction of the power facilities, and would give the preference users in the area-municipal electric systems and rural electric cooperatives-the right to purchase federally generated power at a fair price. If the "partnership" proposal is approved, the Federal Government will be deprived of the full financial benefits from Amistad Dam, additional power revenues which could help support other project features will be lost to the Government, and the preference users in the area will be blocked from the exercise of their right to purchase power from this Federal project at reasonable cost.

TEXAS ELECTRIC COOPERATIVES, INC.,
Austin, Tex., March 8, 1960.

Hon. ARMISTEAD SELDEN,

House of Representatives,

Congress of the United States, Washington, D.C.

DEAR CONGRESSMAN SELDEN: During the first hearings on the Amistad Dam, H.R. 8080, the electric cooperatives of south Texas indicated their strong interest in the authorization of this international project. They also recom

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mended that the Federal Government finance the construction of the electric generating facilities of Amistad rather than sell the "falling water" to the Central Power & Light Co.

It might be of interest of the committee to know the location of electric cooperatives in south Texas. Attached hereto is a small map which shows the rural areas being served by them. All these cooperatives have indicated a strong interest in Amistad Dam power. They have furnished this office with their estimated peak power demands for 1966 (the year that Amistad could be producing power if construction is authorized in 1960).

Listed below are the names, headquarter locations, number of consumers, and peak demand estimated for 1966.

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All of the above electric cooperatives, with the exception of the Medina Electric Cooperative which is constructing its own generating plant, are dependent upon Central Power & Light Co. for their power requirements. Central Power & Light Co. has within the past year notified these electric cooperatives that they were going to raise the wholesale power rates approximately 30 percent. However, when the Medina Electric Cooperative generating plant was authorized the C. P. & L. immediately reduced their proposed rates back to only a 5-percent raise over previous rates.

This company completely dominates the electrical generating, transmission and urban distribution field in all of south Texas. They were the only bidder for power from the Falcon plant-however, the electric cooperatives have now built up their loads to a point where they can ask for a sizable amount of power from Amistad Dam if the powerplant facilities are built by the Government. They would not however, be in a position to bid for the "falling water" and construct the powerplant facilities at Amistad.

We want to thank you and the committee for your consideration of our testimony and we will be very happy to supply any further information about our organizations that you may desire.

Sincerely,

J. R. COBB, General Manager.

MEDINA ELECTRIC COOPERATIVE, INC.,
Hondo, Tex., March 16, 1960.

Subject: H.R. 8080, Amistad (Diablo) Dam.
Hon. ARMISTEAD I. SELDEN, Jr.,

Chairman, Inter-American Affairs Subcommittee, Foreign Affairs Committee,
House of Representatives, Washington, D.C.

DEAR CONGRESSMAN SELDEN: The Medina Electric Cooperative serves a large 17county area in the vicinity of the proposed Amistad Dam. District offices of this company are in the following south Texas towns: Uvalde, Dilley, Rio Grande City, and Bruni. The home office is at Hondo.

We have under construction at the present time a gas fuel, steam-driven powerplant with 66,000 kilowatts capacity. It will be composed of three 22,000kilowatt units.

This cooperative alone will not have need of the full capacity of this plant in its initial years. However, adjacent cooperatives will have demands for the surplus. There are three cooperatives to which I have spoken. To make plans with these three cooperatives, availability of Amistad Dam power is extremely important.

If power is available to us from Amistad, we will be able to rely upon that for our reserve during the period when full demand will be upon us. This will be in the summer months when Amistad water will be used for irrigation and power is consequently produced.

These four cooperatives 6 years hence would place a demand upon the steamplant of at least 59,000 kilowatts. At peak demand it would be necessary for us to have some standby source of power for one of the 22,000-kilowatt units. However, only 15,000 kilowatts would be required under this supposition of power demand. In addition to this need, the other three cooperatives will need peaking power themselves to the extent of 10,000 kilowatts.

This would be a total of 25,000 kilowatts which is one-third of the dam's capacity. The cooperatives would expect to pay annually $10.80 per kilowatt for this capacity, provided they would receive one-third of the energy generated at the U.S. plant. The cooperatives would be willing to pay for this energy at the rate of 1.75 mills per kilowatt-hour for the first 30 million kilowatt-hours and 1 mill per kilowatt-hour for all additional energy.

Because of the lack of transmission lines and steam generation available to the cooperative in this south Texas area, we do not have the means to utilize all of the 75,000 kilowatts capacity of Amistad. And we certainly would have our problems in trying to build the powerplant at Amistad ourselves, and then to pay for the falling water. Yet we need at least a substantial part of our power from this source.

If power from Amistad is not available to us, we continue to be subject to what is offered us by the present suppliers of our wholesale power. The completion of our steam plant will help somewhat for some of the cooperatives, but it will not change our dependency upon the present power sources.

Incidentally, we suspect that our presence in the picture will mean the Government can get a better contract for the sale of the power to other users. Also, the fact that gas fuel prices are rising rapidly in the area will increase the value of Amistad power to the Government's benefit.

As our testimony to your committee has shown, by selling the Amistad power at rates equal to those the four cooperatives would expect to pay, the Government could realize in excess of $1 million annually. And the cost of amortization with 3 percent interest and operation expenses included would come to $488,700 annually over a 50-year period. This would leave more than half a million dollars annually to defray conservation storage or other costs.

I assure you that installation of full power facilities by the Government at Amistad will be most advantageous to the Government as well as the electric cooperatives and the people of south Texas.

Sincerely yours,

RIGGS SHEPPERD, General Manager.

[Telegram]

LAREDO, TEX., March 18, 1960.

Hon. A. I. SELDEN, Jr.,

House Office Building, Washington, D.C.:

Your attention is respectfully called to utilization of waters of the Colorado and Tijuana Rivers and of the Rio Grande, Treaty Series 994 and section C of the understandings of the Senate, adopted by resolution April 18, 1945, in ratification of the Treaty Between the United States of America and Mexico signed February 3, 1944, and protocol signed November 14, 1944: "(c) That nothing contained in the treaty of protocol shall be construed as authorizing the Secretary of State of the United States, the Commissioner of the United States Section of the International Boundary and Water Commission, or the U.S. Section of said Commission, directly or indirectly to alter or control the distribution of water to users within the territorial limits of any of the individual States." In view of this treaty provision section 3 of H.R. 8080 should be eliminated and further this treaty provision negatives the repayment proposal of the Bureau of the Budget.

R. S. PHELPS,

Laredo Area Farmers and Landowners Association.

APPENDIXES

APPENDIX I

A

Col. L. H. HEWITT,

FEDERAL POWER COMMISSION,

REGIONAL OFFICE, Fort Worth, Tex., April 1, 1958.

Commissioner, International Boundary and Water Commission, El Paso, Tex. DEAR COLONEL HEWITT: Reference is made to your letter of March 27, 1958, and previous correspondence between our respective offices concerning hydroelectric power values and operations of your proposed Diablo project. Your letter encloses a graphical presentation, in two sheets, of your latest operation study DF-2 and includes detailed discussion thereof. You request our review of this study and our evaluation of the energy that can be produced therefrom. A review of the graphical presentation of your operation study reveals that the capability and energy output of the Diablo plant under this plan would be reduced to zero during several of the peakload months of 1912, 1913, 1918, and 1919 and that the capability would be reduced to about 45,000 kilowatts during the peak summer load months of 1950, 1951, 1952, and 1953 with a concurrent limited energy output. Although it is indicated that the desired monthly energy output and a capacity of 75,000 kilowatts could be maintained for 30 consecutive years (1920–49), we cannot assign dependable capacity to the Diablo plant due to the capacity and energy shortages cited for other years within the period of study. On the other hand, a utility might be willing to contract, without too great a penalty, for power with an occasional shortage of capacity if sufficient advance notice of the impending shortage could be given. However, since the operation study indicates that the capacity available will not meet the standard criteria utilized by this office in assignment of dependable capacity—we have assumed that the dependable capacity of Diablo would be zero in this case.

Our computations indicate that the at-site value of the Diablo energy under your power study DF-2 would be 1.7 mills per kilowatt-hour applicable to the 147.6 million kilowatt-hours of annual energy cited in your referenced letter. In evaluating this energy we have assumed that it would be marketed as steam replacement on existing utility systems and the value reflects the cost of transmission facilities and losses necessary to transmit it to the market. However, as indicated in the previous paragraph, we are of the opinion that there may be some capacity benefits but we do not evaluate them under our procedures. No values have been assigned to the power output at the Falcon project since actual contractual arrangements now form the basis for evaluation of power from this existing project.

The energy value estimate furnished you in this letter is at field level and has not been reviewed by our Washington office. The value does not necessarily determine the rates at which the energy could be sold either at the site or at the market.

Sincerely yours,

Please do not hesitate to call upon us if we can be of further assistance. EDGAR S. COFFMAN, Regional Engineer. 255

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