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Among the many authorities so holding are the following:
Motle v. Boyd (Tex. S. Ct.) 116 Tex. 82, 286 S.W. 458;
Devine v. City of Los Angeles, 202 U.S. 313, 50 L. Ed. 1046;
City of Brownsville (Tex) v. Cavazos, U.S. 100, 138, L. Ed. 25, 574.
Hooker v. City of Los Angeles, 188 U.S. 314; 47 L. Ed. 487-63, L.R.A. 471.
C. of Los Angeles v. Pomeroy, 124 Cal. 597; 57 Pao. 585.
Vernon Irrigation Co. v. Los Angeles, 39 Pae. 762. Cal. Jur. 25, Page 1095. I wish to thank the committee for myself and for those for whom I speak for the opportunity to make this statement.
Mr. Selden. This completes the open hearings on the Amistad Dam
project, and the subcommittee is adjourned.
(Whereupon, at 3:45 p.m., the subcommittee was adjourned.)
Statement By Alex Radin, General Manages, American Public Power
My name is Alex Radin. I am general manager of the American Public Power Association, a national trade organization representing more than 1,000 local publicly owned electric utilities, mainly municipally owned systems, in 42 States and Puerto Rico. Our offices are at 919 18th Street NW, Washington, D.C.
Our interest in H.R. 8080 stems from language in section 2 of the bill which would have the effect of preventing municipal electric systems in Texas from obtaining electric power at reasonable rates from this proposed dam. We support the bill's purpose of authorizing "the conclusion of an agreement for the joint construction by the United States and Mexico" of the Amistad (Diablo) Dam on the Rio Grande River near Del Rio, Tex.
We urge, however, that your subcommittee delete language beginning on page 2, line 21, through page 3, line 9 of H.R. 8080 which would permit "the lease of the power privilege." Although the language of this section states that "preference shall be given to a public body or cooperative as the lessee," the practical effect of this provision would be to lease "the power privilege" to Central Power & Light Co., a private power company with headquarters at Corpus Christi, Tex.
It is unfortunate that a bill to authorize negotiation of this agreement between the United States and Mexico should be the vehicle for another attempt to obtain congressional approval of the so-called partnership concept in water resource development. The "partnership" idea has been rejected by the Congress in connection with several projects, the most recent being at the Trinity River division of the Central Valley project in California.
The "partnership" concept is based on the assumption that the falling water made available by construction of an otherwise all-Federal multipurpose project should be sold to the highest bidder. The proposed Amistad Dam, then, would be constructed jointly by two governments, but with the power generating facilities on the U.S. side being built and owned by a private power company. Under this unusual situation, an international multipurpose dam—providing great public benefits in flood control, stream regulation, irrigation, and recreation—would include one privately owned part, the power generating facilities. The Federal Government would build the dam, the penstocks, and the intake works for delivery of water.
A major factor in this "partnership" proposal apparently is the Federal Power Commission regional engineer's letter of April 1, 1958, to Commissioner L. H. Hewitt of the International Boundary and Water Commission that "we cannot assign dependable capacity to the Diablo plant due to the capacity and energy shortages * * * ." However, FPC Chairman Jerome K. Kuykendall, in a letter to the Secretary of State, does not say that dependable capacity cannot be assigned to Diablo Dam, but refers to "the conjectural nature of the capacity benefits" as the reason for opposing Federal power facilities.
Chairman Kuykendall states that with 100,000 kilowatts of generating capacity installed at Amistad Dam, "a capability of at least 75,000 kilowatts would be available some 81 percent of the years, including a continuous period of 28 years; and a capability of 100,000 kilowatts would be available about 62 percent of the years." [Emphasis supplied.]
Furthermore, the Department of the Interior says the Department's "present contracts for the sale of power from Falcon Dam," downstream from the proposed Amistad Dam on the Rio Grande, "are based on capacity being available a percentage of the time * * * ." [Emphasis supplied.] The experience at Falcon, says the Interior Department, "indicates that higher revenues than 1.7 mills can be anticipated at the Diablo project." Revenues from Falcon in 1958 averaged 3.2 mills per kilowatt-hour.
It is evident, then, that if federally generated power at Amistad Dam were marketed on a "dependable" basis during the period when dependable capacity was available, the Federal Government would derive more than enough revenues to make the power features feasible. In fact, Charles A. Robinson, Jr., staff engineer of the National Rural Electric Cooperative Association, states that the annual value of Federal hydroelectric power would be $1,337,400, with surplus power revenues of $526,400 a year after meeting all operation, maintenance and amortization requirements. This surplus would assist in paying for other project features.
Under the Central Power & Light Co. proposal, the total revenue received by the Federal Government would not exceed $337,000 a year, and could well be considerably below that amount, while the net power revenues would not exceed $247,000 a year.
An analysis of Central Power & Light Co.'s letter of April 14, 1958, to Commissioner Hewitt reveals that the company's proposed payments to the Federal Government would only average $337,000 a year under the most favorable water conditions, and that the conditions which would produce less revenue to the Government from federally owned generation would also be likely to mean lower payments to the Government under the Central Power & Light Co. proposal.
1. The Central Power & Light Co. letter states that "the Diablo hydroplant and its electrical facilities should cost no more than $140 per kilowatt of installed capacity. Should subsequent cost studies at Diablo show that the powerplant costs will differ appreciably from this base, the value of falling water would accordingly change." Colonel Hewitt's estimate before your committee was that the power features would cost $15.2 million, or $202 per kilowatt for 75,000 kilowatts of installed capacity, or $19.4 million—$194 per kilowatt—for 100,000 kilowatts of installed capacity.
The company's estimate of the cost (based on $140 per kilowatt) is about $10,400,000 for 75,000 kilowatts, which closely parallels the $10,600,000 estimate of Roy Krezdorn, consulting engineer retained by the Texas Electric Cooperatives.
If the cost of the hydroplant and its electrical facilities were above the company's estimate of $140 per kilowatt, then the company would apparently have to revise downward its payment to the Government, since the company would be faced with higher investment costs.
2. The Central Power & Light Co. letter states: "Our evaluation is also based on 100-percent availability of peaking capacity." Thus, the company says that Amistad power is worth $337,000 a year to them if there is 100-percent availability of peaking power. Yet Mr. Robinson's estimates—based on assumptions similar to those of the company—show that federally generated power will produce surplus power revenues of $526,400 to (the Federal Government. If these assumptions are correct, the Government would derive much more revenue from federally owned generation than from the "partnership" arrangement with Central Power & Light Co. If peaking capacity were not available on a consistent basis, Central Power & Light Co.'s payments to the Government would apparently be reduced accordingly. The $337,000 a year offer, therefore, is far from firm, and the same factors which might reduce Government revenue from federally owned generation would reduce the Government's income from Central Power & Light Co.
3. The Central Power & Light Co. letter States: "We would, therefore, like to reserve the right to modify our evaluation of falling water in accordance with whatever action a regulatory or legislative body might take toward exercising control of or enacting legislation affecting the use of water on the Rio Grande below Fort Quitman, Tex." This is another company provision, which could affect its tentative offer of $337,000 a year.
4. The International Commission states that the annual cost of amortizing the $2,190,000 Federal investment in "the required power intake works and penstocks for delivery of falling water" to Central Power & Light Co. would be $90,000 a year over a 50-year period. Even assuming that Central Power & Light 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 2% 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.
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'Jterm loans outstanding at the time the first appropriation for construction * * * is made." The International Boundary Commission assumes in its report that 2% 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 2% 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.
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
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.
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. Aumistead 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 Graude 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.
Laredo, Tex., March 18,1960. Hon. A. I. Selden, Jr., Bouse 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. Pheips, Laredo Area Farmers and Landowners Association.