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I think that about sums it up. I have been in the power business about 25 years. Mr. FASCELL. If it is not violating any personal business confidences, could you give us some idea of the scope of your clientele? I don’t mean in size, but I mean in variation. Mr. KREZDoRN. I have served in the past Texas municipalities, and am at present serving the Texas Electric Co-ops. Much further in the past I have made board studies—that is, network analyzer studies entailing joint power companies, Lower Colorado River Authority with Houston Power, Texas Power & Light with Central Power & Light. Mr. FASCELL. Thank you, sir. Somewhere you said you based your conclusions on information made available to you by the Commission, plus other sources and that . had no basic—there was no diversity of opinion insofar as the asic facts were concerned. Mr. KREZDoRN. Yes, sir. Mr. FASCELL. Just so I can identify what we are talking about, are we talking about this document or another document as the Commission study ? The document I hold in my hand is a Senate document, “Rio Grande International Storage Dams Project, Proposed Amistad Dam and Reservoir.” Mr. KREZDORN. There was another document I used. However, all of the information contained in your document there was contained in the other document. It was a preliminary study. If I may outline my basic difference of conclusion, the reason that I do differ, the conclusion that there is no firm capability is involved. . that assumes then that there is no water inflow to the reservoir uring Mr. FASCELL. Excuse me. Let's stop right there. Can you find that conclusion for me in the Commission report? Mr. KREZDoRN. It is in chart form. There is a hydrographic chart. I don’t remember the chart. It is also contained in my report. There are approximately 4 years where you could not, from inflow, maintain 75,000 kilowatt firm capability. But if we are going to have conservation storage and we are going to have it for the controlled release of irrigation waters downstream—then regardless of whether water is running into the reservoir or not, there will be water released downstream to the irrigators. That is one of the purposes of this reservoir. If water is released to the irrigators it can be released through the penstocks as well as the discharge gate. And if it is released through the penstocks, it will generate power. Mr. FASCELL. In other words, that was one of the basic assumptions that you emphasize in your statement? Mr. KREZDORN. Yes, sir. Mr. FASCELL. It is inherent in the project, in other words, that the water is going to be released for one of the primary purposes? Mr. KREZDoRN. Yes, sir. And to get some of these cold facts and figures down into some basic values, at the full conservation storage, which is at elevation 1,117—there is an operating head of 211 feet, and it takes but 21 inches of this lake to meet the power requirements. You have 211 feet of head and you take 21 inches off of the top

and you have established 75,000 kilowatts peaking demand, as far as generation is concerned. Mr. FASCELL. So you have no doubt in your mind but what the power is firm 2 Mr. KREZDoRN. That is right. Mr. FASCELL. The value of it as far as you are concerned is—what did you say ? Mr. KREZDoRN. At a bare minimum, it is roughly twice the $337,000. If there were no water at all running into this reservoir for 1 year, not one drop, and you discharged o of the downstream irrigation requirements, you would drag this head down approximately 31 feet. For a whole year, with not a drop coming in. So I assume then that there will be water, controlled releases for uses downstream. Mr. FASCELL. You heard the FPC conclusion on this thing and they analyzed the same data. Now what is the variable factor? What is the difference in how they arrived at their conclusions and you arrived at yours? Mr. KREZDoRN. Well, this is conjectural, but I don’t think they took into account that there was going to be controlled irrigational releases. They must not have taken this into account. Mr. FASCELL. You feel they just discounted that completely? Mr. KREZDoRN. It is the only conclusion that I can draw, sir. Mr. FASCELL. That is a point upon which we can inquire to determine whether or not that was discounted or included. Mr. KREZDoRN. Yes, sir; I think that would be a pertinent fact. Mr. FASCELL. In other words, that would be a valid point of inquiry to determine the basis of their conclusion. Mr. KREZDoRN. Yes, sir. Mr. FASCELL. Now from a technical standpoint in your business, is the consideration of the utilization of irrigation discharges a regular, or irregular thing? Mr. KREZDORN. The primary client or company that I have served in the past has been the Lower Colorado River Authority, a State agency of the State of Texas, and they are set up by State law as a conservation agency. So this is a primary consideration. Power is secondary and yet they are doing very well by themselves. Mr. FASCELL. Strictly from a technical analysis standpoint—that is nonlegal, I am referring now to this proposal made by the power company, in letter form to the Commission. I am trying to get an interpretation or an understanding—not an interpretation. “Our evaluation is also based on 100 percent availability of peaking capacity.” How about translating that into the English language for me so I can understand it. Mr. KREZDORN. Peaking capacity, in the down-to-earth definition of this particular statement, would represent electrical energy available when the purchaser needs electrical energy. When he has to have electrical energy. That would be peaking power. Mr. FASCELL. Now you are talking about the same kind of power, aren’t you, that is in your analysis? Mr. KREZDoRN. Yes, sir; 75,000 kilowatts. Mr. FASCELL. Firm power?

· Mr. KREZDORN. Yes, sir. Mr. FASCELL. That is 100 percent availability of peaking capacity? Mr. KREZDORN. Yes, sir. Mr. FASCELL (reading): We recognize that according to your studies, shortages will exist from time to time and while we are willing to accept the premise that hydropower can never be 100 percent reliable, our estimates of its value are computed on the basis that some regulation of water releases can be effected so that a power head can be maintained and energy deliveries can be made in a manner at least as good, if not better, than indicated by your study DF-2.

That would appear to me to be the converse of the assumption which you have made, which is that you are basing your power estimates on the fact that water will be released for irrigation purposes, and this one seems to be saying that they are evaluating what they are willing to pay based on control of the head for power purposes. Am I right or wrong?

Mr. KREZDORN. I think you are correct. I don't know whether this should go on the record, but I think they are hedging, sir, because I think that they are cognizant of the fact that it is going to be 100 percent.

Mr. FASCELL. Maybe that is good business. I am not saying anything is wrong with it.

Mr. KREZDORN. It is darned good business. Mr. FASCELL. If I was a businessman I would hedge in every way I could.

Is that your opinion that they are hedging as a matter of good, cautious business protection?

Mr. KREZDORN. Yes, sir. Mr. FASCELL. That is all I have, Mr. Chairman. Mr. SELDEN. Mr. Burleson Mr. BURLESON. Mr. Krezdorn, suppose we ignore the technicalities as far as possible and refer to page 2 of your statement. If I understand you correctly, after the reservoir is full, or has a 211-foot head, and the present demand for irrigation is now approximately 190,000 acre-feet, that peaking power would be provided by the irrigation of 140,000 acre-feet; is that correct?

Mr. KREZDORN. Yes, sir; because through a study of the load requirement charts of irrigation users and the similar study of the load requirements of electrical usage, we have determined that 28 percent of the water discharge, the annual discharge, occurs in the 3 months that the electrical peak occurs. And so all of your electrical requirements as far as peaking capability is concerned, are met in 3 months, when the 28 percent of the irrigation requirements are met in those seasons, the same 3 months.

Mr. BURLESON. In other words, in those 3 months, 28 percent of the present requirements for irrigation would provide peaking power. What happens to the other 9 months?

Mr. KREZDORN. That is when you are raking in the gravy from this power generation. The rest of the time you would be generating kilowatt-hours which does not enter into the economic consideration here, because we base this entirely on the premise set up by IBWC.

Mr. BURLESON. Whatever power is generated after that would be, you might say, net profit?

Mr. KREZDoRN. In the vernacular of the locality, that is pelon. Mr. BURLESON. Let me ask you further: Is this irrigation requirement as it now stands, below Falcon? Mr. KREZDoRN. Sir? Mr. BURLESON. Is the present requirement for irrigation below Falcon Dam or is it between Amistad and Falcon? Mr. KREZDoRN. No, sir; that is the one below Amistad. Mr. BURLESON. That is between Amistad and Falcon? Mr. KREZDoRN. And all the way down to the Gulf; yes, sir. This does not take into account discharges which would come from Falcon. We have even ruled that out. We have made this as conservative as we possibly can. By saying that if all of the discharge were from Amistad and none from Falcon, that you released enough water into Falcon to take care of the water which is being released from Falcon and maintain the Falcon head at a static level. And this is the flexibility which Central Power & Light, I am sure, is counting on, that you can release additional waters from Amistad, catch it in Falcon, without losing water. The additional evaporation would cause some loss, but not an appreciable amount of loss. Mr. BURLESON. Then I assume that factor is also one reason why you say that your estimates are on the conservative side. Mr. KREZDoRN. Yes, sir. Mr. BURLEsoN. Thank you, Mr. Chairman. Mr. SELDEN. Mr. Kilgore— Mr. KILGORE. Mr. Krezdorn, I take it from the second paragraph on page 2 of your statement that you are assuming that water releases will necessarily, as provided by the treaty, be primarily for irrigation purposes and secondarily for power purposes? Mr. KREZDoRN. Yes, sir. Mr. KILGORE. I believe you said a moment ago that your reference to an operating head of 211 feet was a reference to storage at maximum conservation level? Mr. KREZDoRN. Yes, sir. Mr. KILGORE. That assumes full U.S. storage and full Mexican storage? Mr. KREZDoRN. Yes, sir. Mr. KILGORE. You based your studies on an assumption that Mexico will maintain her storage full? Mr. KREZDoRN. Yes, sir. However, I did make additional studies which I did not include in this report for reduced head and it is still feasible. Mr. KILGORE. The net figure would be lower but it would still be feasible : Mr. KREZDoRN. The feasibility figure would not be affected, sir. Mr. KILGORE. It would not be affected? Mr. KREZDORN. No, sir. Mr. KILGORE. So the power head of 211 feet is not a matter of significance in the arrival at your conclusion on the value of power? Mr. KREZDoRN. It is affected only when the drawdown is greater than 18 feet. Mr. KILGORE. What does that mean?

Mr. KREZDoRN. That means that if you had no more than the minimum streamflow—minimum by past history—the lowest streamflow into Amistad, if you had no more than that for 1 year and you still met all downstream water requirements, you would lose approximately 18 feet. You could operate the electrical generators and turbines associated with them under this reduced head and still stay within the requirements and specifications that we have set up here. Mr. KILGORE. I understood you to say that assuming no inflow into Amistad for 2 years and irrigation use at the current rate, that there would still be a power head at Amistad. Mr. KREZDoRN. Yes, sir; but this figure would not hold then. Mr. KILGORE. What figure do you use for U.S. storage at Amistad at the beginning of that 2-year period? Mr. KREZDoRN. Would you repeat that, please? Mr. KILGORE. At the beginning of that 2-year period, what figure do you use for U.S. water in storage at the Diablo or Amistad site Is that 1,600,000? Mr. KREZDoRN. I have it in head only. I can convert it. I would have to get my briefcase but it would be about 18 feet low. Twentyseven feet at the end of 2 years. Mr. KILGORE. My understanding was that U.S. storage at this site was proposed to be 1,600,000 acre-feet. Mr. KREZDoRN. No, sir Mr. KILGORE. My understanding also is, assuming the current rate of use which is 1,706,000 acre-feet, that you would be out of water before the first year is over if you assumed no inflow into Amistad. Mr. KREZDoRN. Sir, I believe that the impounding capacity of Amistad is in the nature of 3 million acre-feet. Mr. KILGORE. Yes, but only 1.6 million is U.S. water. Mr. KREZDoRN. That is correct. Mr. KILGORE. If you are using the Mexican water then under the treaty and under the proposal, the Mexican water is available to them for their power purposes. Mr. KREZDoRN. That is right. I was using the total and I am assuming that the drawndown would be uniform. Now if this were not so it would affect the figures, but they were so conjectural that I had no way of telling. Mr. KILGORE. If you were using total storage, but if in fact Mexico is diverting her share of that storage, which I understand is 1.4 million, through her penstocks and through her plant and it is not available to the United States, then what would your situation be? Mr. KREZDoRN. I am sorry. I misunderstood you. I am considering only the irrigation water which is a portion of our water allotment. Only of the U.S. water allotment. The only thing that I have not been able to take into consideration is the effect on the head of the method of Mexican discharge. Mr. KILGORE. Let me go back to this question: My recollection is that current water demands and usages on the watershed are in the nature of 1,706,000 acre-feet annually. Mr. KREZDoRN. Yes, sir. Mr. KILGORE. Then how can your other statement be reconciled with that fact—your statement to the effect that if there is no inflow into Amistad and the current use is continued for 2 years, which current

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