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. 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 use would mean the utilization of over 3 million acre-feet of water, that there would still be a power head when you started out with only 1.6 million? How can you reconcile that situation? Mr. KREZDORN. I have taken into consideration this particular time the total storage. I can see your problem there. In figuring the total drawdown for 2 years, with no inflow, I have considered the total in that particular example. Mr. KILGORE. As a matter of fact, if there is no inflow for a period of 1 year and the average annual use is taken, you will be out of U.S. water in Diablo or Amistad. Mr. KREZDORN. Out of U.S. water; yes, sir. Mr. KILGORE. And that is all we can use, is U.S. water? Mr. KREZDORN. One year would do that. Mr. KILGORE. Does that affect your computations? Mr. KREZDORN. No, sir. I think I am still on the conservative side. I am convinced of it. Mr. KILGORE. That would be more than 100 percent error in water availability but it would still leave your figures valid? Mr. KREZDORN. On different assumptions; yes, sir. I think I have a safety factor not of two, but of four or five in this thing. Mr. SELDEN. Mr. Fisher, have you any questions? Mr. FISHER. No, sir; no questions. Mr. SELDEN. Mr. Fascell Mr. FASCELL. Is this example an exaggerated example or is it a condition likely to occur at any time? Mr. KREZDORN. Which example, sir, is this? Mr. FASCELL. About drawing down the water and not having any come in for 2 years and you would be out of water and out of power and out of everything. I am not sure I understood all of that. Mr. KREZDORN. This is a rather farfetched example. This might happen Mr. FASCELL. In other words, you were using an exaggerated example? Mr. KREZDORN. Yes, sir. Mr. FASCELL. What is the likelihood of occurrence according to actual statistics? Mr. KREZDORN. I think this occurred once in the history of the streamflow Mr. FASCELL. In other words, there was no flow downstream at that point for 2 years? Mr. KREZDORN. No, sir. I think 1 year was the maximum of it; there was some streamflow, but not appreciably. I think you will find that the IBWC report indicates there is 1 year in the chart where there is no streamflow recognizable from the chart. Mr. FASCELL. Now, is there one other assumption in your statement and that is that in the determination of the value of the power to be sold, the power and the energy, that the customer would come to the site to get it? Mr. KREZDORN. Right now I would say that this would possibly reduce the Mr. FASCELL. That is what your figures are based on, is it not? Mr. KREZDORN. Well, they are based on a very, very pessimistic view that the power would be delivered to the customer, and a very optimis 51563-60-7 tic view that he would have to come and get it, as far as the demand is concerned. As far as the firm power is concerned, it is a very pessimistic view. The fuel costs now are running around 2 mills and here we are purchasing energy at 1.47 mills. In fuel costs to generate a comparable amount of electrical energy through the utilization of natural gas which we use in that part of the country, it would cost approximately 2 mills for the gas alone. Mr. FASCELL. That is a very fine statement. The only trouble is, I didn't understand any of it. How about translating that into the English language for me. What I am trying to find out is, are your figures-if I am using the wrong words, you reframe it so I will know what I am talking about-are your figures based on the sale of this power at the site of the generation of the power? Mr. KREZDORN. Yes, sir. I think in my report this is brought out. Mr. SELDEN. Are there any further questions? Thank you, Mr. Krezdorn. I am certain that your study and analysis will be very carefully considered by the subcommittee. Mr. KREZDORN. Thank you, sir. It has been a real pleasure. I enjoyed the opportunity. Mr. SELDEN. We have two additional REA witnesses, but since we are running into the noon hour, we are going to recess until 2 o'clock. At that time we will hear from Mr. Clyde Ellis and Mr. James Cobb. The committee is recessed until 2 o'clock. (Whereupon, at 12:05 p.m. the committee was recessed, to reconvene at 2 p.m.) AFTERNOON SESSION The Subcommittee on Inter-American Affairs reconvened at 2 p.m. in room 1310, House Office Building, Hon. Armistead I. Selden, Jr. (chairman of the subcommittee) presiding. Also present were the Honorable O. C. Fisher, a Representative in Congress from the State of Texas and Hon. Joe M. Kilgore, a Representative from the State of Texas. Mr. SELDEN. The meeting will come to order, please. Our first witness this afternoon is Mr. Clyde T. Ellis, general manager of the National Rural Electric Cooperative Association. Mr. Ellis, you may proceed. STATEMENT OF CLYDE T. ELLIS, GENERAL MANAGER, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, WASHINGTON, D.C. Mr. ELLIS. Mr. Chairman, I shall make a brief statement and then defer to our electrical engineer, whom I shall introduce at that time. I am Clyde T. Ellis, general manager of the National Rural Electric Cooperative Association, which is the service organization of the rural electric systems of the United States, with something over 90 percent of them belonging. Mr. Chairman, there are two points I would like to make. One is that the rural electric systems everywhere are having great difficulty planning and finding their wholesale power supply. |