stream from the Bull Shoals Dam, and additional flood-control benefits to the lower Mississippi Valley. Power-generating facilities proposed for the Table Rock project include an initial installation of 2 units having a capacity of 50,000 kilowatts each and provisions for the future installation of 2 additional units of the same size. Dependable capacity and energy made available by the Table Rock project, including increases at downstream hydroelectric plants, are 123,000 kilowatts and 541 million kilowatt-hours annually, respectively. The estimated cost, benefits, and annual charges are summarized in the following tabulation: In analyzing the need for Table Rock in supplying powerloads the district engineer obtained data from publications and obtained views on the power requirements and needs from the Federal Power Commission, the Southeast Power Pool, advisory committee on power for the Southwest (association of rural electric cooperatives), Southwestern Gas & Electric Co., and Southwestern Power Administration (Department of the Interior). This analysis indicated that additional generating capacity over and above existing capacity and definitely scheduled additions less retirements will be required as follows: 163,000 kilowatts in 1958, 335,000 kilowatts in 1959, and 531,000 kilowatts in 1960. Operating companies state that they will schedule added capacity as it becomes required to meet future power needs, but that the capacity of Table Rock could be readily absorbed into the loads of the area. The cost of power which will be made available by the Table Rock project is considerably less than the cost of equivalent energy from the alternative method considered likely to be utilized in lieu of the project. Representatives of utility companies in the area state that the utilities are ready and willing to contract for the entire output of Table Rock project at the cost of producing similar capacity and energy by the best alternative method available to the companies. Representatives of cooperative bodies state that they have anticipated the use of the Table Rock project as a source of power to meet their growing needs. The estimated cost of constructing the Table Rock project is $78,610,000. This estimate has been carefully reviewed and is considered adequate based upon current-price levels. The costs which are considered properly chargeable to power amount to $61,450,000 of the cost to construct and $2,450,000 of the annual charges. On this basis the cost of power made available by the Table Rock project is approximately 4.7 mills per kilowatt-hours. The value of the power in terms of the cost of producing equivalent capacity and energy from an alternate source (steam-electric) is approximately 6.9 mills per kilowatt-hour. Thus the ratio of the power benefits to the cost is 1.47. The Congress has authorized appropriation of $169 million for initiation and partial accomplishment of the approved comprehensive plan for the White River Basin. The total appropriation to date for that purpose has been $121,128,000 including $5,151,000 for the Table Rock project. Thus prior to the completion of Table Rock, it will be necessary to increase that authorized amount. Accordingly, I propose to recommend that the Congress include provisions for an increase in the authorization for appropriations in connection with the next flood-control bill which is expected to be considered in the session of Congress beginning in January 1954. From the studies made pursuant to the request cited above, I conclude that: (a) The power needs in the area of the Table Rock project are expanding at a rapid rate and there will be a need for substantially more additional power by the time Table Rock Reservoir can be completed than the project will make available. (b) The power which will be made available by the Table Rock project can be fully integrated into the power supply of the area. 42592-54 20 (c) The cost of power which will be made available by the Table Rock project will be considerably less than the cost of equivalent power from the alternative source considered likely to be utilized if the project is not completed. (d) In addition to needed low cost power, the Table Rock project will provide needed flood control and will provide other benefits incidental to the primary purpose. (e) The project is economically justified. (f) The present estimate of $78,610,000 is adequate to construct the project. A similar letter is being sent to the chairman, Committee on Appropriations, House of Representatives. Sincerely yours, S. D. STURGIS, Jr., Major General, Chief of Engineers. REASON FOR COST INCREASE General CHORPENING. I wanted to make one more statement in connection with that overall increase in cost of $13 million. An item of that is $4 million which was increased at McNary Dam as a result of legislation which required us to pay for the railroad and highway bridge there, so that was an item that was included in the cost this year. Senator ELLENDER. That was not included previously? General CHORPENING. That was not included in the estimate last year and it was so testified. Senator ELLENDER. Why was it left out? General CHORPENING. At that time we did not have a firm estimate of what that was going to cost. We simply stated that it would increase the cost, but we did not know how much. Now we do have firm figures and we have included them. That is all I had generally. Senator CORDON. All right, sir, what is the first project in the multiple-purpose field this morning? BLAKELY MOUNTAIN RESERVOIR, ARK. 1 Reflects a contemplated borrow of $500,000 from this project through June 30, 1954. Colonel WHIPPLE. Blakely Mountain Reservoir is a multiple-purpose project, a part of the comprehensive plan for the Ouachita River in the interest of flood control and power. It will have a storage capacity of 2,768,000 acre-feet and reduces flooding on 101,000 acres, of which a large part is highly developed agricultural land. The benefit cost ratio is 1.47 to 1. The project is now nearing completion. The unexpended balance on June 30, 1953, was $4,043,000. On December 31 the balance was $5,660,000. On June 30, 1954, it will be $1,412,000. You can see that the unexpended balances are being reduced, and the work is going along well. The total estimated Federal cost is $31 million, which has been reduced during the last year from a previous estimate of $32,675,000. AMOUNT REQUESTED The appropriations to date are $29,343,000 and the appropriation requested for next year is $1,600,000. Senator ELLENDER. How did that saving of a $1,675,000 come about? Colonel WHIPPLE. Plans for accommodations for the visiting public were reduced by a little over $55,000. An application of our new standards of clearing reduced the clearing cost by $132,000, but the greater part of the reduction is a result of favorable contracts that have been let resulting in contract prices lower than the estimate. Senator CORDON. I have a note in connection with this particular item, Colonel. It appears that there will be a delay in the initial power installation of 2 months over the program as it existed during the course of construction. I do not know when that change was made, but can you tell us anything about the delay; why it exists? I ask the question, of course, because the minute that power is available, as I understand the situation in the area, it is salable and any delay in getting the receipts coming in means another period of time when the total cost is drawing interest and there is no offset from receipts. DELAY DUE TO STRIKE Colonel WHIPPLE. There has been some difficulty in connection with a strike, sir. The S. Morgan Smith Co. is manufacturing the turbines and some of the imbedded parts which were in that plant were held up for some time with the strike. I am not sure that that is the complete cause of this 2-month delay that you refer to. Senator CORDON. That is correct, there is a 2-month delay; is there not? Colonel WHIPPLE. Sir, you are correct. I have my notes on that now. That delay was on account of contract or delays, of which strikes were a part, but also there was some unusually severe weather last year and there was a delay of other contractors in diverting the flow of water from the power tunnel. So it was a summation of a number of minor difficulties that caused that 2-month delay. Senator CORDON. The delay is not a delay that an additional appropriation of funds could remedy? Colonel WHIPPLE. No, sir; it is not due to lack of funds, and it could not be corrected by the application of more funds. General CHORPENING. In answer to the earlier request on all projects, the request to the budget was $1,611,100 within ceiling. The amount approved was $1,600,000. Senator CORDON. Any other question about Blakely Mountain? What is the next one, Colonel? FISCAL YEAR 1954 APPROPRIATION $8,800,000 PLUS $4,500,000 TRANSFERRED IN FISCAL YEAR 1954 FROM FUNDS SURPLUS TO COMPLETION OF OTHER PROJECTS Dec. 31, 1953.. June 30, 1954 (estimate).. 1 $1,552, 682 1 $5,699, 909 None : None 1 Reflects a loan of $1,500,000 to this project through Dec. 31, 1953. Colonel WHIPPLE. The Folsom project is a multiplepurpose project of rather unusual diversity of benefits, being for flood control, irrigation, power, municipal water supply, and repulsion of salinity. The authorization for this project calls for the construction of a powerplant by the Bureau of Reclamation, whereas the dam and reservoir are being constructed by the Corps of Engineers. The testimony that we will give pertains primarily to the progress on the portion of the structure that is under our control and only refers indirectly to the progress by the Bureau of Reclamation, although the two have been coordinated in the field and in the budgetary requests. There have been some very unusual construction difficulties in connection with this project, which were testified to in general last year, but have since been developed in more detail and have now been overcome. ESTIMATED COST However, in the course of these construction difficulties the estimated cost, which was $58,560,000 for the portion being constructed by the Corps of Engineers, has been increased to $65,335,000. Senator ELLENDER. Over what? What was it before? Colonel WHIPPLE. $58,560,000. It is now $65,335,000. Senator ELLENDER. Since this project is being constructed by Interior and the Corps of Engineers does this sum of $65,335,000 indicate the entire cost of it? Colonel WHIPPLE. No, sir. Senator ELLENDER. This cost we are now talking about is the amount that will be expended by the Corps of Engineers! Colonel WHIPPLE. Yes, in addition to the $40 million which will be expended by the Bureau of Reclamation for the powerplant and other power facilities not constructed by the Corps of Engineers. Senator ELLENDER. What is the ratio of that? General CHORPENING. 1.6 to 1. Senator ELLENDER. Has that ratio varied any in the last few years because of this additional cost? Colonel WHIPPLE. No, sir. Actually the benefits have increased as well as the cost, by different evaluations. INCREASE IN BENEFITS EXPLANATION Senator CORDON. Tell us a little bit about this increase in benefits by virtue of a different evaluation. I frankly do not understand just what it means. Senator ELLENDER. That is kind of puzzling. That is why I asked the question. I thought we might get a little light on the subject. Colonel WHIPPLE. In all of our flood-control projects, sir, we have been using a system of projected prices and the question of the exact interpretation of what the projected prices are and how they should be applied has been rather intensively studied. We found that we were unduly downgrading our projects on account of these rather theoretical projections. We have corrected the application of those projected prices and that has caused our flood-control benefits to be reevaluated since last year. Senator CORDON. That is all flood control? Colonel WHIPPLE. Yes; across the board. They have gone up approximately 15 to 20 percent, depending on the impact of the projected prices to that particular project. Senator CORDON. When you speak of projected prices do you refer to your projecting of the prices of products, or the prices of construction of existing facilities, or improvements within a flood danger area as representing a reconstruction cost of what might be destroyed if the floods happened? Is that what you mean by it? Colonel WHIPPLE. We use both the projected values of the items that may be destroyed by the floods as related to the projected construction cost of the dam that is to protect against them and when it appears, as it usually does, that the projected long-term agricultural values, which are the principal items protected against, are going to vary downward relative to construction cost, the economic value of those flood-control benefits is reduced by the difference in these projections over a long-time period. Senator CORDON. And if those projected values indicate an increase then the benefits as compared to cost increase, is that right? Colonel WHIPPLE. Yes; but there are no cases in which an increase is shown. All of our flood-control benefits are reduced to a minor extent by these corrections on account of projected prices. Senator CORDON. Then there is something wrong here. You have a $58,560,000 project that has gone up to $65,335,000. If you are going to have a ratio there that remains constant you are going to have to have an increase in the benefits resulting from the controlled floods, and if that is a decrease, then of very necessity you would have had a decrease in the ratio at the original price and a considerably greater decrease at the new price. Am I right? I am not speaking about the dollar benefit. I am speaking about the ratio of cost to benefit? Colonel WHIPPLE. Every year we reevaluate our costs and we reevaluate our benefits. The two are done independently and in this case it so happens that there have been changes in the benefits that approximately counterbalance the proportionate changes in the cost. |