keting of power from the Colorado River storage project. The following are deemed by us to be basic principles for such cooperation: 1. Because of the relationship of the water-storage features of this project to the Colorado River compact, the vast areas encompassed, the magnitude and multiple-purpose objectives incorporated including nonreimbursable features, we believe the holdover reservoirs and powerplants should be built by the Federal Government. 2. In order to obtain the maximum amount of firm power, the greatest diversity and flexibility in operation and to make the power accessible to the greates area, a backbone transmission tie line directly connecting major powerplants of the Colorado River storage project, such as Echo Park and Glen Canyon, except in cases where such interconnections can be more economically and feasibly accomplished through the present and projected transmission systems of the companies, should be an integral part of the generating system, and therefore, should also be built by the Federal Government. The integration of other plants of the project constructed reasonably adjacent to the present and projected transmission systems of the companies should be accomplished through these systems; the benefits of such integration would accrue to the project without additional cost. 3. In order to obtain maximum flexibility and lowest cost in transmission, it is essential that use be made of the then-existing transmission systems of the companies and in addition the companies construct such new transmission lines from the project plants or project interconnecting transmission tie lines to the various load centers of their respective systems as may be required to market project power, the Government or other agencies to construct necessary and nonduplicating transmission lines to other load centers not within the general service areas of these companies. 4. The investor-owned utilities are willing to enter into contracts whereby they will deliver project power to so-called preference customers making such reasonable transmission charges therefor as may be approved by the local regulatory authorities; or, the private utilities are willing to contract directly with the preference customers to supply all their power requirements at rates which will pass on any such savings as are obtained through the purchase of project power. 5. We believe that the financial feasibility of the project depends upon the sale to private utilities of the power output of the project plants not contracted for by such customers as may be entitled to preference, and that such sales should be made at the powerplants or along the backbone transmission tie line upon terms such that the cost of project power will not exceed the cost of power from alternate sources. 6. Each company as to its rates and charges is subject to the jurisdiction of the State utility commission in which it is furnishing electric service to the public. Rates charged by such utilities for electric service, taking into consideration the cost of power purchased from project plants, will be subject to the full jurisdiction of the appropriate State utilities commission. To carry out successfully the foregoing principles, it is essential that an understanding be reached in order that these companies may henceforth plan, design, and construct new generating and transmission facilities to coordinate with the project development. The general premises of this understanding should be incorporated in the legislation authorizing the project. Mr. Chairman, that concludes the formal statement, but we both have just a couple of very brief comments we would like to add. You remember the concluding paragraph of the statement that I just read outlined an area that we think should be incorporated in the legislation. Therefore, we would like to offer for your consideration the following proposed amendment. At the end of section 1, line 18, page 3, after the word "project" add the following: Provided, That the authority conferred by Section 1 of this Act to construct transmission lines is limited to: (1) Backbone transmission tie lines directly interconnecting powerplants in units of the Colorado River storage project, directly interconnecting such plants with powerplants of participating projects, or directly interconnecting plants authorized in this Act with other Federal powerplants, where such interconnections cannot be more economically and feasibly accomplished through the present and projected transmission systems of electric utilities operating in the States of the upper Colorado River Basin; (2) transmission lines between powerplants of participating projects which cannot be more economically and feasibly interconnected by the extension of present or projected transmission lines of electric utilities operating in the States of the upper Colorado River Basin; and (3) transmission lines to municipalities or other public corporations or agencies desiring to purchase electricity and having a preference thereto by law where there are not existing or projected transmission lines which may reasonably be connected with the aforementioned powerplants or interconnection transmission tie lines between said plants, and where the Secretary is unable to contract with electric utilities to deliver such electricity at charges therefore approved by him and by local authorities having jurisdiction. While the House committee did not incorporate any such language in their bill, I feel sure they agree in principle and I would like to call your attention to the House Report No. 1774 on H. R. 4449 and particularly to the top of page 10 and the section entitled "Proposal of the Private Power Companies" on page 23 of their report. One observation I have made during the course of these hearings is the repeated references to the need for electric power in the upper basin States. Of course, this is not true. There has never been a power shortage in our areas and as far as I have been able to determine no industry has failed to locate in the States of the upper Colorado Basin because of the lack of electric power. These companies we represent are installing generating capacity as fast as the present and anticipated needs of their customers require, and we can continue to do so. Electric power from this project is not a necessity, it can be used and that is our principle for cooperation. We can contribute to the financial and economic feasibility of the project by construction of transmission lines, marketing the power, and thus through power revenues assist the project. But I wish to reemphasize that we need water, not power, we need water such as would be available through the central Utah and other participating projects. Mr. PATTERSON. Senator, in order to save your time, I will file my comments. They deal principally with the fact that this is not an untried field for us, that we have been wheeling Bureau of Reclamation power over our transmission system in the State of Colorado REA's, so we have had a considerable amount of experience in this field. I believe that you and I have gone over this thing, and I believe that our philosophy on the private utilities and the Government working together is very similar, so that you are aware of what we have been doing. If I might file this and have it incorporated into the record as though I had read it, that would save your time. Senator WATKINS. That will be the order. (The statement is as follows:) STATEMENT BY PUBLIC SERVICE CO. OF COLORADO RE COLORADO RIVER STORAGE PROJECT As stated before, my name is L. R. Patterson and my address is 900 15th Street, Denver, Colo. I am assistant vice president, electric operations, of the Public Service Co. of Colorado. In my capacity as assistant vice president I am responsible for the future electric power supply and system planning of this company. In this connection we must very carefully study the future power requirements of our service area and make plans as necessary to meet these requirements when they arise, and on an economically sound basis. We are very proud of our record of meeting these expanding power requirements of our area. We have more than doubled our generating capacity since the end of World War II; and by the end. of 1955 we will have tripled our World War II capacity. The other companies for whom we speak have had generally similar experiences. It is on the basis of this experience that we are able to make the proposal which Mr. Moffat has just submitted; namely, to utilize our existing transmission facilities and to construct such additional transmission facilities from the project powerplants or backbone transmission tie line as are necessary to market electric power from the Colorado River storage project throughout our respective service areas. In making this proposal, these companies are offering to make a very substantial investment in transmission facilities. We estimate that in the earlier phases of the project the combined investment to be made by the private utilities will probably reach $75 million, and for the ultimate development this investment in transmission facilities may reach $125 million. Referring again to Mr. Moffat's statement, the companies involved have offered two suggested methods of handling the power requirements of such customers as are entitled to preference under the law. The first method mentioned is commonly known as wheeling. Under this plan the preference customer contracts directly with the Federal Government for the project power which the customer desires. The Government in turn contracts with the company whose transmission system is adjacent to the preference customer, to make delivery of or wheel the project power over the company's transmission system. The Government compensates the company for the use of its transmission facilities, and all charges to the preference customer are made in that case directly by the Federal Government. The Public Service Co. of Colorado had had some 3 years of experience with wheeling. We wheel Colorado Big Thompson power to 6 preference customers at some 18 different points of delivery. One of these points of delivery is 150 miles distant from the location at which we receive the power from the Big Thompson system. Altogether these preference customers are spread out over a very wide area so that the utilization of our transmission system is a very substantial saving in investment to the Federal Government. We believe that this method has been satisfactory to all parties concerned. Now, the second means suggested might be called the resale method. Under this the company would purchase the project power from the Government, and the preference customer would contract directly with the company. The company would sell the power to the preference customer at rates which will pass on to the preference customer such savings as are obtained through the purchase of project power. The advantage to the preference customer under this method is that the company will offer open-end contracts which will assure the customer of future power supply without any commitment for a reservation charge. Now, if this committee reports favorably on our proposal, the respective companies involved will base their future system planning on this premise and make all future transmission-line additions of such capacity as will best fit into this long-range plan. As a result, the companies will begin making substantially higher expenditures for transmission facilities than would be otherwise required. If the Colorado River storage project is approved by your committee, and your committee believes our proposal merits favorable consideration in the implementation of the project, it is respectfully requested that your committee recognition to our proposal in its report, either by a specific recommendation thereon, or that the basic principles of our proposal be incorporated in the authorizing legislation. This we believe to be essential from the standpoint of the companies involved because of the very substantial financial undertaking on their part, which is encompassed in the proposal, and also because of the necessity for forthwith programing of future transmission construction to coordinate with the project development. Senator WATKINS. I have a statement of the Delta-Montrose Rural Power Lines Association which will be made a part of the record at this point. DELTA-MONTROSE RURAL POWER LINES ASSOCIATION, Hon. EUGENE D. MILLIKIN, Senate Office Building, Washington, D. C. DEAR SENATOR MILLIKIN: I have received information to the effect that the Subcommittee on Reclamation of the Senate Interior and Insular Affairs Committee will soon hold hearings on S. 1555 which is your bill relating to the upper Colorado River storage project. It is going to be impossible for me to attend the hearings, but I would like very much to have a few statements inserted in the record of the hearings. My name is F. M. Peterson. I am 45 years of age and have. except for short periods of time, spent my entire life in the State of Colorado. By profession I am now and have been, for the last 8 years, the superintendent of the DeltaMontrose Rural Power Lines Association, an AEA co-op with offices at Delta, Colo. My parents owned and operated a farm near Hotchkiss, Colo., so I have spent most of my 45 years on a farm in Delta County, Colo. After the death of my parents I operated the farm and thereon learned to appreciate the use of irrigation water and to realize the damage caused by the lack of water. Many of the years have I had to helplessly stand by as my crops were ruined because of the lack of late season water, although every year the spring brought floods of water down our rivers. I learned by experience an abundance of water in May and June does not provide water in August and September without reservoirs to regulate the streamflows. I am the director of the Delta County Water Advisory Committee. I reprent the county of Delta on the Colorado River Water Conservation District board and a member of the Western Colorado Water Association which is a committee representing all of western Colorado. The State of Colorado supplys practically three-fourths of the water that makes up the Colorado River. And by compact agreement Colorado has been allocated over one-half of the total volume of water from the Colorado River allocated to the four upper basin States. I know by experience that without storage reservoirs it matters not how much water is allocated to us by compacts and agreements, we cannot make future use of any part of the allocation as our streams are overdecreed on direct flow. In other words, we cannot even obtain the water we are allowed under present decrees without storage reservoirs as the minimum flows will not provide the necessary water. If our thousands of acres of fertile soil are to be irrigated and if our vast deposits of oil shale, coal, and uranium are to be processed for the benefit of mankind, we must have storage reservoirs. The In S. 1555 there is one project which is the keystone to the development of water resources in western Colorado and that project is the Curecanti on the Gunnison River. It will store approximately a million acre-feet of water. percentage of evaporation is less on this proposed reservoir than on any reservoir proposed in the upper Colorado River storage project. Curecanti is located high up on the Gunnison River nearest to the Continental Divide where the waters of the Colorado River originate. This then, means that as the water stored in Curecanti is diverted downstream from the dam, it can be used over and over again, providing the most good to the greatest number of people. Both the water and the power developed from Curecanti can be used to a good advantage in developing and processing of natural resources vital to the safety and success of the United States. We in western Colorado do not believe the Bureau of Reclamation has investigated all of the possibilities and benefits attributed to the proposed Curecanti project. We know that there are many irrigation, recreation, and flood-control benefits that would be realized if the Curecanti Dam were built. We also feel certain that additional electric-power development can be obtained by utilization of an additional 295 feet of head in the 9-mile stretch between the Curecanti Dam site and the high-water line of the proposed Crystal Reservoir. The utilization of this additional power head and the benefits to irrigation, flood control, and recreation make Curecanti a very desirable project and one that will be economically feasible. We in Delta County are fully familiar with the necessity of the Paonia participating unit of the upper Colorado River storage project. The project has been authorized in part at two different times in the past. Construction has been completed on the canal to carry water, to the farms. The question most often asked locally is, "What water will the canal carry?" Without a reservoir to supply water for the canal, the canal is of no material benefit. We therefore request that favorable action be given the Paonia project now before your committee. Although I have only set forth a few of the benefits that would result in the authorization and subsequent construction of the Curecanti and Paonia units of the upper Colorado River storage project, we in western Colorado are very anxious to see all of the units, in Senate bill S. 1555, authorized, and we hope the committee will act favorably on this bill as the benefits will accrue to everyone in our great Nation. Very truly yours, Mr. PATTERSON. Thank you, sir. F. M. PETERSON, Superintendent. Senator WATKINS. Thank you, gentlemen. I think we have had all the witnesses now except the witnesses from California. Are they here? Mr. Ely, would you please come forward. STATEMENT OF NORTHCUTT ELY, SPECIAL COUNSEL, THE COLORADO RIVER BOARD OF CALIFORNIA Senator WATKINS. May I inquire how long you will take, Mr. Ely? Mr. ELY. My statement will take perhaps three-quarters of an hour to present; short of questions, that is. |