Since conversion of oil and gas fired boilers would be for the benefit of the entire country rather than for the customers of the individual utilities, it should be financed by the people as a whole through non-interest bearing Government "Contributions in Aid of Construction" which would be repaid out of funds generated through Depreciation Charges over the lives of the individual installations. This method of financing, which I believe would have to be specifically authorized by the Congress, would provide the necessary capital at no direct cost to the individual utilities or their customers and, at the same time, provide for the ultimate recovery of the funds over the life of the facilities.

Without some such financial assistance by the Federal Government, there may be some question as to whether the individual utilities could raise the capital required to convert their oil and gas fired boilers to coal.

Utilities are already experiencing difficulty in raising the capital necessary to finance the expansion of their facilities to meet the growing demand for electricity. Few utilities have been able to sell long term bonds in recent months and many have had to resort to bonds with five to ten year maturities as the only type of utility debt that investors are willing to purchase. Obtaining short term funds for the construction of facilities with an economic life of thirty years might well be characterized as "desperation financing".

It is not only debt financing which is presenting problems for the utilities. Equity capital is virtually impossible to obtain at book value. Of thirty-seven utilities which sold common stock to raise new capital during the first five months of this year, only three were able to obtain a price of as much as book value while some received little more than half book value. Additional equity is necessary to provide a base for the increased debt that must be raised, but sale below book value dilutes the value of the stock and undermines the entire financial structure and viability of the corporation.

Financing the conversion of oil and gas fired boilers through Government "Contributions in Aid of Construction", therefore, would not only distribute the capital costs of conversion more equitably among those receiving the benefits but would assure the ability of obtaining the necessary capital and at a minimum overall cost.

Respectfully yours,

is My f

International Paper Company is in general accord with the
objectives outlined in Senate Bill 1777 to convert utility boilers and major
industrial installations to use coal as a primary energy source. New
boilers purchased by International during the past few years were designed
and built so that conversion to coal could be made in the future. The
company also uses residual fuels composed of bark and by-products amount-
ing to over 45 percent of its total fuel requirements. In the replacement
of the special boilers required to burn by-product and residual fuels special
attention has been given to increasing the efficiency of these boilers in order
to minimize the use of fossil fuels in conventional type boilers. A major,
company-wide, energy conservation program was organized in early 1972,
months before the oil embargo, and this program is a vital part of our daily
operations in all of our plants. We have established a public relations
program to present to all of our employees the facts concerning this nation's
energy problems and the essential need for energy conservation.

International Paper Company has eighteen pulp and paper mills that will be affected by this proposed legislation. Our total purchased fuel expressed in tons of coal equivalent is over four million tons per year. International Paper operates fifty-five boilers that utilize purchased fuels. Since International is a large user of purchased fuel, we feel that there are a number of factors that should be considered from the user's standpoint.

The majority of these boilers now use oil as a fuel--or a com-
bination of oil and bark. Converting these boilers to coal would result in
a twenty to twenty-five percent loss in steaming capacity from the present
boilers, thus requiring the addition of new boilers to maintain present
production rates or the replacement of several small units with a large unit.
Boiler manufacturers have advised us that it is not possible for this company
to obtain and install the required number of boilers needed to maintain present
production capability in the time frame outlined in the bill. Consequently, a

INTERNATIONAL PAPER COMPANY

The Honorable Jennings Randolph

Page 2

June 6, 1975

significant number of employees would be without work for extended periods of time unless the time to complete conversion to coal is extended.

Reliable long-term contracts for coal from suppliers must be arranged for. An increase in the use of coal of this magnitude, affecting nearly all industries, will create very serious supply and transportation problems that must be coordinated with coal users.

The ability of industry to obtain the capital money needed to convert from present fuels to coal will coincide with time frames already set out to meet 1983 water effluent standards. We have estimated that 600 million dollars will be needed to move from 1977 Federal effluent standards to 1983 Federal effluent standards; to meet present and proposed Federal air standards will require approximately another 70 million dollars. Conversion of our primary pulp and paper mills to coal will require an investment of at least 350 million dollars. The total impact of the capital dollars of over one billion dollars required to meet the needs outlined above will give rise to serious problems in raising capital to maintain present facilities and to expand capacity to meet the country's needs for pulp and paper and to provide employment.

In order to accomplish the objectives of this proposed legislation, we propose that one-year amortization, investment tax credits, and the use of tax-exempt bonds be permitted to make capital available to industry to encourage and expedite conversion to coal while, at the same time, protecting employment of American workers, meeting needed expansion in industrial production to provide the goods U.S. citizens must have, and protect the financial integrity of American industry.

A serious review should be made of the timetables now built into the Federal Water Pollution Control Act and the Federal Clean Air Act to assess whether or not the additional benefits to be attained are consistent with the need for protecting United States fuel sources. In all environmentalenergy legislation we need a "cost risk benefit analysis" system with legislation based on fact rather than emotion.

Maximum benefit in converting to coal should be attained by conversion of large units first, in progressive steps over a period of time, with the conversion of smaller boilers being the last to be converted. We question the feasibility of conversion to coal of boilers with 50,000,000 BTU per hour input. We feel this should more nearly be a minimum of 250,000,000 to 300,000,000 BTU per hour input.

INTERNATIONAL PAPER COMPANY

The Honorable Jennings Randolph

Page 3

June 6, 1975

The objective of the country in moving away from being dependent on foreign oil and gas supplies would occur faster if other sources of energy supplies are also encouraged, such as geothermal, wood wastes, garbage, and solar energy. All types of energy conversion in one planned and orderly program will create the greatest impact in reducing this country's dependence on foreign oil sources, maintain and protect American jobs, and industry's ability to compete in foreign markets.

We appreciate the opportunity of being able to make comments concerning your proposed bill and hope that some form of it will be passed.

Very truly yours,

A. P. Foster

ASU

western union

WFC159

Telegram

WAC358(2052) (1‐2035666154) PD #6/03/75 2052

ICS IPMIAHA PH-1

NNA128 (SF 154) KACOAHR 103 NL OAKLAND CALIF 6-3-75

PMS THE NONORABLE HENRY JACKSON

U.S. SENATE

VASHINGTON, DC

FLVG SENT TO

SENT OR COMM

JUN 5 1975

WASHINGTON, E. C. 20510

THE HONORABLE HENRY JACKSON, U.S. SENATE, WASHINGTON DC

CC BRUCE MCPHADEN, SPOKANE

CC RL MAIER, WASHINIGON DC

I WANT TO CALL TO YOUR ATTENTION THE SERIOUS IMPACT THAT SENATE
BILL 1777, WHICH YOU AND SENATORS RANDOLPH AND MAGNUSON JOINTLY
INTRODUCED IN THE CONGRESSIONAL RECORD OF MAY 20, WILL HAVE
UPON OUR COMPANY AND ULTIMATELY ON OPERATIONS IN YOUR STATE.

SF-1201 (RS-60)

UU

western union

Telegram

IN BRIEF, THE SHORTENED DEADLINES FOR THE CONVERSION OF
OUR ELECTRIC GENERATION FACILITIES FROM NATURAL GAS TO COAL IN
LOUISIANA CANNOT BE ACCOMMODATED WITHOUT SERIOUS ECONOMIC
IMPACT UPON ALL OUR ALUMINUM OPERATIONS. AS YOU KNOW, OUR BATON
ROUGE AND GRAMERCY ALUMINA PLANTS AND CHALMETTE REDUCTION PLANT,
ALL IN LOUISIANA, WERE BUILT AROUND NATURAL GAS FOR THE
GENERATION OF ELECTRIC AND STEAM. THIS REPRESENTS A QUARTER
OF OUR ALUMINUM ASSETS,
ESSENTIAL TO THE ECONOMIC WELL

BEING OF OUR OTHER FACILITIES, 1 UDING OUR PLANTS IN

WASHINGTON STATE.

WHILE IT IS OUR PLAN TO CONVERT THESE OPERATIONS TO ALTER-
NATE FUELS, IT IS ESSENTIAL THAT THESE FACILITIES BE ABLE TO
USE NATURAL GAS FOR BOILER FUEL UNDER THEIR PRESENT CONTRACTS
WHICH EXPIRE IN 1988, 1981, AND 1985. THIS DOES NOT APPEAR

SF-1201 (RS-69)