Operating utilities have now substantially completed their actions to implement the 11 principal recommendations which the Federal Power Commission made in respect to adequacy and reliability of power supply, as a part of its three-volume report to the President on the Prevention of Power Failures, July 1967. I set forth the factual details of these recommendations and actions in my testimony before the Subcommittee on Communications and Power on May 6, 1971, Hearings p. 446 and Appendix N thereto (not printed, but reproduced and annexed hereto as Appendix C.)

In addition, through our general rulemaking procedures, we are in the process of evaluating establishment of a schedule of plans and procedures which major utility systems would follow to effect all possible needed electric power transfers between utilities or areas to meet electric shortages, whether arising from equipment breakdown, fuel or water shortages, equipment maintenance requirements or other emergency conditions. The formulation of load relief or load curtailment procedures which may be required to avert wide-spread service interruptions in the event of severe capacity-load imbalances in any given locality, area or region are also included in this rulemaking which is under consideration. Docket No. R-405, Policy Statement Notice of Investigation and Proposed Rulemaking with Respect to Developing Emergency Plans, issued November 4, 1970. At p. 466 and following of the printed Hearings containing my testimony before the Subcommittee on Communications and Power, (May 6, 1971) I discuss the details of this rulemaking which covers both the electric power and natural gas industries.

With respect to the supply and availability of fossil fuels specifically for electric utility use, we are working with other agencies of Government, as well as industry, in order to help stimulate the production of all types of fuels, to ensure their delivery at needed points of consumption, and to encourage the full utilization of storage facilities to meet future needs.

The following tabulation, prepared by the Commission staff, shows the relative percentages of fossil fired fuel electric generation at five year intervals from 1970-1990:

TABLE VI. PERCENTAGE BREAKDOWN OF TOTAL FOSSIL FUEL GENERATION

Based upon what we know now, the next few years may represent the period of the greatest difficulty for electric utilities in securing adequate fuel supplies. In the past 18 months, scattered fuel shortages have been experienced by the electric utilities. Fuel stocks, delivery methods and air quality regulations all must be considered. By order issued September 17, 1971, the Commission prescribed report forms for all types of electric utilities (investor owned, publicly owned and cooperatively owned) to report on a weekly basis when emergency conditions exist in respect to coal and oil stocks for electric utility gen

eration. Order No. 438, Reliability of Electric Service. Docket No. R-415.

In the Commission's 1971 National Power Survey covering the period 1970-1990, and in working with the Nation's 22 power pools in the course of our day-to-day regulation of the electric utility industry, we are taking steps to stimlate increases in reserve ratios through increased capacity additions and better load forecasting techniques. This is being done through appropriate ratemaking allowances in the discharge of our rate regulatory activity, in studies made in our interconnection and coordination work, and in general reports and studies which are being prepared by the Commission and its staff. My current judgment is that average installed generating reserve ratios should be at least 20 percent of the loads served. Necessarily, the specific amount varies between utilities and regions, depending upon physical equipment and the nature of connected loads.

At p. 447 and following (including Appendices L, P and P-1 thereto [not printed]) of the printed record of my testimony before the Subcommittee on Communications and Power on May 6, 1971, I reviewed the electric power supply conditions throughout the Nation for 1971 summer period and for the winter period 1971-72. Since that date, the Commission's staff, as a part of its continuing work schedule on electric power reliability matters, has completed a reassessment of electric load and supply conditions as projected by the nine Regional Electric Reliability Councils (summer season and winter season) on a comparative basis, 1970 (actual) and 1971-1973 (projected). This reassessment is set forth in Appendix D hereto. The overall conclusion to be drawn is one of gradual improvement in respect of the Nation's bulk power supply arrangements, although there have and will continue to be disturbances. Since January 1, 1971, twenty-five power interruptions have been reported to the Federal Power Commission under its Order No. 331-1. A number of these involved power outages of more than 200,000 kilowatts including three which affected relatively large areas. A brief summary of these three incidents appears in Appendix E.

On September 9, 1971, the Commission released its staff report comparing actual 1970 and 1971 summer conditions. The Commission's release (Appendix F hereto) states:

The Federal Power Commission today released a staff report which shows that the nation's electric power system conditions improved this summer as compared to the summer of 1970.

The report shows that 40 voltage reductions were reported during the period June 21-September 7, 1970, compared to only 9 this year, between June 1 and September 6. Voltage reductions occurred on 15 days last year and on 5 days this year.

There have been no reports of appeals for load curtailment so far this summer compared to 8 such appeals last year.

I believe the present policies and programs of the Federal Power Commission will contribute to meeting the energy needs of the future under our assigned responsibilities by Congress. But, it should be emphasized that some shortages are inevitable over the course of the next three to five years. There will be a definite lag in supply to meet demands due to the time required for resource development.

The Commission regularly analyzes the load capacity situation of each major electric utility supplier in the contiguous 48 states under projected summer and winter conditions. Also, as a part of the Com

mission's continuing work in the area of electric power adequacy and reliability, analyses are prepared of the annual reports of the Nation's major electric utility suppliers submitted through the nine electric reliability councils. These reports project ahead up to 10 years. Appendix & hereto sets forth the Commission's Release of that report dated August 30, 1971. The Release notes:

For the 1972-76 period there are only a few instances in which projected reserves are less than 18 percent at the time of winter or summer peaks. Average reserve margins of about 20 percent of expected peak load demands generally are considered necessary to compensate for forced outages, required maintenance, uncertainties in load forecasting, and other reasonable contingencies.

Projecting farther into the future (1970-1990), the Federal Power Commission, in completing its National Power Survey to be released during 1971, is studying electric utility growth and demands in coordination with industry advisory committees. We may expect the growth in electric power use to continue at a rate which will result in an approximate doubling of consumption in each 10 years, at least for the next two decades. In 1970, the total electric utility generation in the United States was about 1,547 billion kilowatt hours. For purposes of the National Power Survey, we have made projections for 1980 and 1990 of 3,113 billion and 5,922 billion kilowatt hours, respectively. Based on these projections and interpolating for the intermediate points, the electric power generation for 1975 and 1985, from all fuel sources, would be about 2,160 billion and 4,240 billion kilowatt hours, respectively.

The sources of generation for the year 1970, 1980 and 1990, for all types of fuels, are shown in the following tabulation:

As shown in Table VI tabulation above, staff projections of the percentages of coal, gas and oil used to produce the kilowatt hours generated by fossil fuels have been made for five year intervals, 19701990. Your letter of August 19, 1971, requests these data estimates as set forth above.

The hardware and sites needed to meet the future demands of electric utilities may be summarized as follows: 11

Current projections call for 300 new thermal plant sites by 1990 and the utilization of approximately 7,000,000 acres of land for transmis

11 Testimony of Chairman John N. Nassikas before the Subcommittee on Communications and Power, May 6, 1971. Hearings.pp. 439–442.

sion rights-of-way as compared with the 4,000,000 acres now in use for this purpose. The various types of basic generation in this long-term picture are:

In respect to increased and strengthened transmission ties between utilities and regions, the Commission and its staff are continuing to use all available means to ensure the early construction of needed lines. Heavy ties are necessary for reasons of reliability and economy of service. Moreover, they are indispensable to the accomplishment of large emergency power transfers between systems or regions. At p. 433 and following of Hearings before the Subcommittee on Communications and Power, I summarize these actions by geographic area. Research and Development.-As a part of this look to the future, I believe there must also be a greatly expanded effort to stimulate research and development and formulate new concepts for utility systems analysis and design on regional and vastly improved interconnected bases. The 1971 National Power Survey and the National Gas Survey should do much in both areas. In the utility sector of our economy, the regulator and regulated must effectively contribute to a resolution of the pending problems. I called attention to the urgency of this matter in my May 6, 1971 testimony before the Subcommittee on Communications and Power, Hearings p. 455 and Appendix Q thereto (not printed). That Appendix summarizes recent regulatory actions which the Federal Power Commission has taken in an effort to stimulate advance planning and research and development activities. It appears as Appendix H hereto.12

In my judgment, we must develop the technology to economically gasify coal or synthesize gas from other hydrocarbon sources, such as oil shale and tar sands. In addition nuclear power needs of the future, which are critically dependent upon successful development of a fast breeder reactor program, must be vigorously pursued on a time schedule which assures bringing this vital technology to a state of commercial readiness in the early 1980's. These are absolutely essential priorities.

Among the promising programs undertaken by a number of gas utilities is participation in an intensive research effort to develop a commercially feasible fuel cell. Other programs requiring commitment by the gas industry and the energy interests are the establishment of expanded pilot projects for coal gasification 13 and the initiation of

12 The basic materials discussed in the Appendix were presented to the National Academy of Sciences-National Academy of Engineering Environmental Studies Board on February 11, 1971, Remarks of John N. Nassikas, "National Energy and Environmental Policy".

13 A large part of the budget of the Office of Coal Research of the Department of the Interior is devoted to gasification projects. The Office's fiscal 1972 budget is $21 million, of which nearly $4 million is for the expansion of pilot plant construction and operation for conversion of coal to fuel gas, and for research in magnetohydrodynamics. See Budget of the United States Government, Fiscal Year 1972, page 348.

68-699-72-22