Because of limitations on construction and budgets, it was not included in 1957, but it was included in 1958.

Mr. PASSMAN. It had not been discussed prior to that time?
Mr. WOHL. No.

Mr. PASSMAN. Will any of the power generated in this new plant be available to our armed services on the island?

PRESENT POWER DISTRIBUTION SYSTEM

Mr. WOHL. Yes, sir. The present situation is this. We have what is called the Island Power System, which is made up of the existing Machinato plant, and two barges which are military-owned, Barge Jacona and Barge Impedance. The Jacona has a capacity of 20,000 kilowatts and the Impedance has a capacity of 30,000 kilowatts. There are also some standby diesels which remain from World War II with a capacity of 15,000 kilowatts. These are very antiquated and expensive to run. The Machinato plant, title to which is held by the Ryukyu Electric Power Corp., at the time it was completed was leased to the Army and the Army, under the operations contract with Gilbert Pacific, operates it as well as the Jacona, the Impedance, and the standby. So the entire operation is in the hands of the military for our military requirements and for the local requirements, with the provision of free power in the amount of 30 million kilowatt-hours

per year.

Mr. PASSMAN. What do you mean by free power?

Mr. WOHL. At no cost to the Ryukyu Electric Power Corp., and the Ryukyu Electric Power Corp. sells this 30 million kilowatt-hours to 5 local-enterprise distribution systems for distribution.

In addition, as the local economy requires power in addition to the 30 million kilowatt-hours, the power system provides the Ryukyu Electric Power Corp. with this additional power at cost.

Mr. PASSMAN. Does the Ryukyu Electric Power Corp. receive direct payment from our Armed Forces for the power they consume?

Mr. WOHL. They receive it in the form of free power to the amount of 30 million kilowatt-hours per year. This is an amount which covers the straight-line amortization of the original cost of the facility plus 5 percent interest.

Mr. PASSMAN. Breaking that down on a dollar basis, what does it mean they are receiving in dollars and cents?

Mr. WOHL. On a dollar basis, $622,000 a year. That is what the Ryukyu Electric Power Corp. receives in the way of power which, when sold, generates this.

Mr. PASSMAN. It is slightly complicated.

Mr. WOHL. Yes, it is complicated.

Mr. PASSMAN. Have you been on the islands recently?

Mr. WOHL. I was there in 1955.

NEED FOR ELECTRIC POWER

Mr. PASSMAN. Do you find conditions much different today than they were last year? Do you think the need is any more urgent this year than a year ago?

Mr. WOHL Yes, sir. The need is considerably more urgent in that we are approaching rapidly a time when the existing power gen

erating facilities will not meet the combined requirements of the local economy and the military.

Mr. PASSMAN. That just means an expanding economy, and as your population increases and your economy improves you have greater demand?

Mr. WOHL. That is right. The point is this, the urgency stems from the long lead time involved in putting a plant into being. We are at a point where we must get this plant approved and funded in 1958 in order to put it on the line in 1960 or 1961.

Mr. PASSMAN. Of course the committee understands the lead-time phase of this thing, that it takes some time to procure and install the necessary equipment, but there is no recent development that would make this strictly a matter of urgency, would you say?

Mr. WOHL. Yes, sir. The developments have been twofold. They have been, in the local economy, the expanding requirements for power which are generated by the expanding economy; and in the military sphere, the fact there have been additional deployments of our military forces, with the consequent increase in housing, all of which require more power.

Mr. PASSMAN. What percentage of the power consumption of the military does the military generate themselves?

Mr. WOHL. The military are running the entire system, which includes the Machinato plant.

MILITARY REQUIREMENTS FOR ELECTRIC POWER

Mr. PASSMAN. What percentage of the entire power output is used by the military and what percentage is used by the Ryukyuan economy?

Mr. WOHL. In 1956 the total demand in thousands of kilowatts was 50,000 kilowatts, of which 40,000 was for the military requirements. In other words, they are taking roughly 80 percent.

Mr. PASSMAN. Do you have any other facilities? What would happen if you had a typhoon that would knock out this plant, put it out of operation? Does the military have auxiliary plants?

Mr. WOHL. A deficit of the existing plant would mean the military could not meet their own requirements.

Mr. PASSMAN. That is not the question. They may not be able to meet their own requirements, but could they generate a percentage of the requirements with auxiliary units?

Mr. WOHL. If the Machinato plant were knocked out, you would have the Jacona, Impedance, and the standby diesels which would give you 65,000 kilowatts. You would be under the necessity, as you are in any power generating system, of keeping your largest single unit in reserve, which would take 30,000 kilowatts out of the system. That would give you 35,000, which would not meet the military requirements.

Mr. PASSMAN. But the military does have plants on these installations so that they could start generating power?

Mr. WOHL. To the extent of the facilities I have just listed for

you.

Mr. PASSMAN. This was first discussed for fiscal year 1957?
Mr. WоHL. That is correct.

Mr. PASSMAN. And on account of the drive for some economy in Government it was postponed to fiscal 1958?

Mr. WOHL. That and other reasons, sir.

Mr. PASSMAN. Other reasons? May I have the other reasons? Mr. WOHL. I cannot say that the only reason why the item was not included in fiscal 1957 was that there was an economy drive in Government. The decision was made at higher levels in totaling up what would be included and which were higher priority items. Mr. PASSMAN. And they determined this could be postponed? Mr. WOHL. As of last year.

Mr. PASSMAN. Mr. Gary.

Mr. GARY. Give us your charts and show us what you have.
Mr. WOHL. This information is classified.

(Discussion off the record.)

Mr. PASSMAN. The military requirements increase about 1 percent a year?

Mr. WOHL. After the construction program is finished.

Mr. PASSMAN. It would be about 1 percent a year after the construction program is finished?

Mr. WOHL. That is correct.

Mr. PASSMAN. Presently, what is the increase or is it just static? Mr. WOHL. Off the record.

(Discussion off the record.)

Mr. PASSMAN. But the requirements are presently being met fairly satisfactorily?

Mr. WOHN. That is correct.

Mr. PASSMAN. When you finally finish this program, requirements will increase as estimated?

Mr. WOHL. Requirements are being met very well at the present time. As I will show you when I superimpose this overlay on the chart, in a very short time, the total requirements will be such that existing facilities cannot meet them.

EFFECT OF REDUCTION IN MILITARY FORCES

Mr. PASSMAN. One final question, if I may: If we should reach a more peaceful period in the world, it could just as easily decrease and there would be an excess of power there; is that right?

Mr. WOHL. No, sir. The figures that I am giving you are based upon our existing force in the Ryukyu Islands. We are, to my knowledge-and my knowledge is pretty good on the subject-not intending in any way to reduce our existing plant. We have an investment in bases there that runs close to $1 billion.

Mr. PASSMAN. I know. I had reference to military. If we should in future years decide we can cut this down to 40 or 50 or 60-it may never come; we hope and pray it will-you would have an excess of power. Would it not be plus, rather than minus?

Mr. WOHL. Let me answer it this way, sir: If we were to cut our military forces back in the area, then the existing high-cost temporary plant which the military has to supplement the Machinato steam powerplant would be cut back with them. They would take it away with them. It is not a firm asset of the economy. You have 2 floating power barges, 1 of which was built in 1929, and is already overage.

It is only maintained there because we have nothing to replace it with. You have the Impedence, also a military asset, floating. Ail you have to do is attach a tug to it and tow it away.

Mr. PASSMAN. Why did not the military come through the Defense budget for this powerplant, rather than through this local government of Okinawa?

Mr. WOHL. They come through the Army, in the Army's responsibility for the civil administration of the area, we being charged with the government of the Ryukyu Islands.

Mr. PASSMAN. They do not procure anything else for the Army through you, do they, for civil administration?

Mr. WOHL. Insofar as it affects the local economy they do. We have the Machinato steam powerplant, the only permanent facility in the island which was built to service local requirements and military requirements.

Mr. PASSMAN. In effect, this is for military use, the larger percentage of it?

Mr. WOHL. It is for both.

Mr. PASSMAN. I know it is for both, but percentagewise a greater amount of your kilowatt consumption will be by the Armed Forces; is that correct?

Mr. WOHL. As of the present time, yes, but the trend is in the reverse. In other words, as your local economy expands, you will notice from the chart that it takes a larger and larger proportion of the total power requirements to the point where, as of 1968, the local economy's own requirements would be such that from the Machinato steam powerplant, all of its output would have to go to local economy. You could not service the military at all.

Mr. PASSMAN. Could not a request just as easily have been in the Defense Department's budget?

Mr. WOHL. If it were put in a military construction budget, it would be a military asset, to service only military requirements, and would have nothing by way of additional power availability for the local economy.

Mr. PASSMAN. All right. You go ahead with your chart. (Discussion off the record.)

OPERATION OF THE MACHINATO POWERPLANT

Mr. GARY. Mr. Wohl, prior to World War II, the only electricity or power in the Ryukyus was furnished by the Japanese; is that not correct?

Mr. WOHL. That is correct, sir.

Mr. GARY. And all powerplants were operated by the Japanese? Mr. WOHL. That is my understanding, sir.

Mr. GARY. It so happens that I was on Okinawa, I think, in 1952, and they were constructing the Machinato powerplant, at that time. They were uncertain as to how they were going to operate it, because they did not have anybody on the island who was capable of operating the plant, and they were considering entering into a contract with a Japanese firm to operate it.

Just what arrangement has been made for the operation of the present plant?

Mr. WOHL. The present plant, on its completion of construction and after testing period, was turned over, so far as title was concerned, to a Ryukyu public corporation called the Ryukyu Electric Power Corp., which was created by the United States civil administration by an ordinance.

Mr. GARY. Is that an agent of the United States administration? Mr. WOHL. It is an instrumentality of the United States civil administration.

Mr. GARY. Who owns that company?

Mr. WOHL. There is no capital stock.

Mr. GILLIES. It is a public corporation without capital stock. It was originally intended that this plant would be operated by the Ryukyu Electric Power Corp., or that was considered, and that it would sell power to the military and to the local economy. However, the need for operating military power sources, as well as this source, as an integrated system, was one of the principal factors in arriving at this other arrangement, where the corporation owned the plant and leased it to the military, so that it can be operated as a single, integrated, islandwide system.

Mr. GARY. When I was on Okinawa, they were planning for the operation of the plant. They contemplated at that time deeding it outright to the Ryukyuan government.

I recall that they requested the Federal Power Commission to send a study mission over to Okinawa to study the situation, and to advise what rates the government should pay for electricity, so as to give the Ryukyuan government a profit, which they could use in boosting the economy of the government.

Mr. GILLIES. That is right, sir.

Mr. GARY. That plan was not worked out as I understand it. It was not turned over to the Ryukyuan government, but instead, this power corporation was created.

Mr. GILLIES. Yes, sir.

Mr. GARY. That is neither owned by the United States Government nor by the Ryukyuan government; is that correct?

Mr. GILLIES. It is created by the United States civil administration. Its charter is in the form of an ordinance, in the form of legislation, by the civil administration, so that upon liquidation, its assets would revert to the United States civil administration.

Mr. GARY. What plans were made for the operation of the plant? Mr. GILLIES. Upon leasing to the Army forces in the Ryukyu Islands of the plant, the Army hired a contractor to operate this islandwide power system, which includes the Army's own facilities and this plant, owned by the Ryukyu Electric Power Corp.

Mr. GARY. Do they have Americans operating it?

Mr. GILLIES. It is an American company, Gilbert Pacific is the name of the contractor.

Mr. GARY. They were considering contracting with the Japanese company, but instead, they contracted with an American company? Mr. GILLIES. That is right.

Mr. GARY. What is the situation as to the distribution of the power? Mr. GILLIES. The consideration for this lease from the Ryukyu Electric Power Corp. of the powerplant to the Army is the 30 million kilowatt-hours of free power, which is delivered by the operator-the