The Federal Government is under no obligation to pay the private power company for any indirect benefits it may receive. The private power companies have boasted repeatedly that they can build dams at no expense to the Government and can operate them at a profit. Hydroelectric projects are extremely lucrative. That is why the private power companies fight so tenaciously to prevent the Government from building and operating its own dams. This bill would constitute a perpetual subsidy from the U.S. Government to owners of private hydroelectric projects. In some instances, the accumulative amount of the subsidy would be many times more than the cost to the Government of building the structure. For example, there are eight Federal hydroelectric dams on the Snake and Columbia Rivers below the Idaho Power Co.'s Oxbow and Brownlee Dams. Payment for benefits accruing to the Federal dams as a result of the private power company's projects would go to the Idaho Power Co., which contended long and loudly over a period of years when it was fighting Hells Canyon that it would build the dams at no cost to the Government. In your State, the Montana Power Co. and other companies in the Northwest power combine would benefit greatly. Mr. Kinsey Robinson, president of the combine, has frankly stated that the purpose of such legislation is to take over the development of the Columbia River. I hope that you will use your great prestige as a long-time outstanding protagonist in the fight for comprehensive river legislation to bring about the defeat of S. 1782. With kindest personal regards, I am, Sincerely yours, JAMES G. PATTON, President, National Farmers Union. TACOMA CHAMBER OF COMMERCE, Mr. OREN HARRIS, Chairman, House Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: The Tacoma Chamber of Commerce, by unanimous action of its Industrial Bureau and Board of Trustees, takes the following position on proposed upstream storage legislation, for insertion into the hearing records of Senate and House Committees on Interstate and Foreign Commerce. "The Tacoma Chamber of Commerce supports the principle of enlightened self-help as it relates to separate hydroelectric facilities located on the same river or river basin, which through coordination of upstream storage operations with downstream electric energy generation operations may result in an overall increase of firm generation capacity because of more efficient utilization of available water flow on the river system. "The Chamber supports in principle S. 1782 in its practice of coordinating utilization of water flow to the mutual benefit of public and private utilities on the same river system, authorized by this or similar legislation. "The Chamber suggests in addition, that agencies exploring the proposed California power tie consider the suggested coordination legislation as a means of preserving this energy for Pacific Northwest industrial development before entering into agreements on reciprocal transfer of energy." Sincerely yours, D. A. ANDERSON, President. GREAT FALLS, MONT., July 24, 1959. Representative LEE METCALF, House Office Building, Washington, D.C.: Regret we must oppose passage of H.R. 7201 and S. 1782. Measures appear to be very confusing in purpose and yet provide in effect a wide open door for special benefits to private power companies. Strongly suggest measures be tabled or further action suspended until adequate studies have been made of allocation of benefits from upstream and downstream hydroelectric facilities on federally controlled rivers. Private utilities already get huge benefits from Federal dams in Montana. If we must have the coordination suggested in the measures, let's have an MVA and a CVA for the Missouri and Columbia regions. We oppose passage of H.R. 7201 and S. 1782 and similar legislation. Regards, LEONARD KENFIELD, President, Montana Farmers Union. INDUSTRIAL UNION DEPARTMENT, Washington, D.C., July 16, 1959. Hon. OREN HARRIS, Chairman, House Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. HARRIS: Reference is made to H.R. 5309, which proposes certain amendments to the Federal Power Act. On behalf of the industrial union department, I wish to express our opposition to the passage of this bill as inimical to the interests of our members and the general public. The history of this legislation is long but not very complicated. It is an attempt to amend the Federal Power Act to endow certain private power corporations at the expense of the people. There is no possible justification for compelling the consumers of power from Federal power projects to pay tribute to the owners of private power companies. The licenses granted to private corporations under the Federal Power Act are grants or privilege. No one need apply and presumably no one does apply for a license unless he feels that the license is financially desirable. There is no justification for subsidizing private corporations in the fractionalization and underdevelopment of our water resources. We will not go into the matters of simple equity involved in levying high private fixed and operating costs against the consumers of Federal power while subsidizing the owners of private projects through low Federal costs. It is not necessary to go into these matters because the hearings of your committee over the years are replete with testimony on this point. We urge that section 10 (f) of the Federal Power Act be retained as presently written. The proposal in H.R. 5309 to promote coordination does not require legislation. We are opposed to section 2 of H.R. 5309 in its entirety. We have no comment to make on sections 3, 4, and 5. We are very strongly opposed to section 6, designed to amend section 15 of the Federal Power Act. This section would abrogate the present provision which limits a water power license to 50 years, attempting, it appears, to turn these licenses into perpetual grants of privilege to particular corporations. Even more important, section 6 would destroy the preference which States and local governments now have over individuals and private corporations, a preference which we believe is sound public policy. We are opposed to the passage of section 6 of this bill. Will you please make this letter a part of the record of the hearings on H.R. 5309. Sincerely, ALBERT WHITEHOUSE, Director. STATEMENT BY PAUL T. SMITH, CHAIRMAN, THE MONTANA PUBLIC SERVICE COMMISSION Mr. Chairman and Members of the Subcommittee, I am Paul T. Smith, chairman of the Montana Public Service Commission. I appreciate this opportunity to support the bill introduced by Congressman Metcalf, H.R. 7201, which relates to downstream benefits and to the coordinated operation of streamflow by Federal and non-Federal interests. I understand that the other proposed legislation being considered by the committee, H.R. 5309 and H.R. 7494, contains somewhat similar provisions but I would like to confine my remarks to H.R. 7201. To explain by interest in this proposed legislation I might tell you that the Montana Public Service Commission is the official State agency which is charged with the duty of fixing just and reasonable rates for the services furnished to consumers by public utilities in Montana. In performing this duty the com mission is primarily concerned with the revenues and expenditures of the utilities subject to its jurisdiction and with the capital investment required to furnish adequate service. It is also concerned with all matters which affect the ability of these utilities to provide such service at the most economical cost. Unless H.R. 7201 is passed Montana consumers will continue to suffer unjustly by paying a substantial amount for use of upstream storage water while getting no credit from downstream Federal plants that use water stored in Montana at private utility plants paid for by Monana consumers. This is so for the follow ing reasons: 1. The present Federal Power Act provision relating to downstream benefits is inequitable and unfair since it requires that consumers served by non-Federal hydroelectric projects shall pay for the cost of benefits received by such projects from upstream Federal plants but does not require that consumers served by Federal plants shall make any payment for benefits conferred by any upstream reservoir, whether Federal or non-Federal. 2. The provisions of H.R. 7201 relating to the coordinated operation and release of water from upstream facilities by Federal and non-Federal plants would increase the amount of firm energy available without the investment of any additional capital and would result in providing electric service at the most economical rates to the consumer. 3. It is inequitable for the U.S. Government to have no obligation to make payments to citizens of the United States for benefits conferred by upstream non-Federal storage reservoirs when in fact, in negotiations with Canadian authorities, the U.S. representatives have recognized the principle that Canada is entitled to payment for this type of downstream benefit. Let me briefly elaborate on each of these points: 1. It is my understanding that section 10(f) of the Federal Power Act requires utilities subject to the jurisdiction of the Montana Public Service Commission who own hydroelectric plants to make payment to the Federal Government for any increase in power capacity which is due to storage releases from Federal storage dams or other headwater improvements. These payments are operating expenses of the utility and, like all operating expenses, must be paid entirely by the customer. On the other hand when a non-Federal project, by storing and releasing water, increases the production of power at a downstream Federal plant, the Federal Government under existing law is not required to make reimbursement for the benefits received. In other words, there is one rule for the consumers of Federal power and another rule for the consumers of non-Federal power. The present provision of the Federal Power Act relating to downstream benefits is clearly inequitable and is unfair to consumers served by nonFederal plants. Unless a correction is now achieved this injustice would be even further magnified when additional facilities are constructed by the Federal Government. The Metcalf bill would remedy this existing inequity and would place all consumers on a more equal footing. 2. The provisions of H.R. 7201 which encourage the coordinated operation of the hydroelectric facilities in a river basin, would be highly beneficial to the ratepayers served by the public utilities over which our commission has jurisdiction. The bill provides for agreements between the owners of water control facilities, whether Federal or non-Federal, to operate these facilities in such a manner as to produce the maximum amount of energy. Such coordinated operation would increase hydroelectric production without any increase in the capital investment, with no increase in interest charges, and with little increase in operating costs. Such coordinated operation, by increasing the amount of firm energy available from existing plants at no increase in costs, would help achieve our objective of assuring adequate electric service at the most econmical cost to ratepayers. 3. The negotiations which are now being conducted by the International Joint Commission for the cooperative use and development of the waters of the Columbia River by the United States and Canada lend support to the principle of payments by the United States for downstream benefits. These negotiations are concerned not only with engineering plans for the development of the water resources of the Columbia River Basin but also with the apportionment between the two countries of the benefits attributable to such coordinated operation. Canadian officials have indicated that downstream benefits could amount to as much as half the additional energy produced in U. S. plants from Canadian storage releases. It is clear that if the principle of payments by the United States for downstream benefits is fair in the international field, then it is fair for citizens of the United States. In conclusion, it is my opinion that the present law imposes an entirely unfair, unreasonable, and unjust expense on the electrical users in Montana whom our commission is obligated to protect. H.R. 7201 would remedy this situation, would be fair and equitable to all concerned, and would give all consumers of power produced on the Missouri and Columbia Rivers and their tributaries the greatest amount of power that could be obtained from the facilities. OREN HARRIS, Chairman, Interstate and Foreign Commerce Committee, SANDPOINT, IDAHO. The Lewis-Clark G. & T. Cooperative with a membership of 10 rural electric cooperatives, located in the States of Idaho, Washington, and Oregon, would like to be on record as favoring in principle H.R. 7201 and H.R. 7494. Would you please have this wire incorporated in the hearings now in progress before your committee. EDGAR COLLISON, President, Lewis-Clark G. & T. Co-op, Ritzville, Wash. GRAND RIVER DAM AUTHORITY, In re H.R. 7201. Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR SIR: It is our understanding that H.R. 7201, an act to provide for the comprehensive operation of hydroelectric power resources of the United States, and for other purposes, will be considered by your committee on July 27, 1959. The Grand River Dam Authority, a public power agency of the State of Oklahoma, is vitally interested in this proposed legislation. The governing body of the authority adopted a resolution endorsing and approving this legislation. A certified copy of this resolution is enclosed. We respectfully request that this resolution be made a part of the record of your committee hearing and that the same be considered by your committee. Yours very truly, C. J. DUGAN, General Manager. RESOLUTION OF THE BOARD OF DIRECTORS OF THE GRAND RIVER DAM AUTHORITY CALLING UPON THE CONGRESS OF THE UNITED STATES TO ENACT H.R. 7201 AND SENATE BILL 1782 OF THE 86TH CONGRESS, 1ST SESSION RESOLUTION NO. 3855-ADOPTED JULY 20, 1959 Whereas the Grand River Dam Authority is an agency of the State of Oklahoma created for the purpose of performing public functions, among which is the development of the waters of Grand River, a nonnavigable stream in Oklahoma, for the production of electric power and energy; and Whereas the Grand River Dam Authority owns and operates the Pensacola Dam and Reservoir project and holds Federal Power Commission license No. 1494 for said project; that said Pensacola project was completed in 1940 with storage capacity of approximately 1,680,000 acre-feet at maximum power pool elevation at 745 feet above mean sea level, with additional storage for flood control of approximately 520,000 acre-feet at elevation 755 above mean sea level, with a hydroelectric powerplant of 90,000 kilowatts; and Whereas the United States owns and operates the Fort Gibson Dam and Reservoir project located on Grand River approximately 50 miles below the Pensacola project; that the United States since on or about the 30th day of March 1953 has been operating said Fort Gibson project for the production of electric power and energy; that the present installed generating capacity of the Fort Gibson project is 49,000 kilowatts with provisions to add an additional 25,000 kilowatts at some future date; that the Fort Gibson project has only 3 feet of storage for power production; that such Fort Gibson project is what is commonly known as a run-of-the-river plant, and that said project depends upon the authority's power storage in the Pensacola project for the production of electric power and energy; and Whereas, under the terms of the Federal Power Act, the Federal Power Commission is unauthorized to assess and require the United States to pay to the authority annual charges for the benefits that the Fort Gibson project receives from the Pensacola project; and Whereas there is pending in the Congress of the United States legislation to amend the Federal Power Act to the extent that the United States shall pay for benefits to its hydroelectric power facilities received from other hydroelectric power projects, all as embodied in H.R. 7201 and Senate bill 1782 of the 86th Congress, 1st session; and Whereas if said legislation is enacted, the Grand River Dam Authority will be entitled to receive compensation from the United States on account of benefits that it (United States) receives at its Fort Gibson hydroplant from the authority's headwater storage and improvements at Pensacola; and Whereas the board of directors of the authority is of the opinion that said legislation will remedy a great inequity that now exists under the Federal Power Act: Now, therefore, be it Resolved by the board of directors of the Grand River Dam Authority, That the Congress of the United States be and is hereby respectfully petitioned to enact H.R. 7201 and Senate bill 1782 of the 86th Congress, 1st session, or such other legislation that will require Federal owned hydroelectric projects to pay just compensation for benefits received from other hydroelectric projects; and be it further Resolved, That this resolution be submitted to the Oklahoma delegation in Congress and that copies of the same be submitted to the congressional committees considering such legislation. CERTIFICATE I, Andrew Rohmiller, secretary of the Grand River Dam Authority, a conservation and reclamation district and a public corporation organized and existing under the laws of the State of Oklahoma, do hereby certify that the foregoing is a true and correct copy of Resolution No. 3855, adopted by the board of directors of the Grand River Dam Authority at a regular meeting of the board of directors held in Vinita, Okla., on the 20th day of July 1959, at which meeting a quorum of the board was at all times present and acting. In witness whereof, I have hereunto set my hand and affixed the corporate seal this 21st day of July 1959. ANDREW ROHMILLER, Secretary. The CHAIRMAN. This concludes the hearing on the subject and the record will be held open for 5 days if anyone desires to file additional statements. The committee will be adjourned. (Thereupon, at 12:40 p.m., the committee was adjourned.) |