There are two possible approaches I would like to recommend to this Committee in lieu of the approach taken by the bills before you: First, amend section 10 (a) of the Federal Power Act, and/or other appropriate sections, to remove any doubt that may exist concerning the authority of the Federal Power Commission to require coordination as a condition of all FPC licenses. In my opinion, such authority now rests with the Commission. However, since FPC's approval of the bills now under consideration indicates either their doubt as to their authority or their reluctance to use such authority, I would recommend that the Federal Power Act be amended to require FPC to exercise such powers where coordination is feasible.

Second, a companion measure-again based on the present wording of section 10(a) of the Federal Power Act-should be enacted which would authorize and direct appropriate Federal or State agencies to prepare comprehensive plans for the full development of the various river basins in the Nation. Once these comprehensive plans are prepared, and approved by the Congress, the FPC should be required to issue licenses only to those projects which fit into overall plans including integration of electrical facilities into basinwide transmission networks. You would then achieve what needs to be achieved-not coordination, but integration, the really efficient way to make maximum use of the resources coming from our Nation's rivers. I suggest to this committee that the tools needed to accomplish the purposes of these bills are already in hand. All they need is some active use, and perhaps some sharpening. If the Federal Power Act is to be used for the purpose for which it was enacted, the answer does not lie in Federal payments to entice non-Federal interests to conform to the intent of the law. Instead, the answer lies in a more effective and more dedicated application of the law as it is written or as it may be clarified for those who fail to apply its present provisions to further the public interest.

The CHAIRMAN. We appreciate your appearance and testimony, Mr. Ullman.

Mr. ULLMAN. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Hooker?

STATEMENT OF AUSTIN L. ROBERTS, JR., GENERAL SOLICITOR, NATIONAL ASSOCIATION OF RAILROAD AND UTILITIES COMMISSIONERS

Mr. ROBERTS. My name is Roberts. The arrangement was that I was to precede Mr. Hooker, if that is all right with you.

The CHAIRMAN. Very well, Mr. Roberts.

Mr. ROBERTS. Mr. Chairman and members of the subcommittee, my name is Austin L. Roberts, Jr. I am general solicitor for the National Association of Railroad and Utilities Commissioners, with offices at 5310, ICC Building, Washington, D.C. I appear here on behalf of that association in support of H.R. 5309, a bill to amend part I of the Federal Power Act.

The National Association of Railroad and Utilities Commissioners is a voluntary organization embracing within its membership the members of the public utility regulatory commissions and boards of the several States of the United States. These are the State agencies

charged by statute with the duty of regulating the public utilities operating in their respective States. The Federal regulatory commissions, the Interstate Commerce Commission, Federal Power Commission, Federal Communications Commission, Civil Aeronautics Board, and Securities and Exchange Commission are also members of the association, but on matters of legislation the association does not presume or attempt to speak for the Federal agencies. The association in 1954 established a special committee on legislation amending the Federal Power Act. After review of proposed and possible amendments to part I of the Federal Power Act, this special committee recommended to the association for its endorsement three amendments to part I of the act. The association endorsed these amendments and they were introduced in the 84th Congress and subsequent Congresses in a single bill by Congressman J. Vaughan Gary, of Virginia. Numerous of the individual State regulatory commissions have also registered their support of this legislation: through the adoption of resolutions or the like.

The proposed amendments to part I of the Federal Power Act,. contained in H.R. 5309, are designed to accomplish three objectives: 1. To amend section 10(f) to provide that charges shall be paid by Federal power projects which are benefited by water-control improvements constructed by other parties.

2. To amend section 10 to increase the standard for waiver of license provisions from 100 horsepower capacity to 2,000 horsepower capacity.

3. To clarify the takeover provisions in section 15 so as to estabilsh the preferment of the holder of the license at the time of expiration of the license.

Section 10 (f) of the Federal Power Act provides that when hydroelectric power project licensees are benefited by reservoirs or other headwater improvements constructed by other parties, including the United States, they shall reimburse the owner of the headwater improvement for such part of the annual charges for interest, maintenance, and depreciation thereon as the Federal Power Commission may determine to be equitable. The proposed amendment provides that is those cases where any hydroelectric power project owned by the United States is benefited by the construction and operation of any reservoir by another party, the United States shall pay to the other party an annual charge, the payment to be determined in the same manner as for charges paid by non-Federal interests. Such an amendment appears to do simple equity.

H.R. 5309 would amend the Federal Power Act by repealing section 10(f) and adding a new section 31 which would provide that charges shall be paid by Federal power projects which are benefited by stream improvements constructed by other parties, in the same manner as charges are provided for in the case of non-Federal projects. The proposed section 31 would provide for like treatment of both Federal and non-Federal power projects.

Where a private party has constructed a reservoir or other wateruse facility which benefits a Federal power project, it is simple equity to provide that the Federal power project should share the costs of that facility by which they are benefited. There appears to be no sound reason why the costs of stream benefits should not be spread among

all beneficiaries, and thereby to all ultimate consumers, without exception.. Equity and fairness dictate that the present exception extended non-Federal power projects should be removed, and this would be accomplished by the enactment of H.R. 5309.

It should be kept in mind that these benefit charges are not charges for water, the natural resource involved, but are charges for supplying the proper time or control factor-that is, withholding water in a reservoir and releasing it at such time as it is needed and can be used. Besides the equity provided for in H.R. 5309, there is also the contribution to sound public utility regulation which would be accomplished by this bill. Generally speaking, the rates of electric utilities, which are fixed by the appropriate regulatory commissions, are premised upon the cost of rendering the service. The equitable apportionment of the cost of water control benefits to all parties and agencies involved, would contribute to a more realistic and accurate determination of the cost of power whether from a Federal or non-Federal power project. This, in turn, would lead to a more economically sound determination of rates for the ultimate consumers of the electric energy. In the final analysis, it is the consumers who must pay the costs; and while the nationwide effect, dollarwise, of levying benefit charges against both Federal an non-Federal power projects might be nil, nevertheless the consumers of energy generated at individual Federal or non-Federal power projects will receive energy at rates which more accurately reflect the cost of the power.

Section 10 of the Federal Power Act gives the Federal Power Commission the authority to waive any license conditions, except the 50year terms, in the case of a complete power project of not more than 100 horsepower capacity. The proposed amendment would increase this standard for waiver to 2,000 horsepower. If such an amendment is made, the Commission would be relieved of the administrative burden relating to the small hydroelectric projects which are primarily of local concern and not affecting the national interest, and it would also relieve the many owners of small dams throughout the nation.

Section 15 of the act provides that if the United States desires to do so it may take over a licensed project at the end of the license period, but that if the United States does not exercise this option, the Commission may issue a new license to the original licensee or to a new licensee. The statute may have been intended to give a license holder the first choice at the end of the license period, if the United States does not exercise its right of acquisition. Section 15, however, is not clear on this point and it is a matter of serious financial concern to those companies which are seeking licenses for constructed projects or are refinancing. If the license holder does not obtain a renewal license, it could cause a serious disruption of rates where lower cost hydroelectric power has to be replaced by higher cost steam generated electric power. It could also cause a serious disruption in service where other energy must be obtained to replace that lost by termination of energy received from the hydroelectric source. The proposed amendment would clarify section 15 so as to establish the preferment of the holder of the license at the time of expiration of the license. Accordingly, the National Association of Railroad and Utilities Commissioners feels that H.R. 5309 is meritorious legislation in the

public interest, and urges your subcommittee to favorably report it for enactment.

I also have with me from our National Association Judge H. Lester Hooker, a member of the Virginia State Corporation Commission, who is a member of our committee on legislation amending the Federal Power Act and is also chairman of the standing committee on legislation of our association.

Mr. ROGERS of Texas. Mr. Roberts, without this legislation, could the Federal Government enter into the contracts anticipated herein? Mr. ROBERTS. As to H.R. 5309, the provisions on page 3, section (b), would recognize the agreements where they are entered into, but otherwise would provide for the assessment of annual charges.

Mr. ROGERS of Texas. No; can the Federal Government right today enter into the contracts anticipated in this legislation?

Mr. ROBERTS. Well, I think the agreements you are talking about are in the other two bills, in the Metcalf bill and in the Hemphill bill. I would say as to those bills our association has not considered them and taken a position on them. The provisions endorsed by our association are the ones in the Gary bill.

Mr. ROGERS of Texas. No, I am talking about this: Does the Federal Government have the authority to pay non-Federal owners of installations referred to in this legislation the same as they would have if these bills were passed?

Mr. ROBERTS. No, at present the Federal Government is not required to pay for benefits received from nonfederally owned projects. Mr. ROGERS of Texas. I am not talking about that. I know it is not required. What I am talking about is: Does it have the power to pay for them if the Federal Government wants to pay for them right now?

Mr. ROBERTS. And could they pay for them if they so desired? Mr. ROGERS of Texas. Could they say to John Doe, who is an upstream developer who has reservoirs up there and grants benefits to downstream owners-could the Federal downstream installation pay the upstream man voluntarily?

Mr. ROBERTS. Very frankly, I do not know the answer to your question, but I would doubt, if not required by statute, they would be justified in spending that money.

The CHAIRMAN. Well, what he means is: Is there authority for the Federal Government to enter into such an arrangement? Do you know the answer to that?

Mr. ROBERTS. No, I do not.

The CHAIRMAN. All right.

Mr. GATCHELL. Mr. Chairman, would you like the answer to that question?

The CHAIRMAN. Yes, I surely would.

Mr. GATCHELL. There are various statutes under which the Federal projects are operated, and some of them do not provide for the exchange of energy. The exchange of energy by a Federal project with a non-Federal project would be authorized in this bill and is not authorized under some of the marketing agreements, marketing laws, now in effect.

The CHAIRMAN. Mr. Gatchell, there is a difference between the exchange of energy and the authority to repay one project, as to another, of the Federal Govenment.

Mr. GATCHELL. Yes, sir.

The CHAIRMAN. Now, is there authority under the law for that? Mr. GATCHELL. One Federal project at this time does not repay another Federal project under the present laws as it stands today. The CHAIRMAN. I know it does not do it. But under the law, could it be done if it wanted to?

Mr. GATCHELL. I cannot answer categorically "Yes" or "No," Mr. Chairman. I know they cannot exchange. They cannot exchange

energy.

Mr. Mason calls attention to the fact that the Bonneville Power Administration cannot purchase energy. And therefore I would assume that it could not purchase energy from even a Bureau of Reclamation project.

The CHAIRMAN. The Southwestern Power Administration may enter into exchange agreement for the interchange of power. But I question whether there is any authority for the Federal Government to reimburse any private facility for any benefits it may get from the operation of the private facility. And that is what we are trying to clear up.

Mr.

GATCHELL. I would have serious doubt as to that, Mr.

Chairman.

The CHAIRMAN. Will you get the information and supply it for the record?

Mr. Moss. Yes. I have some questions.

How do the utility commissioners of the several States endorse these proposals?

Mr. ROBERTS. How do they endorse them? Some of the individual States have endorsed the Gary proposal by resolutions adopted by the various commissions. Through our association they have endorsed it by resolution in the association.

Mr. Moss. Well, how many commissioners were participating, representing how many States, and by what vote was the resolution adopted?

Mr. ROBERTS. I do not have that information with me at this time. I can obtain it.

Mr. Moss. Are all States represented?

Mr. ROBERTS. In our association, all of the States are represented except Alaska, which does not have a regulatory commission functioning at the State level.

Mr. Moss. Now, are these considered in an annual convention?

Mr. ROBERTS. Yes. We operate through annual conventions, in which these matters are presented to the association, and in between annual conventions the association's affairs are in the hands of an executive committee, which meets about quarterly during the year. Mr. Moss. Is this resolution one of the executive committee, or one of the association in convention?

Mr. ROBERTS. It is one of both. As I said in the statement, the association established a special committee on legislation amending the Federal Power Act. And there is report back to the association each year at the annual convention.