ing upon whether the upstream storage were Federal as compared to a private utility.

58. It is apparent that considerable amounts of money are involved and that the repeal of section 10 (f) would create a situation in which the Federal Government would be at a disadvantage.

59. Stated simply the case is this: The rivers belong to the people. The granting of a license is a valuable privilege but does not confer ownership. Such licenses are premised on the project being part of a comprehensive plan, which in turn is premised on coordinated operation, or should be. The Brownlee Dam license in article 39 pins this down so as to remove any doubt in that case. If there is need for legislation to force coordination in other cases, then the appropriate amendment would be part of S. 584 to improve section 10(a) of the act.

60. We all agree on the desirability of coordination. We agree the present situation is not entirely satisfactory. The public interest requires coodination. We do not want private utility control of the Columbia River. The answer is not in amending section 10 (f) but in tightening up section 10 (a) of the Federal Power Act to require coordination as a condition of every license.

61. As recently as May 28, 1959 the American Public Power Association convention at Seattle adopted the following resolution opposing both H.R. 5309 (reintroduced by Representative Gary on March 5, 1959 and which is the same as his previous bill H.R. 2438) and S. 1782:

"Whereas S. 1782 and H.R. 5309 would amend section 10(f) of the Federal Power Act to require downstream Federal dams to pay charges to upstream private utility corporations for river regulation at upstream dams; and

"Whereas such bills would not be in the public interest in that they would require the Federal Government to pay a rental on a public resource: Now, therefore, be it

"Resolved, That the American Public Power Association opposes S. 1782 and H.R. 5309 in their present forms."

62. In order that the Magnuson bill S. 584 may most fully assist in clarifying section 10 (a) of the Federal Power Act by expressly including "coordinated operation" within the meaning of "comprehensive plan", it is proposed that the following four amendments be made in S. 584.

1. Where the word "integrated" appears in the following three places, add "or coordinated"—

(a) In the title of the bill.

(b) Page 2, line 2.

(c) Page 2, line 9.

2. Page 2 line 11 delete the word "comprehensive".

This change is desirable to emphasize that the comprehensive plan is the best of alternative plans.

3. After page 3 line 24 insert definitions of integrated and coordinated operation as follows:

"(21) 'Integrated operation' with respect to a hydroelectric project, plan or development means that mode of unified operation and management by one owner of all hydraulic and electric facilities within the river basin and the scheduling of water and electricity, including interchange of power outside the river basin, so as to achieve the optimum load carrying capability.

"(22) 'Coordinated operation' means integrated operation of the facilities of two or more owners."

These two definitions are intentionally limited to electrical and hydraulic integrated operation. Definitions 17, 18, 19 and 20 cover the broader multiple purpose aspects and achievement of maximum not public benefits.

4. Add the following new section after line 23 page 4:

"SEC. 3. Subsection (c) of section 10 of said Act, as amended, is further amended by deleting the first three words and substituting therefor:

"That the license shall operate the project works on an integrated or coordinated basis. The licensee ***"

63. Conclusion: We respectfully urge that enactment of S. 1782 would be against the public interest. We oppose S. 1782. Instead we urge enactment of

S. 584 with the refining amendments submitted above.

Respectfully submitted.

51029-60

-6

GUS NORWOOD, Executive Secretary.

Hon. OREN HARRIS,

Northwest Public Power Association., Inc.
Vancouver, Wash., August 19, 1959.

Chairman, Committee on Foreign and Interstate Commerce

House Office Building,

Washington, D.C.

DEAR REPRESENTATIVE HARRIS: If the hearing record on H.R. 5309, H.R. 7201, and H.R. 7494 has not yet been closed, we would very much like to add a clarification.

Many witnesses, including myself, were under the impression that the Montana Power Co. license for project No. 5 (Kerr Dam) issued May 23, 1930, was silent on the subject of coordination.

Actually article 21 of that license requires:

"Art. 21. The operations of the licensee, insofar as they affect the use, storage, and discharge from the storage of the water of Flathead Lake, shall at all times be controlled by such reasonable rules and regulations as the Secretary of War may prescribe in the interests of navigation, and as the Federal Power Commission may prescribe in the interests of flood control and of the fullest practicable utilization of the waters of Flathead River and the Clark Fork for power, irrigation, and other beneficial public uses."

It would appear to us that "fullest practicable utilization of the waters" clearly requires coordination.

This strengthens our point in testifying against S. 1782 that there is no reason for now subsidizing or rewarding Montana Power Co. for doing what their license arleady requires them to do.

Sincerely,

GUS NORWOOD, Executive Secretary.

The CHAIRMAN. The other witnesses that were to have been heard today are here in Washington. The committee will adjourn until Monday, the 27th. At that time, we will have other witnesses from the West and Northwest here to testify. Mr. Metcalf and Senator Murray both were anxious for them to have an opportunity to testify while they were here testifying before the Senate. The committee is endeavoring to work out a cooperative program with them.

We will try to get to them on the 27th and sandwich it in during the 27th and 29th.

You have some witnesses, Mr. Hemphill, and if they will be here on the 27th, we will hear them.

(Whereupon, at 12:42 p.m., the committee was adjourned, to recon vene on Monday, July 27, 1959.)

UPSTREAM BENEFITS

MONDAY, JULY 27, 1959

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMUNICATIONS AND POWER OF THE

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 1334 of the New House Office Building, Hon. Oren Harris (chairman) presiding.

The CHAIRMAN. The committee will come to order.

Today we resume hearings on three bills-H.R. 5309 by Mr. Gary of Virginia, H.R. 7201 by Mr. Metcalf of Montana, and H.R. 7494 by Mr. Hemphill, South Carolina, a member of this committee-on the subject of comprehensive operation of hydroelectric power sources of the United States. This is a continuation of the hearings held several days ago in order to give opportunity for witnesses who could not be here at that time and who were to be in Washington, I believe, this week on hearings before the Senate committee.

First, we will hear Mr. Arthur Williams, vice president and general counsel of the South Carolina Electric & Gas Co.

We have our colleague here from South Carolina, Mr. Riley, whom we have known for a long time and whom we are glad to welcome before this committee. I believe he would like to have the privilege of making a statement and presenting his constituent. We are glad to give you that privilege.

Mr. RILEY. Thank you, Mr. Chairman and gentlemen.

My constituents are tremendously interested in this pending legislation. Today we have Mr. Arthur Williams, Jr., who is vice president and general counsel of the South Carolina Electric & Gas Co., who will present our thinking in regard to this legislation. Mr. Williams is one of our foremost businessmen in the State and one of our leaders. I know that what he has to say will be of interest to you. Mr. WILLIAMS. Thank you, Congressman.

The CHAIRMAN. Thank you, Mr. Riley. We are glad to have you with us today. We know of your continuing interest in this subject on matters affecting your district.

You may proceed with your testimony.

STATEMENT OF ARTHUR M. WILLIAMS, JR., VICE PRESIDENT AND COUNSEL, SOUTH CAROLINA ELECTRIC & GAS CO.

Mr. WILLIAMS. Thank you.

Mr. Chairman and gentlemen of the committee, at the outset let me thank you for permitting me to appear before you, and compli

ment you on the careful but expeditious manner in which you have considered this legislation. I am keenly aware of the multitudinous demands made upon your time, so I shall make my statement as brief as is commensurate with a proper presentation of the subject.

The South Carolina Electric & Gas Co., which I represent, is an investor-owned utility serving central and southern South Carolina with electricity and natural gas. It has served this section for over 100 years. It has an installed generating capacity of 890,000 kilowatts, of which 161,000 kilowatts is hydro and 729,000 kilowatts is steam.

During the last year it sold 3,007,566 thousand kilowatt-hours of electricity to 175,496 customers and 7,351,952 thousand cubic feet of natural gas to 35,136 customers.

We are vitally interested in the legislation now being considered by your subcommittee, and especially the portion which provides that in river basins where hydroelectric facilities are used chiefly for peaking purposes or for producing energy other than firm types, benefits flowing to Federal facilities must be considered as well as those flowing from Federal installations.

This interest arises from a situation which presently obtains on the Savannah River, the stream marking the boundary between our State and our neighbor to the south, Georgia.

South Carolina Electric & Gas Co. has maintained on this river, for approximately 50 years, a hydroelectric facility known as the Stevens Creek plant. Shortly after World War II, the United States, acting through the Army Engineers, completed a dam and hydroelectric generating station a few miles upstream at Clark Hill. Acting in accordance with authority embodied in the act, and permit from the Secretary of War issued pursuant thereto, under which Stevens Creek Dam was constructed, the Federal Power Commission moved in 1952 to assess the annual charge to be paid by our Company to the United States for alleged benefits derived by Stevens Creek plant from the Clark Hill facility.

We were then informed by representatives of the Federal Power Commission that their studies over the period 1950 to 1956, inclusive, had resulted in these significant figures:

(a) The benefit to Stevens Creek from Clark Hill amounted to $247,498;

(b) The benefit from Stevens Creek to Clark Hill amounted to $318,000; and

(c) The damage to Stevens Creek from Clark Hill amounted to $896,900.

Thus, it can be seen that if either the damages resulting to our facility from the operation of the Federal facility, or the benefits from our facility to the Federal facility could have been used in computing the annual charge, we would have been relieved of paying anything.

We felt under those circumstances we should not be required to pay anything to the Federal Government for what we got from Clark Hill in view of the damage we got and also in further view of the benefit we rendered it.

Now, if the Federal Power Commission has taken the position that it cannot employ either of these last two factors, in other words, our

benefit to Clark Hill or the damages we received from Clark Hill, in computing the annual charges that we owe, I think certainly as far as the benefits to Clark Hill from our Stevens Creek facility are concerned, the Federal Power Commission is well supported by judicial decisions. That is why we feel that a change in the Federal Power Act is advisable.

Now, your bill 7494 would permit the consideration of that factor in making the computations for the annual charges due from our plant.

To me this seems to be an equitable and fair result.

Now, this conclusion is not merely mine nor that of other representatives of investor-owned utilities.

On July 16 last, the General Counsel of the Federal Power Commission testified before the Subcommittee on Power and Communications of the House Committee on Interstate and Foreign Commerce that the principle here involved proceeded on the plain principle of fairness and equity in placing all electric power consumers on an equal footing those served from Federal powerplants and those served from other powerplants, either publicly or privately owned. And this brings up a point used in opposition to the bill, namely, that the rivers of the United States are owned by the people of the United States and they should not have to pay rent for their property. Like most generalities, this sweeping and unquestionably correct statements embodies two salient reasons why it is not applicable to the case at bar:

(a) The charges invloved are not charges for water, but are a sharing of the cost of facilities which makes water available for the generation of electricity in more desirable amounts and at more propitious times.

As you gentlemen know, the time you can get water to make electricity is of vital importance because that spells the difference between firm power, secondary energy, and dump power.

Further, (b) the consumers of power from non-Federal dams compose a rather large percentage of these same people of the United States in whom is so rightly and justly vested the control of the navigable waters of these 49, and soon to be 50, United States.

The point first made needs very little elucidation. The Federal Power Act itself says whenever any licensee hereunder is directly benefited not by the water in the stream but by the construction work of another licensee, the Federal Power Commission shall assess charges.

The Federal dams which merely use the waters of these rivers do not pay for that use.

Of course, on the other hand, the non-Federal dams do. First, they must pay an annual license fee to the Federal Power Commission and they must assume certain far from negligible burden when they accept the license and build the dam.

Now, as to the second point, that 85 percent of the power consumers in the United States who take hydroelectric power take from non-Federal dams, testimony was given to that effect before a subcommittee of the 2d session of the 84th Congress on H.R. 7468, a bill similar in many respects to the bill 7494 here under consideration.