Hearings

› permit the full diversion of the quantities of water required for the articipating projects named in this bill without causing the flow at ee Ferry to fall below 75,000,000 acre-feet in 10 years under any reccurrence of drought such as has occurred in the past.

Other testimony of my associates indicates that power generated at len Canyon Dam will cost very much less than the 6-mill rate pro›osed to subsidize irrigation, and power at other more expensive sites.

Glen Canyon power cost estimate summary

Power at bus
bar, mills
per kilowatt-
hour

Power delivered 250 miles, mills per kilowatthour

Power allocation to be returned with 22 percent interest in 50 years

. Power allocation to be returned with 22 percent interest, and irrigation allocation without interest in 50 years

. Total cost of dam and powerplant to be repaid with 22 percent interest in 50 years....

Not only is it proposed to charge this artificially high rate of 6 mills out to continue this charge for decades after the power investment has Deen returned with interest in order that subsidy may be provided for a hundred years under H. R. 3383 and according to the testimony of proponents I have heard before the Senate committee 2 weeks ago. Why should power users be called upon to pay this high 6-mill rate for a century in an area described by the 9, later changed to 10, privately owned electric utilities at page 556 of the published transcript of hearings on H. R. 4449 of 1954 in part as follows:

this basin is one of the greatest sources of thermal energy production to be found anywhere in the world. Here are located vast deposits of coal, great underground reservoirs of oil and natural gas, mountains of oil shale, and perhaps more important than all these are the deposits of uranium ores. The potential thermal power resources of this area stagger the imagination.

Steam produced power is being furnished to the Atomic Energy Commission at around 4 mills. Why should the people in the Mountain States sitting on this enormous potential energy be called upon to pay a 50 percent higher rate for the next 100 years?

Under H. R. 4488 and supported by Governor Johnson in his testimony March 1, 1955, before the Senate subcommittee, appears the astounding philosophy:

Provided, That power produced pursuant to this act shall be sold at the highest practicable price to enhance the development of the upper Colorado River Basin.

How shall the potential industrial intermountain empire be developed under such a philosophy of high-cost power in comparison to the low-rate policies in the Pacific Northwest, TVA, the St. Lawrence, Niagara Falls, and elsewhere throughout the United States?

Naturally, I would be in favor of the economic development of hydroelectric power marketed under the provisions of the 1944 Flood Control Act which provides that power shall be disposed of—

in such manner as to encourage the most widespread use thereof at the lowest possible rates for consumers consistent with sound business principles.

59799-55-pt. 2- 34

This is not only sound for public power but is the recognized principle of all public regulatory bodies in fixing the rates of privately owned public utilities. The inclusion of costs not pertinent and re quired in the necessary production of power would not be allowed t any such regulatory body. Why should the Congress of the Unite States be asked to violate such a universally recognized principle of rate fixing?

Isn't it completely unrealistic that such 6-mill rate should be ertended for 100 years in spite of the almost universal optimism that power production costs will be lowered by production of atomic power! Scientists have told us that the cost of uranium if it could be 1 percent converted to electric energy would be only 0.013 mill per kilowatt-hour, or about one two-hundredths of the cost of fuel corsumed in conventional steam-electrical plants. During my profes sional experience the efficiency of fuel-steam power has increased percent until we are now converting more than 35 percent of the energy of fuel into electricity. How long will it be before we car economically convert just 1, 2, or perhaps 5 percent of atomic energy into useful electricity? Many believe the time is almost at handcertainly not more than a decade or two. Such accomplishment would make unsalable power at the 6 mills planned for the next 1* years.

It has been considered a sound policy, whenever the United States Government has acted as banker and has been repaid the dollars advanced for construction of water projects, that the local districts and public agencies shall thereafter not only cease to make further capital repayments to the United States but that such local agencies shail become the owners of the works they have paid for. Under the Coilbran formula power users continue to make capital repayments to irrigation after power capital is completely repaid with interest.

CONCLUSION

We have in this series of bills to authorize the Colorado River storage project an extraordinary effort to speed the expenditure of $1 billion in authorization of uneconomic projects, many not fully reported on, to be paid for in part by artificially high-cost power which may lose its market to lower cost competing power and thus fail to afford the subsidies to irrigation planned in the bills.

The storage projects are not required for the proposed participating irrigation projects. The proposed high charges for power for 100 years would tend to defeat the very industrial expansion sought in the upper basin of the Colorado.

To authorize these projects it is proposed to embrace a series of departures from existing general water policy without awaiting the enactment of new policies of general applicability following receipt of the Hoover Commission and Cabinet Water Policy Committee reports. I refer to:

1. The adoption of the "one basin account" idea.

2. The use of the "Collbran Formula" or "Modified Collbran Formula."

3. The fixing of artificially high power rates for a century to come in violation of the 1944 Flood Control Act, and of good sound business practice.

4. The adoption of an open and financial subsidy for projects yet nborn anywhere in the upper basin States.

Surely there is no crying shortage of foodstuffs or other agriculiral need which should demand such haste in authorization and xpenditure of a billion and a half dollars.

I therefore again urge that H. R. 270, H. R. 2836, H. R. 3383, H. R. 384, H. R. 4488, and similar bills to authorize the Colorado River torage and participating projects be not adopted.

Mr. ASPINALL. Without objection, the charts appearing at the back f your statement, with the agenda of the charts will be made a part f the record.

Hearing no objection, it is so ordered.

(The material referred to follows:)

'ABLE 1.—Accumulated costs to end of period-$1 million project at 22 percent

1 No capital repayment is made except by power and irrigation.

2 Except for interest compounded during the construction and development periods, it is assumed that apital costs not repaid by power or irrigation are repaid by the taxpayers in equal annual repayments to nd of repayment period with simple interest on remaining capital balances.

LIST OF CHARTS

-Composite of charts 1, 1.1, 2, 3, 4, and 5

Compound interest 21⁄21⁄2 percent

A-Composite of charts 1, 1.1, 2A, 3A, 4A, and 5A
Simple interest 22 percent

-Power project

Interest 22 percent

.1-Power project under modified Collbran formula

Interest 21⁄2 percent

Irrigation project under reclamation law

Compound interest 21⁄2 percent

2.1-Irrigation project under modified reclamation law

Compound interest 21⁄2 percent