Secretary UDALL. Mr. Dubrow is chairman of the team designated to conduct formal negotiations with the Canadian Government. Conferences were held on a technical level in December of 1963. However, we have not had the type of negotiations that would lead to agreement because we did not feel that we had all the technical data pulled together, and I think this report, for example, on the fishery side of the problem is something we had to have before we could start. I think that the Canadian officials certainly should be encouraged by the additional data we have developed and conclusions developed in this new report.

Mr. McINTIRE. So it has been a matter, Mr. Secretary, of sort of discussions of technical people with a mutual interest

Secretary UDALL. Yes.

Mr. McINTIRE. And there have been no formal discussions as between the two governments on the total aspects of the project. Secretary UDALL. That is correct.

Mr. McINTIRE. Mr. Secretary, on page 68 of the report in the discussion of marketing policy-I am not going to take time to go into it, but I think the paragraph, the last paragraph on the page, if you could prepare for us some further detailed memorandum as to whathow this is to be interpreted, I think it would be helpful, because I read this that

downstream benefits provided by the projects and received in the United States from the Canadian authorities in the form of power and energy shall be received, transmitted and disposed of by the Secretary of the Interior.

There are presently some installations which perhaps would get downstream benefits, and I would be interested in a memorandum to elaborate on how this would relate to some of the existing installations on which there are already agreements between the New Brunswick Power Commission and some of the private utilities for the purchase of power and how this would affect that, at your convenience.

Secretary UDALL. I will be very glad to provide you and the committee with a memorandum on this point.

Mr. McINTIRE. Thank you.

(The information requested is as follows:)

To date, no negotiations have been entered into between the Canadian Government and the United States regarding any phases of the PassamaquoddySt. John River project. One technical briefing session was held on December 4 and 5, 1963. The language contained in the report is of a general nature and intended to indicate to whom payment of downstream benefits would be made. No detailed discussions have been held either with the New Brunswick Electric Power Commission or the private utilities in the United States and it is impossible for us at this time to speculate or indicate on how these might be effected by any formal agreement between our two countries.

Senator MUSKIE. Mr. Secretary, I would like to ask this question. What are the essential differences between the project as reported last year and this report?

Secretary UDALL. Well, I want to summarize these because I think this is very important.

The current report contains a number of significant improvements in the design and cost of the project which make for more effective use of the tidal river flow resources for the production of lower cost power. These are the things we have achieved in the last year with this more refined study. The principal changes are these. One, in

creased dependable capacity output of the Quoddy powerplant by the addition of reversible turbines. This is a very important technological development, thus removing the limitation during extremely low tide by pumping in advance of such conditions.

Furthermore, these reversible pumps make it possible to operate Quoddy to meet peaks of 2 or more hours as needed. Under the earlier plan we were talking about just 1-hour peak. We can enlarge that, enlarge the performance of the plant.

Two, better utilization of the Upper St. John River by improved locations and designs of the Dickey and Lincoln School powerplants for optimum power generation.

Three, proven foundation data, design concepts, and cost data completely assuring the economic and engineering feasibility. These are matters that the corps, of course, has gone into.

Four, economic evaluation on required and exactng standards further testing financial feasibility. We used interest rates of 3 percent, the current cost, rather than the 2% percent which was in the earlier report which was a point that some people raised.

Five, the power costs are lower. For example, capacity charges a year ago were $24 per kilowatt-year. Now they are $19.75. Energy charges a year ago were 4 mills per kilowatt-hour. Now they are 3. This includes the transmission to load centers, 410 miles away.

These charges will completely repay the power resource investment with interest within 50 years after each power unit becomes ready to produce.

So these are some of the more significant improvements.

Senator MUSKIE. I cannot resist asking your reaction to criticism which has been directed at the project within the last week or two by a group of Maine people who called it a boondoggle. I wonder how you would react to that description of it.

Secretary UDALL. Well, I do not think that that helps this committee or helps us form any conclusions on this. I think what we need are engineers, scientists, and economists, economic analysts expressing hard-headed opinions on this. Our reputation is on the line, the reputations of these experts here with me are on the line.

Some of the same people here with me today worked on putting together this Pacific Norhwest-Southwest big electric power intertie. This is the boldest, most ambitious plan for electric power transmission in the history of the country, involving an investment of nearly three-quarters of a billion dollars. There was a great deal of skepticism about this 3 years ago. Whether we should attempt it, whether direct current transmission was engineeringly feasible, et cetera. But, we have the General Electric Co. and other people that are ready to go, and if the Congress acts this week, you are going to see some very exciting things happen.

So trying to be conservative, Senator, I would say that we think that the report we have prepared will stand the closest kind of scrutiny, and we think it certainly will stand any idle charges that anyone wants to make.

Senator MUSKIE. I think it is accurate to say that in all of your public discussions of this project, all the discussions in which your people, including these distinguished gentlemen with you, have been involved, you are concentrating entirely upon the merits of the project.

You have willingly opened yourself to questions directed at the merits of the project. And if those who have questions about it would also concern themselves with the merits of the project rather than with undertaking to describe it with colorful labels, then maybe we could stay on the merits and prove or disprove the feasibility of this project on that basis.

I remember when I visited the Bonneville project for the first time, I think it was in 1958, that I was told then something of the history of that project and how it was described back in the 1930's as a boondoggle producing power that never conceivably could be used in that area. What is the history of the use of Bonneville power?

Secretary UDALL. Well, it was criticized in the 1930's because there were no visible possible users of power of the quantity or magnitude that would be produced from the great dams that were built on the Columbia, Bonneville, and Grand Coulee. I think someone made the famous statement in the Senate, "Who will use the power? Who will buy it, jackrabbits?" There are a lot of jackrabbits in that region. And, of course, what you find if you go there today is the Aluminum Corp. of America, the Boeing Co., and other large industries that are consumers. I cannot help, Senator, but contrast the Northwest region of the United States with the Northeast region of the United States I am not saying this is the only key to growth, but I am saying that low-cost electric power produced at a major Federal project, serving as a yardstick function also, has certainly enhanced the whole economic picture of the Pacific Northwest, and I think that the New England region would equally benefit if we could get a project of this magnitude up there.

Senator MUSKIE. At one place in this report, I noticed that you emphasized the importance of the fact that now with the use of reversible turbines in the pumping operation, it is going to be possible to use the full capacity of the generators at Quoddy during any period when it is required. Would you want to elaborate on that?

Secretary UDALL. I would like Morgan Dubrow, the top engineer on this, to explain the reversible turbine for the committee because Allis-Chalmers and some other companies, the French, and others are working on this. This reversible turbine has just been developed in the last 2 or 3 years, and it is a wonderfully flexible instrument and opens up a whole new potential in terms of electric power generation. You might describe it.

Mr. DUBROW. Well, Senator, this reversible turbine either acts as a generator and a motor. When the water is flowing from the upper pool to the lower pool, it generates electricity. But it is so designed that this same generator can be used as a motor when you feed power into it. You can pump water from the lower pool into the upper pool. Now, what we would do, and what we intend to do, is to operate Quoddy during off peak periods and hold water in Dickey Reservoir. This will enable us to have available at all times power from Dickey to operate the reversible turbines at Quoddy.

Now, on 1 or 2 days out of each month you have a real low tide called a neap tide. On this particular day, the generators would not put out 10,000 kilowatts each unless you had a little more head.

Now, during the offpeak period, we would take energy from the Dickey project, operate the reversible turbines at Quoddy as pumps, raise the upper pool just a matter of a foot. Then, when the peak

comes on that evening, as has been projected by the Federal Power Commission as far in the future as 1980, you would have available the maximum capability of every single turbine at Quoddy. You could put all of them on the line and get at least 10,000 kilowatts out of each installed generator, thereby providing 500,000 kilowatts from Quoddy and over a million kilowatts when combined with Dickey.

Senator MUSKIE. Now, do I understand that the net effect of that is, first, to increase the amount of power that is available during those periods? And, second, to lower the cost?

Mr. DUBROW. Well, you lower the cost because all of the capacity is dependable and therefore you can sell all of it instead of a part of it. As a result, you can sell it at a lower cost. That is correct.

Senator MUSKIE. And the effect would seem to be, and I am speaking now as a layman, to redistribute the power from one part of the system and one period of time to another part of the system and another period of time.

Mr. DUBROW. This is correct.

Senator MUSKIE. At minimum cost, indeed, at no net cost.
Mr. DUBROW. That is right. That is correct.

Senator FONG. Mr. Chairman, may I ask the Secretary a question? Mr. Secretary, would you tell us what point of the study we are at now? How much more study do you have to give to this project? How much more money do you have to carry on what you are doing now so that we have an idea as to where we are on this project?

Secretary UDALL. Senator, I think this is a good question. I think we have reached the point where we are at really the final refining stage. As far as the Corps of Engineers is concerned, I think you will find that most of their studies are completed. I think this report which has just been completed ties most of the remaining loose ends. So I think we are well along. We do not have any big problems ahead of us, and we do have adequate funds to complete the final report. Senator MUSKIE. There are one or two other questions I have on technical aspects.

I think in the slides of the presentation you discussed this and in the report you discussed it, but it is important enough, I think, to emphasize again.

I am speaking of the question of realistic alternatives. I know you studied that. It was part of your responsibilities to study that. And I would appreciate it, Mr. Dubrow, if you would give us your findings in that respect.

Mr. DUBROW. Well, Senator, as required by Senate Document No. 97, we considered all possible alternatives to Quoddy and Dickey. A Federal nuclear plant would be less expensive. Now, the Congress has made it quite clear that these will be private developments, and they are not in a true sense an alternative to Quoddy. We also considered pump storage, and we found that pump storage, privately financed, was more expensive than Quoddy. We found that thermal steamplants privately financed were more expensive than Quoddy and Dickey. A cheaper alternative would be Federal pumped storage plants in New England, but this type of development does not offer, ast does Quoddy and Dickey, equivalent benefits in water resource development, in flood control, in outdoor recreation, and in the war against poverty. We found that an alternative-which would not really develop this resource-but which was cheaper would be a federally

financed steamplant. Certainly up to this point, the Congress has given no indication that they would have the Department of the Interior or U.S. Army Corps of Engineers build a Federal steamplant. So the real answer comes that if you want to develop ths resource, there is no alternative except to get on with the job.

Senator MUSKIE. Is there any substance, Mr. Dubrow, to the allegation that there would be a control problem for getting the generators at Quoddy on the line simultaneously?

Mr. DUBROW. Senator, in the Pacific Northwest, if I may use that as an example, we have a combined private, public, and Federal power system which encompasses some 12 to 15 million kilowatts of hydroelectric generation of which about 50 percent of it is controlled and operated by the U.S. Government. Now, these Government dams have anywhere from 14 to 20 generators in them and they are all integrated and synchronized electronically when they come on the line. They are controlled from one single center and they come on the line automatically. It certainly seems to me that in this age when we can put a satellite in orbit and control it with a computer, we can certainly put 50 or 100 generators at Quoddy on the line when they are needed to meet the loads.

Senator MUSKIE. I think it would also be useful, Mr. Dubrow, if you would discuss the approach to the financing, the general economics, and repayments of the project.

Mr. DUBROW. Well, Senator, in our economic analysis of this project, we use the procedures which are laid down in Senate Document No. 97.

Senator MUSKIE. Is that a part of the record, or is it available to us? We will make it part of the record if it is not too long.

(The procedures in S. Doc. 97 are published in app. I, on pp. 162– 176.)

Mr. DUBROW. And this document summarizes the recommendations which were made and adopted by the Senate from the Department of the Interior, Department of Health, Education, and Welfare, Department of the Army, Department of Agriculture, and the Bureau of the Budget in which we established procedures for project formulation. It was determined that since these water reservoir projects will last for at least a hundred years a project would be formulated on a hundred year basis. In formulating Quoddy and Dickey, this procedure has been used, and it is on that basis that the benefit-to-cost ratio is determined. But at the same time, consistent with the longestablished policy of the Government, of the executive branch of the Government, we have made certain that the revenues which will be produced from the power features of these projects would repay the Federal investment at 3 percent interest within 50 years after each unit becomes operable. This is consistent with the practice that we use in every project which we built throughout the country.

Senator MUSKIE. Do you expect to have-from the engineering point of view-any problems related to the corrosive effect of salt water?

Mr. DUBROW. Senator, this is one of the things that we gave serious attention to. The Allis-Chalmers Co. and other companies that we talked to, Baldwin-Lima-Hamilton, the Newport News, English Electric, they all assured us that the one-eighth stainless steel plating is specified for these turbines and this would protect them against any corrosive impact of sea water.