SEC. 3. Electric power and energy generated at the projects and in the opinion of the Secretary of the Army not required in the operation of such projects shall be delivered to the Secretary of the Interior, who shall transmit and dispose of such power and energy to Canada in accordance with agreements under section 2 hereof, and in the United States in such manner as to encourage the most widespread use thereof at the lowest possible rates to consumers consistent with sound business principles. The Secretary of the Interior shall prepare rate schedules having regard to the recovery (upon the basis of the application of such rate schedules to the capacity of the electric facilities of the projects) of the cost of producing and transmitting such electric energy, including the amortization of the capital investment allocated to power, over a reasonable period of years. Preference in the sale of such power and energy shall be given to public bodies and cooperatives. The Secretary of the Interior is authorized, from funds to be appropriated by the Congress to acquire by purchase or other agreement such additional transmission lines and related facilities as may be necessary in order to make the power and energy generated at the projects for use in the United States available in wholesale quantities for sale on fair and reasonable terms and conditions to facilities owned by the Federal Government, public bodies, cooperatives, and privately owned companies, and he is further authorized to enter into agreements with other electric power systems for the sale, transmission, wheeling, exchange, or purchase of electric power and energy and to provide for interconnection of the projects with one another and with other electric power systems in the United States and Canada. All moneys received from sales of electric power and energy shall be deposited in the Treasury of the United States as miscellaneous receipts. Downstream benefits provided by the projects and received in the United States from Canadian authorities in the form of power and energy shall be received, transmitted, and disposed of by the Secretary of the Interior pursuant to this section.

INTERIOR DEPARTMENT INTRODUCTORY STATEMENT TO SUPPLEMENTAL REPORT

Early authorization and construction of the Passamaquoddy international tidal power project and concurrent development of the St. John River in Maine was strongly recommended today to Secretary of the Interior Stewart L. Udall by the Passamaquoddy-St. John River Study Committee.

"We are firmly convinced that construction of the Passamaquoddy-Dickey project as a Federal development will benefit Maine, New England, the Maritime Provinces, Canada, and the United States of America," the committee reported.

The report-culmination of an intensive 3-year economic and engineering study recommended by Senator Edmund S. Muskie of Maine to the late President Kennedy-is being transmitted to the Governors of New England States, interested Federal agencies, and appropriate national and provincial representatives of the Dominion of Canada for comment prior to final approval by Secretary Udall and subsequent transmittal to President Johnson.

The committee pointed out that this procedure is in accord with established Federal criteria for water resource development as specified in Senate Document No. 97, 87th Congress.

In making its recommendations, the committee said:

"Under established Federal financial procedures and criteria, we have found the proopsed Passamaquoddy-Dickey project, Maine and New Brunswick, engineeringly and financially feasible. For the first time in the history of this Nation, it would harness the enormous energy of the ocean's tides for the production of relatively low cost and abundant electricity in the New England area. It would provide immediate and sustained employment opportunities, flood control, recreation, an international employment opportunities, flood control, recreation, an international tourist attraction, hydroelectric generation on the upper St. John River in Maine and downstream benefits in Canada." Highlights of the report follow:

Initial installation of 500,000 kilowatts at Passamaquoddy Bay to harness the now-wasted energy of the tides with ultimate installation of 1 million kilowatts when future power requirements warrant such development. Reversible turbines would be used at Passamaquoddy to pump water for power generation during infrequent neap tide intervals, thus assuring full utilization of the full installed capacity at all times.

Installation of 760,000 kilowatts and 34,000 kilowatts of capacity at Dickey Dam and Lincoln School reregulating dam, respectively. Dickey Dam would be located above the confluence of the St. John River and the Allagash River in order to preserve the wilderness character of the Allagash. The committee said the Allagash "is a major recreation resource of great potential significance to the Nation. If the Allagash is not preserved, it will mean that the Nation has lost access to an adventuresome outdoor experience which it has treatsured since early times."

Initial installation will provide 1,294,000 kilowatts of dependable capacity and 3 billion kilowatt-hours of electrical energy annually. Of this dependable capacity, approximately 1,100,000 kilowatts would be available to supply a 2-hour peak daily, approximately 200,000 kilowatts of base-load power, plus substantial quantities of off-peak energy. Because of the flexibility of the project, alternative methods of operation are possible. Power would be marketed at $19.75 per kilowatt-year for capacity and 3 mills per kilowatt-hour for energy-substantially less than composite costs of thermal generation in New England as estimated by the Federal Power Commission.

Transmission lines would be constructed to interconnect these project facilities and to deliver power to load centers in Maine and Massachusetts.

The Passamaquoddy-Dickey project would require a Federal resource investment of $896 million. Excluding nonreimbursible allocations to flood control. recreation, and area redeveolpment benefits-approximately 10 percent-the investment will be fully repaid with prescribed Federal interest from power revenues within 50 years after each power feature becomes revenue producing, the usual repayment procedure for Federal water resource projects. The benefit-cost ratio was found to be 1.47 to 1, more attractive than that reported a year ago.

Privately financed modern steamplants, nuclear plants, and pumped storage plants are not realistic economic alternatives to Passamaquoddy-Dickey in terms of power costs and efficient, economical operation. Such plants also would not provide equivalent values in water resource development, flood control, recreation, and area redevelopment benefits.

Federally financed modern fossil fuel or nuclear plants and pumped storage plants, which could produce power cheaper than Quoddy-Dickey, were similarly rejected. Such plants do not provide maximum benefits as required in Senate Document 97, 87th Congress, and in no case could they develop the energy of the tides or the energy of the uncontrolled flows of the St. John River. In the case of a Federal fossil fuel or nuclear plants, the committee noted the lack of basic congressional authority or clear history of congressional preference.

Substantial area redevelopment benefits and national economic benefits consist of 15.000 man-years of on-site employment for skilled and semiskilled workers, many thousands of additional man-years of employment in the manufacturing and transportation of materials and equipment, and sustained economic benefit derived from the availability of abundant, relatively lowcost power.

Basic project features would be constructed by the Corps of Engineers, U.S. Army, and the Department of the Interior would construct transmission lines and market project power. The basic congressional authority for general construction, operation, and power marketing by the two agencies is contained in the Flood Control Act of 1944.

The committee also noted that the Passamaquoddy-Dickey project-which requires Canadian approval-intrinsically contains "a concept of an international intertie between Canada and the United States in Northeast whereby the full economic potential of each nation could be fully realized to mutual maximum benefits."

It also said that the Department of the Interior, the major power marketing agency of the Federal Government, is "convinced that, in New England in the ensuing years, the development of pumped storage, conventional hydroelectric power, modern steam generation, and nuclear plants-whether public or privatewill be required."

"New capital investment by private industry in baseload plants will be absolutely essential. We are equally convinced that the Passamaquoddy-upper St. John project is a first and necessary step toward vitally needed economic rejuvenation" in New England, the committee concluded.

The report issued today was prepared under the supervision of Kenneth Holum, Assistant Secretary of the Interior for Water and Power Development, by a special committee established in 1961 and chaired by Morgan D. Dubrow, chief engineering adviser and assistant to Mr. Holum.

Concurrently, Mr. Dubrow also served as a member of a three-man Pacific Northwest-Pacific Southwest intertie negotiating team which recommended an 11 State combined public-private-Federal extra high voltage electric interconnection, recently endorsed by President Johnson as "launching a new era of cooperation between private and public power in the United States."

In receiving the committee's report, Secretary Udall stated: "The committee met its exacting assignment on a rational, scientific basis, and I hope the Nation will accept their findings on an equally rational, nonemotional basis.

"The race for the moon has many scientific ramifications, but none so challenging in terms of immediate benefit to man than the harnessing of the ever-wasting tides to generate electricity. This endeavor and the utilization of nuclear energy to desalt the ocean's waters will be important tests of our ability to create a great scientific society.

"The committee also took realistic cognizance of the importance of the Allagash River which has been recommended for national riverway status within the national park system. Its destruction would be a national loss. The Federal Government could not permit destruction of the Allagash, the last remaining wild river in the Northeastern United States, in order to develop the St. John River when prudent resource development will enhance the value of both. All conservationists should rejoice in this aspect of Mr. Dubrow's report," Secretary Udall said.

In 1961, Senator Edmund S. Muskie, of Maine, asked the late President Kennedy for a "careful and rigorous analysis" of an International Joint Commission report which found the Passamaquoddy-upper St. John River project to be engineeringly feasible but not financially sound under then assumed conditions of operations.

On President Kennedy's request, Secretary Udall instructed the committee to review the International Joint Commission report in light of changing patterns in electric generation and transmission technology, fuel costs, engineering advances, and electric demand.

The report also includes the detailed engineering and cost analysis for project construction prepared by Brig. Gen. P. C. Hyser, New England division engineer for the Corps of Engineers, and approved by Lt. Gen. W. K. Wilson, Jr., Chief of Engineers, U.S. Army.

SUPPLEMENT TO JULY 1963 REPORT

THE INTERNATIONAL PASSAMAQUODDY TIDAL POWER PROJECT AND UPPER ST. JOHN RIVER HYDROELECTRIC POWER DEVELOPMENT, AUGUST 1964

REPORT TO STEWART L. UDALL, SECRETARY, U.S. DEPARTMENT OF THE INTERIOR BY PASSAMAQUODDY-ST. JOHN RIVER STUDY COMMITTEE

LETTER OF TRANSMITTAL

U.S. DEPARTMENT OF THE INTERIOR,
OFFICE OF THE SECRETARY,
Washington, D.C., August 3, 1964.

Memorandum to: Secretary of the Interior.

From: Passamaquoddy-St. John River Study Committee.

Subject: The international Passamaquoddy tidal power project and upper St. John River hydroelectric power development.

We submit herewith the report which supplements the earlier report which was transmitted to President John F. Kennedy on July 1, 1963, entitled "The International Passamaquoddy Tidal Power Project and Upper St. John River Hydroelectric Power Development." This report was prepared under the supervision of Assistant Secretary Kenneth Holum, Water and Power Development. Under established Federal financial procedures and criteria, we have found

the proposed Passamaquoddy-Dickey project, Maine and New Brunswick, engineeringly and financially feasible. For the first time in the history of this Nation, it would harness the enormous energy of the ocean's tides for the production of relatively low cost and abundant electricity in the New England area. It would provide immediate and sustained employment opportunities, flood control, recreation, an international tourist attraction, hydroelectric power genedation on the upper St. John River in Maine and downstream power benefits in Canada.

This report contains the findings from the additional investigations completed by the Corps of Engineers, U.S. Army, and this Department since President Kennedy's acceptance of the previous report on July 16, 1963. In directing these studies be undertaken, the late President recognized that since the project involves international waters, equitable agreements must be reached with the Canadian Government before its construction could be started. The Department of State was directed to proceed toward accomplishing such agreements. We have been, and will continue, to assist as necessary in this endeavor.

Lt. Gen. W. K. Wilson, Jr., Chief of Engineers, U.S. Army, by letter of July 29, 1963, proposed the establishment of an eight member Army-Interior advisory board on the Passamaquoddy and upper St. John River project composed of four representatives from each agency. The purpose of this board was to advise and guide both agencies in the additional work required to supplement the July 1 report. By letter of July 30, 1963, the Department accepted the proposal. Later the board was augmented to include representatives of the Department of Commerce and the Federal Power Commission as participating members, and representatives of the Bureau of the Budget, the President's Office of Science and Technology, the President's Council of Economic Advisers, and the Atomic Energy Commission, as observers.

The board contributed immeasurably in both the evaluation and investigation of the project and in perfecting the report. Each of the agency representatives contributed generously of his talents and time, but have not yet concurred in this report. The results of this joint effort are embodied in this report.

The basic project would be comprised of the Passamaquoddy tidal power development with an initial installation of 500 megawatts and an ultimate installation of 1,000 megawatts; the Dickey Reservoir and powerplant with an installed capacity of 760 megawatts; the Lincoln School reregulating reservoir and powerplant with an installed capacity of 34 megawatts; and a transmission system interconnecting these plants and delivering power to load centers in Maine and in the vicinity of Boston, Mass. The Passamaquoddy powerplant would utilize the two-pool plan proposed and described in the International Joint Commission's report of April 1961 and all features would be identical with the exception of the powerplants.

In the International Joint Commission plan, an installed capacity of 300 megawatts was proposed and the powerplant was to be operated to produce load factor power to serve a local area. In the present proposal, an initial capacity of 500 megawatts would be installed and ultimately 1,000 megawatts, and the plant would be operated to provide peaking power to supply an expanded marketing area of New England and New Brunswick. The powerplant would incorporate reversible features in the turbines which would enable the generating units to be operated as pumps during the periods of neap tide so that the dependable capacity would be determined by the installed capacities in the powerhouses and not by the magnitude of the neap tide. An insignificant increase in the investment cost and in the cost of energy for pumping would be required to accomplish this improvement.

The Dickey and Lincoln School powerplants on the Upper St. John River would be electrically interconnected with the Passamaquoddy powerplant and coordinated so as to produce the optimum benefits. The operation would be extremely flexible and considerable quantities of load factor power could be provided for the local areas and, in addition, very substantial quantities of peaking power. In the current analysis, a peak of 2 hours' duration was considered a very likely occurrencce and this was selected for the basis of the analysis.

The total power output of the project would be 1,794 megawatts as the ultimate installed capacity. However, in the initial plan, only 1,294 megawatts is recommended, which can be installed in stages to meet the load demands. Generation will be provided at-site of about 3 billion kilowatt-hours and downstream benefits in Canada of 656 million kilowatt-hours, annually. The cost of the project is approximately $896 million, including a transmission system at a cost of

$87 million. This investment would provide annual benefits of $46.86 million, of which $42.51 million would be power, $2.03 million recreation, $2.28 million area redevelopment and $0.04 million flood control benefits within the United States, with significant flood control benefits to Canada which have not been evaluated in the project benefits.

The recommended benefit-cost ratio of the Passamaquoddy-Dickey project is 1.47 to 1, of which the Dickey and Lincoln School benefit-cost ratio is 2.25 to 1, and the Passamaquoddy tidal power project's benefit-cost ratio is 1.04 to 1. The segments of this project complement each other and together create values which are greater than would be obtained from either operating independently. These benefit-cost ratios were determined for a 100-year period of analysis with interest at 3 percent.

With an allocation of about 10 percent to the nonpower features, the investment in the project can be repaid with interest at 3 percent within a 50-year period after each unit becomes revenue producing from revenues from the sale of power at the following rates:

Capacity: $19.75 per kilowatt-year.
Energy: 3 mills per kilowatt-hour.

The above prices are lower than power that can be produced by privately financed new modern conventional steamplants, nuclear powerplants using light water reactors, and pumped storage plants with the transmission essential to deliver power to the load centers.

In accordance with the established procedures and criteria for project formulation and evaluation, we have also considered the least costly alternative. If federally financed, conventional steam, nuclear powerplants, and pumped stor age plants would cost less than the project. However, the proposed development of the Passamaquoddy-Dickey project will provide more benefits than just power supply. The enormous and perpetual energy of the ocean's tides will be utilized instead of wasted. The construction of this project will provide greatly expanded employment opportunities as well as attractive recreational opportunities for an expanding population, with a resulting impact on the economy of the State of Maine and surrounding areas.

In view of the extensive previous investigations made on the project dating back to 1922 and the additional studies made in connection with the review of the report requested by the late President Kennedy, plus the work accomplished under the advice of the Passamaquoddy Advisory Board, we are firmly convinced that the construction of the Passamaquoddy-Dickey project as a Federal development will benefit Maine, New England, the Maritime Provinces, Canada, and the United States of America. Agreements, of course, must be reached with the Canadian Government.

We recommend early consideration moving toward possible authorization of the international Passamaquoddy tidal power project and the upper St. John River developments for construction by the Corps of Engineers, U.S. Army, and marketing of power and construction of transmission lines by the Department of the Interior.

As specified in Senate Document 97, 87th Congress, we are transmitting this report to the interested Federal agencies, the Governors of the New England States, as well as to the appropriate national and provincial representatives of the Dominion of Canada for comment. Such comments as are received will be reviewed and incorporated in your final report to the President of the United States.

MORGAN D. DUBROW, Chairman.
JOSEPH E. GUIDRY, Project Engineer.