BREAK-DOWN OF GENERAL ADMINISTRATION

Mr. JONES. Then for General Administration I would like to have a statement giving a break-down as indicated in the attached state

ment.

Dr. RAVER. Just a moment; let me see if we can do that. I am not sure that we can prepare such a statement, because I am not sure we can get the information to you in time to have it go into this record.

Mr. JONES. I would like to have it in the record. The Bureau of Reclamation is going to give us a statement, and I do not see why you cannot.

Dr. RAVER. Except we are 3,000 miles away.

Mr. JONES. I would like to have the general administration breakdown, covering construction, amount recovered through services billed to others at cost; expenses of programs-power, navigation, flood control, irrigation.

Dr. RAVER. We will do the best we can.

(The information follows:)

1 Amounts reported here are total charges to construction overhead, including administrative and general, engineering, design, budget, legal, accounting, and related services chargeable to the construction overhead clearing account, including uncleared balances applicable to work in progress. Amount shown is net after billings for reimbursable work.

2 All of the Bonneville Power Administration's expenses are charged to the power program.

The above information is for Bonneville Power Administration. Similar data are not available for the Bonneville Dam project and the Columbia Basin project (Grand Coulee Dam).

FEBRUARY 27, 1946.

Columbia River power system-Table showing Federal Government's investment in generation and transmission facilities as of June 30, 1945

1 These ratios are based on present (6–30–45) data. The ultimate transmission ratio for Bonneville-Grand Coulee transmission system will be $78.72 according to present estimates. At present time investment is low per kilowatt inasmuch as system had to operate during the war period without adequate reserves and a large part of the service was to a few large loads adjacent to the basic grid system; future extensions to area load centers will increase the ratio.

The generation ratio of $131.05 at Grand Coulee is high because only partial power installation has been made but most of powerhouse investment is already in the account. The ultimate ratio will be $73.22 based on present estimates.

These ratios are based upon estimated installed kilowatts. Based on estimated prime power, the ultimate ratios are estimated as follows: Transmission system, $120.32 per kilowatt of prime power; Bonneville Dam, $150.15 per kilowatt of prime power; Grand Coulee Dam, $117.68 per kilowatt of prime power; total both dams $126.76 per kilowatt of prime power.

In considering these prime power ratios it should be noted that some of the investment is productive of secondary power and thus is not all to be carried by just prime power; to this extent the ratios are too high but a segregation or allocation to secondary power is not available and may prove not practicable.

22 units from Shasta Dam totaling 150,000 kilowatts were in operation at Grand Coulee on June 30, 1945, but are not included in either the investment or kilowatts in this table.

Investment data in this table are from schedules A-1, B-1, and C-2 of the pay-out report. All the investment at the dams is classified as generation in this table, although in fact a small part of the investment at the dams is in transformers, switches, etc., classified as transmission investment in the system of accounts.

Columbia River power system-Table showing transmission and generating expenses, fiscal year ended June 30, 1945

This figure is cost, not just transmission operation expense. This figure is total of all operating expenses, depreciation expense and interest expense per audit schedule 7 exclusive of cost of power purchased from non-Federal sources. Interest and depreciation are not appropriation items.

Total energy delivered, including energy used by the Administration, but exclusive of losses of 577,232.054 (6.2 percent, a favorably low transmission loss).

Includes all operation maintenance, interest, and depreciation as shown in audit schedules 10 and 13. For Bonneville Power Administration. Excludes projects' own use.

BASIS FOR PAY-OUT REPORT

Mr. DWORSHAK. Dr. Raver I want to clarify one point. The Commissioner of the Bureau of Reclamation told us the other day that in operating arrangements with Bonneville Power Administration, the annual payments for power generated at Coulee were to be based upon requirements to pay out, and the statutory requirement, I think they figured out, called for a rate of 1.09 mills, for the past year. Dr. RAVER. Yes.

Mr. DWORSHAK. I have endeavored to study the pay-out report, but I admit I am not an accountant nor an electrical engineer, nor do I have the time, if I were, in the discharge of my duties as a Congressman to go into the report at great length; but I have not been able to reconcile the pay-out report with House Document 172, known as the allocation report submitted to the committee a year ago.

At that time the question was raised as to whether the Bureau of Reclamation had provided for annual payments to cover the allocation to power and to irrigation under the Reclamation Project Act of 1939, or under an opinion rendered by the Solicitor of the Department of Interior it provided for repayment not of the capital investment chargeable to commercial power, but only 3 percent interest annually. Can you give me any assurance, based upon House Document 172, the pay-out report and the auditor's report as to what procedure will be followed and whether the capital investment of the allocable charge will be repaid or only 3 percent interest.

power

Dr. RAVER. The pay-out report is based on repaying to the Government every dollar of investment in power facilities, plus 21⁄2 percent on the unamortized portion of that investment every year allocated to power at Bonneville Dam and in the facilities of the Bonneville Power Administration, and 3 percent on that investment in the Columbia Basin project.

Mr. DWORSHAK. But not the capital invested.

Dr. RAVER. The capital invested in all the project.

Mr. DWORSHAK. In all the project.

Dr. RAVER. Yes. There is no question about the pay-out report amortizing the capital investment in power and paying 3 percent interest on the unamortized portion of that investment in the Coulee project.

Mr. DWORSHAK. I am glad to have that reassurance because I am just wondering how it will be possible to comply with the statutory requirement as to paying out in the 50-year period when no additional amount, and no provision is being made for increasing rates so you can take up the slack and the discrepancies as between the original plan to repay only 3 percent interest, as contained in the Solicitor's opinion, and repayment of all the capital investment as is provided by the Reclamation Project Act of 1939.

You are not raising the rate; you are not making any revisions of allocation reports, yet assurances being made to the committee that all of the requirements under existing statutes will be complied with. Now, do you think all of this can be done, notwithstanding House Document 172 was based upon the Solicitor's opinion and not upon the requirements of the act of 1939, that notwithstanding all of those changes from a year ago, you still contend that the pay-out schedule provides adequately for meeting all requirements under the act of 1939?

Dr. RAVER. There has been no change in our approach to this pay-out problem, and I think the matter you are raising is a result of a misinterpretation of the solicitor's opinion. There has never been any idea on our part in any of our cost allocations of the $17.50 rate that we were not going to retire the investment allocated to power. Mr. DWORSHAK. I am glad to have that statement.

Dr. RAVER. And pay the interest on the investment until such time as power is retired.

Mr. DWORSHAK. Doctor, there may have been some misinterpretation made of the Solicitor's opinion, but I can assure you it was not made by members of the committee but possible by representatives of the Bureau of Reclamation who a year ago, according to the record of the 1946 appropriation bill, told us very definitely that they proposed to set up a new pattern that was not in accord with the 1939 Project Act. So if these was some misinterpretation, I want you and the record to know where that was.

Mr. DITTMER. I think it ought to be pointed out that House Document 172 does provide for both the payment of interest and amortization of the principal.

Mr. DWORSHAK. Well, the Bureau of Reclamation officials did not know that a year ago, according to the statement they made to this committee.

(After discussion off the record:)

Mr. DWORSHAK. Now we have both the Bonneville Power Administration and the Bureau of Reclamation agreeing with the viewpoint that was presented by our committee last year.

Dr. RAVER. I do not want any misinterpretation of that. Congressman. The increased cost of the Grand Coulee project of $95,000,000 which you spoke about, it is true, is not in the House Document 172 and it is not in our pay-out report, either, except that we picked up some $20,000,000 or so of that increased cost which it is now apparent will be incurred largely because of the increased cost of the repair of the toe of Grand Coulee Dam. And we have indicated that that increased cost which they have estimated may occur at Coulee, or that may be necessary, will be covered in accordance with the provisions of House Document 172, to extend the repayment period. We do not think that will be necessary for a number of reasons, but we have $160,000,000 available for contingency reserves in this thing, plus another $30,000,000 which you may have noticed on one of these schedules, which might be secured to cover that.

Mr. DWORSHAK. Then why was it necessary for the solicitor to render that opinion to set up a new pattern?

Dr. RAVER. Well, I think it was not an effort to change a pattern; it was an effort, as I see it, to make this interest from the power portion of the reclamation project available for further reclamation work if it seemed desirable to do so, and his interpretation indicated that the law would permit that. Now, whether it permits it or not, does not make any difference to us. We will do it, anyway.

Mr. DWORSHAK. Have you ever heard of the National Reclamation Association?

Dr. RAVER. Yes; I have heard a lot about it.

Mr. DWORSHAK. Which represents the hundreds of irrigation districts in 17 Western States that have a direct interest in the program you are interested in and which the Bureau of Reclamation is interested in.

Dr. RAVER. Yes.

Mr. DWORSHAK. They held a conference at Denver in November and passed a resolution in which they also indicated that they had probably misconstrued or misinterpreted, as you say, the solicitor's opinion which led them to believe that an entirely new pattern was being set up for repayment of power costs.

84378-46-pt. 1-25

So you cannot blame a member of this committee for making a misinterpretation when the National Reclamation Association, with its hundreds of attorneys and officers of these irrigation districts, made that same interpretation. And if they made that interpretation, why, of course, it might be understandable why some member of this committee might do likewise.

Dr. RAVER. That is right. I read those statements from the Denver convention; I also have read Mr. Hagie's testimony before the Robertson committee here.

Mr. DWORSHAK. You think he has made a misinterpretation?

Dr. RAVER. I think he made a serious misinterpretation. And with all due respect to the sincerity with which he made it, I think he rendered a great disservice to the whole Reclamation Service in the Western States.

Mr. DWORSHAK. It is apparent that everybody got more or less confused by that solicitor's opinion.

Dr. RAVER. I think that is true.

Mr. MARLETT. May I say that while we have not relied on the solicitor's opinion on these projects, the Department does feel it is an advantage to take advantage of that opinion, because in the future they will be able to reclaim more land and irrigate more land than they would without taking advantage of it; but in the case of these projects, we have not relied upon it.

Mr. DWORSHAK. That is also interesting from the standpoint that Congress is the policy-making branch of the Government, and I happen to have been a member of the House Committee on Irrigation and Reclamation in 1939, when that bill was drafted and, of course, I know what the background was and know what was in the minds of the committee and the Congress when that measure was approved.

JOINT STUDY WITH BUREAU OF RECLAMATION OF SOUTHERN AREA OF IDAHO

Now, Doctor, I notice on this map that you have this part of southern Idaho, south of the Salmon River, shaded for designation as being under joint study of the Bonneville Power Administration and the Bureau of Reclamation. What would be the extent of that? Is

that a power study, or what?

Dr. RAVER. Yes, sir. That situation exists, Congressman. There will be some new dams built on the Snake River. They have a certain amount of power and the studies we have thus far made of the whole potential power requirements of that whole southern Idaho area indicate they are going to wind up with a shortage of about 2,000,000,000 kilowatt-hours a year in that area.

Mr. DWORSHAK. How many kilowatts? Can you convert that into kilowatts?

Dr. RAVER. I do not recall what it is in kilowatts. But the fact is that those dams, while they will provide good power for local use, do not have sufficient water in them to provide blocks of firm power for industrial development, and it is our feeling that the great firm power supply for southern Idaho for industrial development will eventually have to come from big dams on the main stem of the Columbia River