WAGE INCREASES FOR UNGRADED EMPLOYEES The other item in our supplemental appropriation request comes about because of new hourly wage rates established last June and July. The new wage rates average out to an increase of 3.3 percent and result in added costs of $190,000 to our 1964 operation and maintenance program. The portion of the wage increase chargeable to our construction program is being absorbed by available funds. BPA has established wage rates for hourly or craft-type employees through collective bargaining since the passage of enabling legislation in 1945. Wage rates are adjusted to levels consistent with those adopted through collective bargaining by the major electric utilities in BPA's service area. These wage increases were effective after the submission of our fiscal year 1964 budget and thus were not provided for in that budget. However, under authority of existing legislation, we are performing our program in anticipation of supplemental appropriations for the wage increases. Although basic maintenance work has had to be set aside temporarily to allow us to carry out our obligations for implementing the Canadian treaty and paying the increase in wages, we must undertake this system maintenance program in the last quarter of this fiscal year when favorable weather conditions will prevail. Therefore, we are asking for the supplemental operation and maintenance funds for 1964 to permit us to restore these maintenance items to our 1964 program. SUMMARY The two items comprising our supplemental appropriation request-the treaty work and the wage increase-could not have been properly included in our regular 1964 budget submission. Our operation and maintenance program is planned on a basis which permits virtually no flexibility for absorbing unscheduled costs without severe curtailment of the work program already approved by the Congress. We believe it is extremely important to keep our maintenance work on schedule so as to assure a reliable grade of electric service to our customers and adequate protection of the Government's investment in transmission plant. STATUS OF CANADIAN TREATY Mr. EVINS. Since this estimate includes $190,000 for arranging for the sale of power under the Columbia Treaty with Canada, would you please bring us up to date with respect to the implementation of the treaty? Mr. LUCE. Yes, sir, Mr. Chairman. Mr. EVINS. This is with respect to the supplemental. Mr. LUCE. The supplemental appropriation request involves $190,000 for moneys related to the Columbia River Treaty and an additional $190,000 for moneys related to the 3.3-percent wage increase negotiated with our employees for the fiscal year 1964. As regards the need for the funds for the Columbia River Treaty I might briefly summarize where we stand with regard to that important treaty. Mr. EVINS. If you would, please. Mr. LUCE. On January 22, 1964, President Johnson and Prime Minister Pearson signed protocols and agreements at the White House, in Washington, DC., whereby our Government agreed to use its best efforts to assist Canada to sell in the United States its share of the downstream power benefits under the treaty. On its part the Canadian Government agreed to use its best efforts to have the treaty ratified by the Canadian Parliament. It was agreed in these documents that the price to be received by the Canadians is 3% mills per kilowatt-hour at 60 percent load factor at the generator. It is also agreed that this Canadian power will be purchased by a single purchaser in the United States, which in t may resell the power to any number of utilities that wish to buy part of it. The Administration determined that rather than come to the Congress initially to seek appropriations to buy this power, which has a present value of $254,400,000 as of October 1, 1964, we would seek to sell it to the utilities of the region using private financing And so a nonprofit corporation is being organized by the public and private utilities of the region for the purpose of buying the entire Canadian entitlement and reselling it in the region, the price being, as I mentioned, $254,400,000. The Bonneville Power Administration plays an important part in this sale for several reasons. CANADIAN POWER GENERATED AT FEDERAL DAMS In the first place, about 70 percent of the Canadian power is actually generated at Federal projects. The other 30 percent is generated at PUD projects which have been built on the Columbia River. It is a necessary part of any sale agreement of the Canadian power entitlement that the Bonneville Power Administration guarantee the deliveries of the full entitlement and that we transmit the power from the dams where it is generated on the Columbia River in the United States to the load centers throughout the region. There are other things, also, which Bonneville will be called upon to do in regard to the marketing of this Canadian power, but I think these are the two principal items. FINANCIAL CONSULTANTS In order to do our job properly we felt we should have the advice of financial consultants so that we could be sure that the financing of the purchase of Canadian power was done at the most favorable rates permissible by market conditions. Therefore we employed the same firm as consultants that we used in the Hanford financing with such great success; namely, the Dillon, Read firm of New York. Their fee for advising us is stated in our present contract to be $100,000 for their services through this fiscal year. COST OF COMPUTER STUDIES In addition to that expense, which was not contemplated when our budget was presented to the committee last year, we have had to run a very large number of computer studies, and will have to run more computer studies which will cost us $57,000 in addition to that which we contemplated at the time our budget was presented here last year. The remaining $33,000 we are requesting will be for power flow studies and other studies related to the operation of our dams after the Canadian dams are built. This will be contracted out to other agencies so we will not have to employ any additional employees just for this temporary job. That about covers it. Mr. EVINS. The treaty arrangements have all been concurred in by President Johnson and Prime Minister Pearson? The agreements have all been consummated? Mr. LUCE. Yes. Mr. EVINS. Of the $380,000 you are requesting in the supplemental budget, one-half is for wage board increases? Mr. LUCE. That is right. Mr. EVINS. And the other is in connection with the administration of the treaty? Mr. LUCE. That is correct. SUBCOMMITTEE ON INDEPENDENT OFFICES APPROPRIATIONS ALBERT THOMAS, Texas, Chairman JOE L. EVINS, Tennessee HAROLD C. OSTERTAG, New York Carolina EDWARD P. BOLAND, Massachu- CHARLES RAPER JONAS, North setts GEORGE E. SHIPLEY, Illinois LOUIS C. WYMAN, New Hampshire MONDAY FEBRUARY 3, 1964. VETERANS ADMINISTRATION WITNESSES J. S. GLEASON, JR., ADMINISTRATOR W. J. DRIVER, DEPUTY ADMINISTRATOR A. H. MONK, ASSOCIATE DEPUTY ADMINISTRATOR V. P. MILLER, DIRECTOR, BUDGET SERVICE DEPARTMENT OF MEDICINE AND SURGERY DR. J. H. McNINCH, CHIEF MEDICAL DIRECTOR DR. H. M. ENGLE, DEPUTY CHIEF MEDICAL DIRECTOR DR. L. A. ZINK, ASSISTANT CHIEF MEDICAL DIRECTOR FOR PLANS AND COORDINATION DR. A. J. KLIPPEN, DEPUTY ASSISTANT CHIEF MEDICAL DIRECTOR D. I. ROSEN, DIRECTOR, REPORTS AND STATISTICS SERVICE |