Mr. PEARL. I would like, with the use of some charts, to go over our budget if that meets with your approval.

Mr. CANNON. You may proceed. Please point out especially the new construction starts and explain who is served by each of them and the need for that particular facility at this time.

Mr. PEARL. The Bonneville budget is divided in two main points, our construction and operation and maintenance. It is easily explained as follows.

NEW GENERATION

As the marketing agency for these Federal dams, it becomes the function of Bonneville to build transmission lines to carry the power from the point of generation to the load centers. The new construction funds we need each year are to build transmission lines that become necessary because of new Federal generation going in or be cause of increased loads at a given load center and, third, to take care of non-Federal power that we wheel from point of generation to load centers.

To give you an idea of about how much power will come in during our next budget period, we prepared a chart. We listed Federal projects and have indicated here that in 1960, 358.8 megawatts of new Federal generation will come in; in 1961, 179.4; and in 1962, 373.8 megawatts.

The projects for which we are the wheeling agency, so to speak-this is non-Federal power we will wheel to load centers-in 1960 will amount to 257.3 megawatts; in 1961, 257.2; in 1962, 619.5 megawatts.

When you add these two-Federal and non-Federal-this gives the amount of power for which we will be required to put in facilities from generation to load centers, and this is basically the thing on which our construction budget is based.

It is the sum of Federal generation and non-Federal generation for which we have firm contracts to wheel that determines the amount of power we will be required to carry from generation to load centers, and that is the point on which our construction budget is made up.

LANE COUNTY CO-OP LINE-BUDGET REDUCTION

In other words, I would like to cover one item that is a slight change from our budget which will illustrate this point. This budget we are presenting to you is based upon the assumption that Cougar will start to come in in 1962. We have now been told Cougar will not start to come in until 1963. If that is the case, we can then postpone part of one of our items. We are building a line to Cougar that has two funetions: One, to serve the Lane County Co-op, the other to carry generation from Cougar out.

If Cougar is delayed a year, we can delete part of the funds from item 175 in our budget. In other words, we can cut that item from $607,000 to $143,000.

I want to be sure to make this point. If Cougar were kept on schedule, we would then have to come in-that is, if this is removed from our budget-we would have to come in with a supplemental because we would be financially in trouble.

Mr. CANNON. That is the first item you have reduced?
Mr. PEARL. Yes, sir.

APPROPRIATION COMPARISONS

The appropriations that we are requesting in 1960 for construction amount to $25 million. That is an increase of $4,066,000 compared with our construction funds for the present year.

We do not anticipate any carryover in 1960. Our O. & M. that we are asking for for 1960 is $10,250,000. That is an increase of $662,000 as compared with the present budget we are operating on in 1959.

This makes our total budget request for 1960 $35,250,000 as compared with our present budget we are operating on of $30,599,000, or a total increase of $4,651,000.

To compare these two on the basis of our programs, there is no material difference because it is our present thinking, of course, that we will operate on the $25 million, the total amount which will be required in that year (1960) for construction, and the same as far as our operation and maintenance is concerned, $10,250,000.

Then we have an item here we call reimbursable. Generally speaking, that is work we do for other people for which we are reimbursed. That amounts to $670,000.

Then trust funds, generally speaking, are items that we are doing for someone who is going to pay for them. They put up the funds before we do the work. We estimate for 1960 that will be about $300,000.

Our total programs for 1960 we estimate will be $36,220,000.

Mr. CANNON. Are those customers who provide trust funds in advance increasing?

Mr. PEARL. No. You will notice here that in 1958 it was $599,000, in 1959 it looks as though it will be about $643,000, and in 1960 we estimate $300,000, which would tend to indicate it is decreasing.

Mr. CANNON. What factor controls the increase or decrease in number of customers required to pay in advance?

Mr. PEARL. I will give an example. If we have a substation and one of our customers would like to put facilities in there to tie to, we would rather not have them working in our substation. We would say to them, this is what it will cost. Give us the money by way of a trust fund and we will do the work for you to make the connections. Generally speaking, this would take place in a substation that was in operation. There are physical hazards. So we have elected in cases such as that to do the work by the route of a trust fund.

Mr. CANNON. As these facilities are provided, the number of customers required to pay in advance decreases?

Mr. PEARL. Yes, I think that is a safe statement. It appears to be. Mr. CANNON. You may proceed.

CONSTRUCTION PROGRAM

Mr. PEARL. For a moment I would like to talk about our construction program. Our construction program consists of work in progress. That is work that has been previously approved by this committee. Also new starts. Those are items we are asking for which have not been previously approved.

General Plant is comprised of tools and equipment required by Bonneville.

This year we have work in progress amounting to $17,095,000. In 1960 we estimate we will have work in progress of $14,995,000. This year by way of new construction we have $3,515,000. Our budget for 1960 contemplates new starts in the amount of $9,320,000.

That, generally speaking, accounts for our increased construction budget that we are requesting. There are some new starts that will take an appreciable amount of money.

Mr. CANNON. You will later take up those new starts?
Mr. PEARL. Would you like to do that right now, sir?

Mr. CANNON. I would be glad if you would. Tell us what it is, who it will serve, and why you think it is essential.

Mr. PEARL. Mr. Starr is our Chief Engineer in charge of that work. I will ask him to cover our new starts.

Mr. CANNON. Insert pages 15 through 76 at this point. (The pages referred to follow :)