a

Initially that will be a fuel-fired plant. Eventually it may include some atom-fired units.

Senator O'MAHONEY. I might say, incidentally, that the Colorado River does not furnish you enough energy yet, does it?

Mr. Cozzens. Not at all, definitely not.

This department, like most of the utilities on the Pacific coast, has been supplied primarily from hydroelectric sources.

As recently as 1952, 81 percent of our total system generation of over 5,269 million kilowatt-hours was supplied from hydroelectric sources, requiring only 18 percent from our own steam-electric plants plus a small amount of purchased energy.

This condition has completely reversed itself and as of the current year, only 23 percent of the department's requirements could be met from its hydroelectric sources, requiring over 77 percent of the energy to be produced from fuel-fired plants, including a small amount of energy purchased from interconnected utilities. This energy is usually produced with surplus natural gas.

This is the general condition, to a somewhat lesser degree, throughout the State due to the rapid growth of both industry and population and the limited number of potential hydroelectric sites suitable for economic development.

Specifically, the utilities in California in 1952 produced 70.22 percent of their requirements from hydro sources and 29.78 percent from steam sources. In 1955, however, the hydro sources produced only 36.93 percent of the total requirements while steam sources produced the remaining 63.07 percent.

It is not a Los Angeles situation-it is a California, and in fact, the Western States situation, but not so pronounced in the Northwest.

To give a better understanding of the fuel problem in California I believe we should review further the cause for the very sudden change in the fuel requirements of this department and the other major utilities in southern California.

To assure the construction of the Boulder Canyon project and Hoover Dam and powerplant, the department of water and power, the Southern California Edison Co., and the California Electric Power Co., in addition to their direct allotments, agreed to take and pay for energy from this project unused by other allottees pending the time when such allottees would require this energy for use on their own systems.

The Metropolitan Water District of Southern California likewise contracted for 35.25 percent of the energy, the major portion of which it was not able to use for many years, and this energy likewise was purchased by the three above-mentioned utilities.

The States of Arizona and Nevada each had allotments of 17.625 percent from the Hoover powerplant. These States have developed quite rapidly during the past 8 years and have asserted their rights for their entire allotments from the Hoover powerplant.

Likewise the rapid growth in southern California and the increasing need for water supply has required a continually increasing pumping of water into the metropolitan water districts aqueduct.

Further, during the past 10 years and particularly during the past 3 years, the Colorado River Basin has suffered a material drought such that during the 1954–55 water season only 88 percent of firm energy was available from the project.

During the year just past, 1955–56, only 63 percent of firm energy was available. The current operating year, 1956–57 was planned on the basis of 65 percent of firm energy, but the current outlook again indicates 63 percent, with no secondary energy at all.

To indicate more definitely what such changes mean to the department of water and power, 1952 was a rather heavy runoff year and at that time the States of Arizona and Nevada had not withdrawn an appreciable amount of their energy.

The department that year (1952) received for its own use from the Hoover powerplant 3,361 million kilowatt-hours.

During the calendar year 1956 it received only 534 million kilowatthours, and during the contract year in which we are now operating, June 1, 1956, to May 30, 1957, we will receive only 464 million kilowatthours.

The difference between a high production year like 1952 and the present year is over 3 billion kilowatt-hours. This energy must be replaced by burning additional fuel oil in the steam plants of this department.

To replace 3 billion kilowatt-hours will require the burning of approximately 5.5 million barrels of fuel oil or the corresponding equivalent in gas. This is the requirement of the department of water and power alone and an almost equal amount was required for the Southern California Edison Co. and the California Electric Power Co.

That energy must be replaced by the burning of something approaching 10 million barrels of fuel oil on the Pacific coast.

The utilities on the Pacific coast, including this department, receive a portion of their fuel requirements from surplus or interi uptible gas which is available largely during the summer months.

Very little, if any, such gas, is available except under extremely warm weather conditions during the winter months. The availability of this gas is quite variable from year to year which results in some fluctuation in fuel-oil requirements.

The major fluctuations, however, are due almost entirely to the variations in the availability of hydroelectric power.

Since 1956 the department of water and power has utilized fuel oil in the following amounts: Barrels

Barrels 1916. 951, 838 | 1952_

1, 426, 030 197 1, 617,550 1953_

3, 160, 521 1918 1,391, 295 1954.

1, 677, 367 1919. 1,057, 604 1955.

4, 418, 061 19.30 1, 437, 790 1956_

4, 457, 579 1951.-

3, 373, 016 During recent years the use of fuel oil by all electric utilities in district No. 5 have also shown considerable fluctuation. Barrels

Barrels 1950. 9, 810, 0001954_

11, 388, 000 1931 15, 991, 000 1955.

22, 205, 000 19.52 14, 448, 000 1956

22, 000, 000 1953..

1

These heavy uses in 1955 and 1956 are the direct result of the low water condition which I have just mentioned.

It is sen readily that with the exception of 1951 and 1953, the department of water and power has not been a major user of the oil consumed by public utilities in the Western States.

During 1955, however, the department's total fuel requirements rose to 7.8 million barrels oil equivalent of which 4,418,000 barrels were supplied from fuel oil and the remainder from gas.

During the past year the requirement was 8,316,000 of which 4,457,000 was required from fuel oil and the remainder supplied from inter

ruptible gas.

The history of fuel oil on the Pacific coast has always been one of excess with the possible exception of a few years during the war.

This department has maintained relatively large storage compared to its requirements so that it has been in a position to satisfy its requirements by spot purchases from time to time at relatively favorable prices.

In the spring of 1955, news reports indicated that the fuel oil in storage on the Pacific coast was approaching 40 million barrels.

I might add here this is not substantiated by the official Bureau of Mines records, because a portion of it was in storage for purchases, in other words, having been paid for it was in the tanks of the purchaser, or of the company being held for the purchaser.

The record indicates that a maximum of approximately 30 million barrels were in storage during 1955.

This indicated a very favorable situation for the purchaser and our purchasing group was requested to process specifications and requests for a limited amount of oil to meet our immediate needs.

This was in advance of our knowledge that the energy supply from the Hoover powerplant would again be reduced from the low of the previous years.

Concurrently, we were carrying on negotiations with one of the major oil companies for a supply of high-viscosity fuel oil for our Scattergood steam plant, scheduled for operation in 1958.

We had reasonable assurance at that time of adequate supplies of fuel oil for several years in the future.

Without our knowledge and without any notification to us by any of the local suppliers, eastern oil companies came to the Pacific coast and because of the excess oil in storage and the relatively low prices at that time, as well as the low tanker rates, made large purchases of fuel oil for shipment to Eastern United States and other areas.

We have varying reports of from 11 to 20 million barrels.

As reflected in the attached curve and tabulation, appendix II (pp. 1 and 2), over 39,750,000 barrels were reported from district No. 5 during 1955 in comparison with a maximum export during the previous 3 years of only 21,700,000 barrels.

(The charts are as follows:)

a

11 months

of 1955

11 months

of 1956

354, 615

381, 729

359, 561

379, 953