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INDEPENDENT OFFICES APPROPRIATIONS FOR 1965

THURSDAY, APRIL 23, 1964

U.S. SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D.C. The subcommittee met pursuant to recess at 8:30 a.m., in room S-128, U.S. Capitol Building, Hon. Warren G. Magnuson (chairman) presiding

Present: Senators Magnuson, Monroney, Saltonstall, Young, and Allott.

FEDERAL POWER COMMISSION

STATEMENT OF JOSEPH C. SWIDLER, CHAIRMAN, FEDERAL POWER

COMMISSION; HAROLD C. WOODWARD, VICE CHAIRMAN; LAWRENCE J. O'CONNOR, JR., COMMISSIONER; CHARLES R. ROSS, COMMISSIONER; DAVID S. BLACK, COMMISSIONER; HARRY J. TRAINOR, EXECUTIVE DIRECTOR; S. DAVID FREEMAN, ASSISTANT TO THE CHAIRMAN; RICHARD A. SOLOMON, GENERAL COUNSEL; F. STEWART BROWN, CHIEF, BUREAU OF POWER; FRANK F. WATTERS, CHIEF, BUREAU OF NATURAL GAS; ARTHUR L. LITKE, CHIEF ACCOUNTANT WILLIAM N. CAMPBELL, DIRECTOR OF PERSONNEL; AND WESLEY CAPAR, CHIEF, DIVISION OF PROGRAM, BUDGET AND FISCAL SERVICES

FISCAL YEAR 1964 APPROPRIATION AND FISCAL YEAR 1965 ESTIMATE

Senator MAGNUSON. The committee will come to order.

This morning, we have the Federal Power Commission. For the purposes of the record, the appropriations in 1964 amounted to $11,850,000, and for 1965 the budget estimate is $13,335,000, or a plus of $1,485,000. That is for salaries and expenses.

The Chairman of the Commission is here, accompanied by other members of the Commission and members of the staff who are here to answer any detailed questions the committee may have.

Mr. Swidler, you have a prepared statement here and we would be glad to hear from you. You can either put it in the record and highlight it or you can go ahead with it.

I think maybe we had better go ahead with it page by page and then maybe we can interrogate as we go along. Preceding this we will place in the record the introductory statement to your justifications and comparative summaries.

Mr. SWIDLER. You would rather I read my statement and you ask questions as we go along?

INTRODUCTION

The Commission is requesting $13,335,000 for fiscal year 1965. This amount is an increase of $1,485,000 over the 1964 appropriation of $11,850,000. We are requesting 86 additional positions over the maximum 1,148 positions authorized in 1964 for a total of 1,234 in 1965. Of the total increase, $510,000 is needed for personnel compensation and benefits for the 86 new positions, $592,000 is needed for pay increases and for personnel compensation and benefits for the 1,148 maximum positions authorized in 1964, and $383,000 is needed for other costs such as travel, rentals, equipment, and supplies.

While the Federal Power Commission is budgeting for $13,335,000 in 1965, this amount is estimated to be offset by $5,832,000 in payments to the Treasury. This is an increase in receipts of $1,189,121 over 1963. The increase reflects action taken by the Commission to insure that the non-Federal licensing activity under part I of the Federal Power Act is self-supporting and that payments owed the Treasury by licensees for benefits from upstream Federal projects are paid. The net cost to the Government for the Federal Power Commission's work in 1965 would thus be $7,503,000.

The budget submitted provides the resources for regulating the electric power and natural gas industries—two of the largest and fastest growing industries in this Nation. The pace of progress in these two basic energy industries is largely controlled by the Federal Power Commission's ability to discharge its regulatory functions promptly. Adequate staff is the heart of effective regulation and is an absolute necessity for prompt disposition of workload. Construction of hundreds of millions of dollars of natural gas pipelines will be delayed unless we have adequate staff to process certificate applications. The same can be said about our licensing work for non-Federal hydroelectric power projects and indeed for all of our regulatory activities.

The damage to the natural gas and electric power industries from insufficient FPC staff would be compounded by the loss of protection to the gas and electric consumers which include almost everyone in the Nation. The Commission's record in the past 2 years of ordering some $550 million in refunds to the customers of the Nation's natural gas pipelines is in itself ample proof of the large dividends to the economy from small investments in FPC staff. We are also encouraging the construction of stronger transmission-line interconnections and larger and more efficient generating units by the electric power companies to reduce electric power costs and thus facilitate rate reductions to consumers. The benefit of FPC activities is thus nothing less than a long-term reduction in two major energy sources of the Nation.

The additional 86 positions are required for work in several areas of expanding importance.

1. NATURAL GAS We are asking for an increase of only 26 positions over 1964 with respect to the natural gas industry, from a staff of 638 positions to 664. The staff will still be below 677 positions for natural gas provided in our 1963 budget. We need sufficient people to push forward with our area rate proceedings to fix just and reasonable prices for natural gas in all of the producing areas throughout the country. The Commission is developing an efficient and workable administrative tool by which the rates for all the producers in an entire production area may be fixed in a single hearing. We have initiated four area rate hearings which when completed will fix just and reasonable rates for 75 percent of all of the gas in interstate commerce. The thousands of independent producers in the various gasproducing areas and the 34 million consumers throughout the country are entitled to an end to the uncertainty with respect to the amounts that they receive and pay for natural gas.

Progress in implementing the area rate program is greatly hampered by the lack of sufficient FPC staff and the modest increase we are requesting is the minimum we need to push ahead with this program which involves rates totaling hundreds of millions of dollars annually.

Thirteen positions are required to implement our program for systematic analysis of the gas reserves of the pipelines to avoid the necessity of delaying processing of pipeline certificate applications to obtain this information. Gas reserves, production, and deliverability information will be made available annually by each natural gas pipeline company within the Commission's jurisdiction as a continuous updated proof of gas supply, thereby permitting early authorization of multimillion-dollar pipeline construction for the benefit not only of the new customers but also of the national economy. By doing this annually, we will expedite the formal hearings on certificate matters by eliminating the need to prove an adequate gas supply as part of the applicant's case.

2. ELECTRIC POWER

We are requesting an increase of 25 positions in the electric power field to strengthen the Commission's staff for regulating wholesale rates for electric power sold by public utilities in interstate commerce. The Federal Power Commission has a responsibility to the thousands of cooperatives and municipalities as well as to the private companies which purchase power at wholesale in interstate commerce and to the millions of consumers of these public, cooperative, and private systems to insure that they can obtain electricity at reasonable rates and en fair terms. The Federal Power Commission, by the fulfillment of its responsibilities for the assurance of such supply, will provide the smaller power entities with a feasible alternative to building relatively uneconomic powerplants and will instead make available low-cost electric power from economical sources. Effective Commission regulation can thus be a substitute for large investments of public and private funds in plants of relatively low efficiency which are justified only in the absence of effective wholesale rate regulation.

3. NONFEDERAL HYDROELECTRIC PROJECTS

An increase of 23 positions is requested to speed the processing of non-Federal hydroelectric projects. This activity is self-supporting. The cost of these additional positions, as of all of this work, will be recovered by license fees, except as the work is related to applications of public bodies which have statutory exemption.

There is presently pending before the Commission applications for new hydroelectric projects which would cost $3.2 billion to construct. Some applications conflict, but even so, the speedy disposition of these projects could add substantially to our economic growth. The Commission has found that it needs up-todate appraisals of our river basins to discharge effectively our statutory responsibilities for licensing the most comprehensive development of the Nation's river basins. The Commission's program of water resources appraisals for hydroelectric licensing will provide the necessary information. The appraisals will be made for river basins with the highest priorities for Commission license purposes. They will be largely office studies that will utilize and not duplicate the work of others. The availability of these studies will expedite the licensing of projects and encourage applicants to file for the projects set forth in the development plans. Increased staff, at no additional cost to the Government, is needed for this work and for processing an increased number of applications, for supervising the increasing number of licensed projects and to prepare reports and recommendations on the licensed projects subject to recapture by the United States as their expiration date approaches.

Another important activity is our program for licensing existing projects which are still unlicensed. The recent catastrophes in Italy and the United States resulting from structural failures of dams and reservoirs underscore the need to bring these projects under license to insure inspection for safety.

4. FEDERAL RIVER DEVELOPMENT PROJECTS

The increase of 12 positions for Federal river development projects is based entirely on the need to support the comprehensive river basin planning program of the Army Corps of Engineers. This estimate has been coordinated with their program.

The Commission in the past 2 years has concentrated on improving its procedures to utilize its manpower more efficiently and in general accelerating the regulatory process. The budget request for 1965 is the minimum amount that will enable us to continue our core programs without reverting to former standards which resulted in endless delay to the industry and rendering illusory the congressional objective of consumer protection.

Summary table of increases (1965 over 1964) Personnel compensation and benefits (86 new positions) --

$510, 000 Personnel compensation and benefits (to restore 48 positions not filled in second half of 1964).

219,000 Increase due to pay raise-

273, 000 Cost of within-grade promotions--

100, 000 Other cost increases such as travel, ADP rental, equipment, supplies, materials and printing---

383,000 Total increase, 1965_

1, 485, 000

[blocks in formation]

638 $6, 466, 000
198 2, 136, 000
175 1,885, 000

462, 000
92 901, 000
1, 148 11,850,000

664
223
198
57
92

$6,983, 000 2, 520, 000 2, 257, 000

617,000 958, 000

1. Natural gas industry--
2. Electric power industry.
3. Non-Federal hydroelectric projects.
4. Federalriver development projects...
5. Administration.

45

Total...
Change in resources..
Transfer to General Services Adminis-

tration.Unobligated balance

Total appropriation..

1, 234

13, 335, 000

1,178 10, 791, 888

+208, 000

73, 282

6, 830 1,178 11,080,000

1, 14811, 850,000

1, 234

13, 335, 000

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