Since there is no provision requiring replacement of equipment beyond the extent profitable to the lessee, the estimates assume one replacement only of steam turbines during the period of the lease and replacement in hydro plant of only minor equipment not subject to satisfactory repair. From such of the above figures as are applicable to the several combinations, and with the appropriate payments to the United States added, estimates of costs per kilowatt-hour of total energy output and of total primary power are approximately as contained in the following table: Costs per kilowatt-hour in mills and output in thousands of kilowatt-hours per annum The figures under the column headed "Dam No. 2, 60,000 kilowatt, steam," represent the amounts which would prevail throughout the period if the development were limited to 610,000 kilowatts at Dam No. 2, and 60,000 kilowatts in the Sheffield steam plant as now existing. The steam plant is assumed to act as an auxiliary only, that is, to supply power at seasons of the year when water is not available to operate the hydro plant to capacity. Of the total primary power made available under column (1) 95,000,000 kilowatt-hours would be steam produced. With 120,000 kilowatts of steam installation the amount of primary power supplied by steam would be 268,000,000 kilowatt-hours with Dam No. 2 alone and 325,000,000 kilowatt-hours with Dam No. 2 combined with Dam No. 3, or with that dam and Cove Creek. The cheapest kilowatt-hour cost for total output would be produced by Dam No. 2 with the 60,000 kilowatt steam plant, namely, 1.18 mills per kilowatt-hour as the average cost during the 50-year period. This low cost is due to the fact that payments are not required for the steam plant and for only a part of the investment in the hydro plant, and because the amount of steam energy is relatively small. During the first six years of operation, when the payments to the United States are merely nominal, Dam No. 2 if completed and operated with the existing steam plant could deliver the total output at an average cost to the lessee of less than one-half mill per kilowatt-hour, while if all costs were charged solely against the primary power that power would cost only three-fourths of a mill per kilowatt-hour. The costs of power for the maximum years, thirty-fifth to fiftieth, inclusive, during which deferred payments with interest thereon are being liquidated, are only slightly in excess of 2 mills per kilowatt-hour for the output of all the plants. The averages for the 150-year period are, however, well below 2 mills per kilowatt-hour. By building these plants at Government expense and leasing them, as is proposed, for annual payments which are less than the United States must itself pay out in interest, and by making no requirements for depreciation reserves, a situation would be produced whereby the lessee would secure the largest block of power available to any corporation in the United States, or elsewhere, at a cost materially less than anywhere else in the United States, with the possible exception of Niagara Falls. Hon. JOHN M. MORIN, Chairman Committee on Military Affairs, AMERICAN CYANAMID CO., New York, February 28, 1928. House Office Building, Washington, D. C. DEAR MR. MORIN: In the hearings before your committee on the Madden bill on February 20, 1928, during the discussion of what the Government would receive under that bill, pages 1077, 1078, 1079, 1080, and 1081 of the previous hearing, Part II, were inserted in the Record. I have had the pages referred to looked up and the statements therein are, I believe, incorrect. Mr. Madden transmitted with his letter to the President of the United States, of February 13, 1928, a table showing profit to the Government from interest payments under the Madden bill. I inclose a copy of Mr. Madden's statement. I believe these figures are accurate, but believe your attention should be called to the fact that the payment of $140,000 shown on that table for the second year as interest on extra machinery, and the payments of $280,000 annually for the third, fourth, fifth, and sixth years as interest on additional machinery may, at the option of the lessee, be deferred and paid, with simple interest at 4 per cent, during the last 15 years of the lease. Our accounting department is preparing a statement showing all the receipts to the Government under the Madden bill, and, we hope to have this in your hands in the next few days. This statement will show larger receipts by the Government than Mr. Madden's statement, as Mr. Madden's statement only dealt with interest payments. Very truly yours, W. B. BELL, President. TABLE No. 1.-Profit to Government from interest payments under Willis-Madden bill with 3 per cent financing |