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It is most important to the upper Colorado project to have the transmission nes ready to take the power from Glen Canyon and Flaming Gorge when it omes on the line. I therefore hope that the full committee report will act avorably upon my recommendation. Would you please include my letter in the earing record when it is printed. Sincerely,

WALLACE F. BENNETT.

STATEMENT OF MR. HARVEY F. M'PHAIL Mr. McPhail. Mr. Chairman and gentlemen of the committee, my ame is Harvey F. McPhail, manager of the Hydroelectric Division of he Kuljian Corp. of Philadelphia, Pa.

The Kuljian Corp. was retained by the Colorado River Basin Conumers Power, Inc., in December 1959 to conduct a study to determine he power requirements of customers having preference under reclanation law in the area tributary to the Colorado River storage project ydroelectric developments and to recommend a transmission sysem for the project which would best fit their needs. Such a study has been made and the results incorporated in a report dated March i, 1960, copies of which have been distributed to the committee. As you can see, it is not of great length and we request, if permissible, it be included in the transcript of the hearings.

This report, based upon careful and, we believe, quite conservative estimates, demonstrates that the preference customers in the five States of Arizona, Colorado, New Mexico, Utah, and Wyoming can absorb and use all of the power to be generated by the presently authorized hydroelectric plants of the project from the date of initial operation. Among the preference customers it is agreed that such use will be at the firm rates established for the sale of power. It is our considered opinion that this will have the most favorable results in achieving project repayment and expediting the construction of the participating projects.

A transmission system has been proposed which has an estimated cost comparable with estimates made by the Bureau of Reclamation in the project report upon which authorization was based. It is believed to be wholly in keeping with the spirit and intent of the authorizing legislation and will accomplish the following objectives:

(1) Transmit power to strategically located load centers from which the preference customers can take it to their various loads;

(2) Provide interconnection between the hydorelectric plants of the project, thus permitting their fully integrated operation;

(3) Provide interconnection over federally owned lines between presently operating federally owned systems, including the western division of the Missouri Basin project in Colorado and Wyoming, the Rio Grande project in New Mexico, the Boulder Canyon project in California and Nevada, and the Parker-Davis project in Arizona. This arrangement will permit the Government to reap full advantage of the diversity in loads between north and south, where peaks occur at different seasons of the year, and between east and west, where time zones influence peak periods. Also, full advantage can be taken of the diversity in precipitation affecting water supply in the various drainage basins; and

(4) Permit convenient extensions to connect with additional hydroelectric plants which may be authorized for future incorporation in

the project and with yet to be authorized transmountain diversion projects such as the Frying Pan-Arkansas and the San Juan-Chaze.

Regarding connections between projects we believe it is of vital importance to stress the connection with the Parker-Davis transes sion system. The problem of filling the Glen Canyon reserve is complicated and difficult. The magnitude of runoff during the in period control both the number of years required to achiere pre operating levels and the ensuing power output at Glen Canyon at all plants on the Colorado River below it, particularly Hoover powerplant. Interconnection of large capacity will have an important effect during this period in preserving the best combination of water levels and minimizing or eliminating deficiencies in power output for all concerned.

It will be noted in our report that three lines capable of transmitte about 500,000 kilowatts have been shown for initial construction fru Glen Canyon to the Phoenix area. These are considered essential effect the interconnection with the downstream plans and to per the absorption of early production of Colorado River storage proje power in Arizona. Suggestion is also made that two of these lines later be transferred to the potential Marble Canyon development of about 350,000 kilowatts capacity just below Glen Canyon with proper credit of investment to the Colorado River storage project. The this procedure may be somewhat unorthodox, it is certainly a practica one due to the highly economical characteristics of the Marble Canyon development and the future definite need for lines to carry its output away.

As you gentlemen are aware, the private utilities operating in the Colorado River Basin and adjoining areas have presented a proposa for the construction of a transmission system. The preference cilitomer group represented here is opposed to that private utility pro posal. They do not believe it is in keeping with the spirit and intert of the authorization act in the following respects: (1) It does not provide a federally owned or controlled transmis

. sion grid interconnecting the authorized plants of the project and other Federal powerplants in the area. In this situation it does no seem probable that the Federal Government would have the full and free use of the lines to achieve the maximum of power integratio unless substantial payments were made for transmission of the power and energy involved.

(2) It proposes that the Federal Government at its expense coi struct certain expensive lines, involving over $10 million or aboc one-third of the total, through difficult and relatively uninhabita

However, such Federal lines would not reach any large lox. centers and would interconnect only the Glen Canyon and Curecan developments. They would not connect directly with any other Ferieral systems and would have no independent operating value sint utility systems would control.

(3) The repayment of the project would probably be adverse affected since the project would be entirely hemmed in by a complete belt of utility lines thus hampering the Government in full freedom of power sales. The utilities have given no indication of being willing to pay firm rates for any power available to them, but would be ir control of all outlets beyond these Federal lines.

areas.

(1) No charges for transmitting power for preference customers Ive been indicated. It is not known whether the utilities intend to e as a basis for these charges full utility costs, costs based upon sharg of line capacity, or incremental costs related to those which they insider would be required for their own transmission needs. It is ird to conceive under any circumstance how these charges could be ; low as those related to a complete Federal system and therefore ould adversely affect costs of power to preference customers. The utility proposal was based upon the assumption that preference istomer loads would be such that the utilities would have available 1 percent of the project power in 1965 and 33 percent by 1980. In iets of careful market studies conducted by the preference customers nd the Bureau of Reclamation, it appears that no project power will e available for the utilities at any time. We have no information hether this situation will affect the utilities proposal of October 1, 959. We cannot but wonder, however, what justification, from an ivestor's standpoint, is present under these circumstances for the rivate utilities making the necessary very large investment in transnission facilities.

The preference users in Arizona have expressed themselves as being eady and willing to absorb the unused output of the Colorado River torage project on either a permanent or a temporary basis from the lay it is available *** and at firm prices. We believe this repreents increased revenues of the highest importance to the project in arly years, perhaps as much as $50 million more than could be anticiated if sales to the utility systems only were possible.

A basic concept in the Federal Government's approach to the fiancial operation of a multipurpose project is the maintenance of a miform rate level throughout the repayment period. Thus, after he power investment is repaid with interest, an annual amount equal o the annuity previously paid for this purpose is available for credit against the repayment of the cost of the storage and participating projects. As about 91 percent of such costs must come from power rerenues, its importance is evident. If the private utilities build the transmission system and make a continuing charge for transmitting the power, this increment of repayment will be lost. It amounts to about $6 million per year and totals from $240 million to $330 million over repayment periods of from 40 to 55 years after power investments have been amortized.

The need for immediate initiation of transmission line construction is urgent. Flaming Gorge is scheduled for initial operation in June 1963. A line must be ready by that time if power is not to be bottled up. Even with money available by the early fall of calendar year 1960, none too much time is available. Glen Canyon is scheduled for initial operation in June 1964. Due to the heavy, high-voltage type of construction involved, funds should also be available this calendar year to permit a reasonable schedule of construction. We respectfully urge that at least $5 million be made available in the appropriations for fiscal year 1961 for this purpose. It should be noted that the lines contemplated under this minimum appropriation are those from Flaming Gorge to Oak Creek and Glen Canyon to Farmington and Curecanti which the utilities have indicated should be constructed by the Federal Government.

We also urge that this committee, by suitable language in the bill or otherwise, indicate that the construction of a complete Federal transmission system be contemplated and that the Bureau of Reclamation be instructed to proceed with the necessary engineering stries and include in its future budget presentations requests for the tressary funds to complete the system in time to meet power produtiva and market requirements. In particular, early consideration sivi be given to the following lines: Flaming Gorge to Sinclair, Flamur Gorge to Provo, Glen Canyon to Provo, Farmington to Albuquerque, and Glen Canyon to Phoenix.

Thank you very much, gentlemen. Mr. CANNON. Mr. McPhail, you are an old friend of the committe You have appeared before this committee many times over a los period of years.

We have learned to depend on you, on your technical knowledge and your engineering skill, on your analysis of these various situations

We have before us at this time as a part of this presentation am port prepared by the Kuljian Corp. This corporation has been + tained by the Colorado River Basin Consumers Power, Inc., whic consists of the preference customer groups operating in or adjacent to the area in which the hydroelectric power for the Colorado Rives storage project will ultimately be delivered. The committee would be glad and would appreciate it if you

would look at the map which is submitted here by Kujian Corp. in connetion with this presentation—and I will ask the clerk to hand you : map--and tell us if this project outlined in this map is what you arat this time approving and recommending.

Mr. McPHAIL. Yes, sir, it is.

Mr. CANNON. It is identical. We want to know if your map is identical with the one presented in the Bureau's justifications. You may answer that when the transcript comes to you after you have hai time to look it over.

The following answer was submitted : Mr. McPhail. The maps presented are basically the same insofar as the backbone system is concerned. Our map has some variations and additions i 115 kilovolt lines leading to customers load centers.

Mr. CANNON. In the meantime, Mr. Wilson, is there anything fur ther?

Mr. Wilson. Just permission to file our statements. Mr. Cannon. They will be made a part of the record at this tim (The statements follow:)

STATEMENT OF MARION M. WILSON Mr. Chairman and members of the committee, I am Marion M. Wilson, of Fame Morgan, Colo., representing the Colorado River Basin Consumers Power, Inc. of which I am president. We sincerely appreciate the opportunity to appea. here today.

Our organization, previously known as the Upper Colorado River Preferent Users Committee, represents over 1,250,000 preference consumers in the five State of Arizona, Colorado, New Mexico, Utah, and Wyoming-five States united in common program.

We have been active on Colorado River storage project power matters durik: the past 2 years. We have given considerable time and study to this complei problem directly affecting the future of our area.

lieve a Federal power transmission system is a fundamental necessity successful operation of the Colorado River storage project-to assure repayment, maximum assistance to participating projects, and the def power to major load centers of preference customers in the States of rado River Basin at costs which will not adversely affect power rates mers. We believe construction on such a system should begin this year

1961. do Basin Consumers is organized to represent the thousands of cuskerved by nonprofit power systems in the Colorado River Basin area.

to expedite the two-way flow of information between administration the Congress, other interested groups, and agencies and the actual conpf power. st project was to compile load data of preference users based on estirnished by the individual systems. This data has served to supplement 1 of the Bureau of Reclamation, and its accuracy is reflected in the eement between Bureau and Colorado River Basin Consumer figures. figures show that preference power users, including those in Arizona, 11 times use all project power. it recheck of these estimates against actual purchases reveals that many xceeded their projected 1959 demand. While most of our systems are small, they combine to form a dynamic and growing market for electric id this growth can only be enhanced by the general economic developtemplated in the project. seriously concerned by the status of the power features of the storage Construction of the main-stem units, including generation facilities, ssing rapidly and interest on these power features is accumulating. les will repay 91 percent of all project cost, yet the power transmission of the project are a year behind. If construction is further delayed, asteful crash program, involving considerable strain on all segments -ctric equipment, apparatus, and construction industry, would get the it before project generation began. le stipulations laid down by this committee in its report last year as st, this has been a busy year and largely productive.

10 the Bureau outlined to all potential users a tentative transmission id tentative power flows. This system closely resembled the one prethis committee by the preference group in May of last year, so we to add to it. Ker companies, proceeding on much different preference user load data, ith their own outline which they presented to the Bureau of ReclaOctober 1 and to the consumer group on October 13. tline differed substantially from our program, and from the earlier | the power companies which contemplated a Federal backbone transstem, with some distribution over reasonably available company lines. -mber 15, we advised the companies and the Bureau that we could er the outline as a firm proposal because "it did not contain definitive regarding quantities, costs, or terms and conditions under which ıld be wheeled or delivered to preference users.” To date, we have h definitive reply to our request for cost data. ember it became obvious that independent engineering assistance valuable to us in evaluating further developments or programs. We inate to secure the services of Harvey McPhail, formerly Assistant ner of the Bureau of Reclamation. His survey is contained in the "Federal Transmission System for Colorado River Storage Project as py Preference Customers," dated March 1, 1960, which has been sup11. It is our answer to the request for factual information. ary 19, 1960, E. 0. Larson, director of region IV, Bureau of Reclamarded a letter to the power companies containing five principles by companies' presentation was to be evaluated. The five principles

s must be of sufficient capacity to assure delivery of available power. e must be no interference with the ability of the Bureau to serve customers to the extent they would be served by federally constructed

bone lines must provide suitable integration among Federal project lities at the time required to meet project objectives, and project use times be the overriding consideration.

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