They are entitled to their thinking and I don't quarrel with their thinking, but I want to do my own thinking, and that has led me to the conclusion that public power has been a benefit to the people and will continue to be a benefit. But, I do not like monopoly in any form. I do not like monopoly, whether it is private monopoly or Government monopoly. There is room in this Nation for the development of private and public power and there is no reason why they cannot work side by side in a partnership of mutual direction, greater service to a greater number of people. I think in view of the fact that the committee is concerned with monopoly and that the Secretary has made that positive statement, I thought it should go into the record. Thank you, Senator, very much for that privilege. Senator KILGORE. Very well. We will recess to meet again at the call of the Chair. (Whereupon, at 4:20 p. m., the committee recessed, subject to the call of the chairman.) EXHIBIT 1 DEPARTMENT OF THE INTERIOR POWER POLICY The Reclamation Act of 1902, as supplemented by the act of 1906, and various other acts of Congress since that date, to and including the Appropriation Act of 1953, have served to make the Department of the Interior the marketing agency for electric energy produced at many Federal Government-owned plants. These various acts of Congress have served to establish some basic policies for the marketing of this power as well as the planning of facilities for generation and transmission. Supplementary to these acts of Congress, the Department has, on various occasions in the past, stated policies on this important matter. The statement herewith of power policy is a summary of the guiding principles which the Department of the Interior will hereafter follow in planning and operating facilities for the generation and transmission, and marketing of electric energy. It is based upon the various acts and statements of Congress and statements of this administration's policy. It supersedes all statements of power policy heretofore issued by the Department. The policies hereinafter stated will be modified if at any time this is necessary to better serve the paramount requirements of national defense. 1. GENERATING FACILITIES The primary responsibilities of the Department are the reclamation of arid and semiarid lands under the Federal reclamation laws and the development of natural resources as authorized by Congress. These responsibilities include the disposal of surplus electric energy which can be economically produced in the course of the development of these resources. The Department of the Interior will, therefore, actively plan and recommend construction of generating facilities in hydro projects under its jurisdiction when such facilities are economically justified and feasible. The Department will particularly emphasize those multipurpose projects with hydroelectric developments which, because of size or complexity, are beyond the means of local, public, or private enterprise. It is recognized that the primary responsibility for supplying power needs of an area rests with the people locally. The responsibility of the Department of the Interior is to give leadership and assistance in the conservation and wise utilization of natural resources. The Department does not assume that it has the exclusive right or responsibility for the construction of dams or the generation, transmission, and sale of electric energy in any area, basin, or region. In general, it will not oppose the construction of facilities which local interests, either public or private, are willing and able to provide in accordance with licenses and other controls of the Federal Power Commission or other appropriate regulatory bodies and which are consonant with the best development of the natural resources of the area. CITATIONS a. Address by the President, state of the Union message to 1st session of 83d Congress "***The best natural resources program will not result from exclusive dependence on Federal bureaucracy. It will involve a partnership of the States and local communities, private citizens, and the Federal Government, all working together. This combined effort will advance the development of the great river valleys of our Nation and the power that they can generate.' b. Reclamation Act of 1906, 43 U. S. C. sec. 522 "Whenever a development of power is necessary for the irrigation of lands, under any project undertaken under the said reclamation law, or an opportunity is afforded for the development of power under any such project, the Secretary of the Interior is authorized to lease for a period not exceeding 10 years, giving preference to municipal purposes, any surplus power or power privilege * * Provided, That no lease shall be made of such surplus power or power privileges as will impair the efficiency of the irrigation project ***” c. House committee on Interior Department appropriation bill, 1949 "Statement of policy. The committee desires to reemphasize its statement in former reports on the bill, that the reclaiming of arid lands by the construction of reclamation projects is and always has been the primary purpose of the reclamatior laws. Development of hydroelectric power is incidental to irrigation and is made as a means of financially aiding and assisting such undertakings. This policy should not be departed from without specific legislation by the Congress." d. Address of Secretary McKay at Boston, Mass., May 14, 1953 "It should be our objective in these multipurpose reservoir projects to utilize this water resource to the maximum in the generation of hydroelectric power, so far as that can be done, without taking away what we need for consumption purposes, such as reclamation, municipal water and other uses in that category." "We will continue within the limits that the national budget will permit with construction of such of these projects as are economically feasible and fall in the proper category of Federal projects." 2. TRANSMISSION FACILITIES The Department of the Interior will construct and operate transmission lines that are economically feasible and necessary for proper connection and operation of federally owned generating plants. Transmission facilities will also be built and operated to carry power to load centers within economic transmission distances unless other public or private agencies have or will provide the necessary facilities upon reasonable terms. These terms shall generally be such that the federally produced power will be made available to customers at costs not higher than would result from the construction of transmission facilities by the Federal Government. CITATIONS a. Bonneville Act of 1937 (16 U. S. C. sec. 832a (b)) "In order to encourage the widest possible use of all electric energy that can be generated and marketed and to provide reasonable outlets therefor, and to prevent the monopolization thereof by limited groups, the Administrator is authorized and directed to provide, construct, operate, maintain, and improve such electric transmission lines and substations, and facilities and structures appurtenant thereto, as he finds necessary, desirable, or appropriate for the purpose of transmitting electric energy, available for sale, from the Bonneville project to existing and potential markets, and, for the purpose of interchange of electric energy, to interconnect the Bonneville project with other Federal projects and publicly owned power systems constructed on or after August 20, 1937." b. Fort Peck Act of 1938 (16 U. S. C. sec. 833a (b)) "In order to encourage the widest possible use of all electric energy that can be generated and marketed and to provide reasonable outlets therefor, and to prevent the monopolization thereof by limited groups, the Bureau is authorized and directed to provide, construct, operate, maintain, and improve such electric transmission lines and substations, and facilities and structures appurtenant thereto, as it finds necessary, desirable, or appropriate for the purpose of transmitting electric energy, available for sale from the Fort Peck project to existing and potential markets, and, for the purpose of interchange of electric energy, to interconnect the Fort Peck project with either private or with other Federal projects and publicly owned power systems now or hereafter constructed." c. Flood Control Act of 1944 (16 U. S. C. sec. 5) "The Secretary of the Interior is authorized, from funds to be appropriated by the Congress, to construct or acquire, by purchase or other agreement, only such transmission lines and related facilities as may be necessary in order to make the power and energy generated at said projects available in wholesale quantities for sale on fair and reasonable terms and conditions to facilities owned by the Federal Government, public bodies, cooperatives, and privately owned companies." d. Senate committee on Interior Department appropriation bill, 1954 "The committee reiterates its view that efforts should be made to secure wheeling contracts wherever possible, and that the Federal Government should build transmission lines only when such agreements cannot be negotiated at comparable cost to consumers; the only exception to this policy should be with respect to main lines for the purpose of connecting Federal hydroelectric plants, where the benefits from the integration justify the expenditure." 3. PREFERENCE TO PUBLIC AGENCIES AND COOPERATIVES The Department of the Interior will operate the federally owned generating and transmission facilities under its control for the benefit of the general public, and particularly of domestic and rural customers, and the Department will give preference and priority to public bodies and cooperatives in disposing of electric energy generated at Federal plants. It will be the policy of the Department to dispose of power, remaining after provision for existing preference customers, to privately owned public utilities serving domestic and rural customers in the area. The Department will not ordinarily undertake to dispose of power directly to consumers except to carry out existing contracts or renewals or expansion thereof, nor will it use or permit the use of the preference privilege as a means to provide power for large industrial consumers at the expense of domestic and rural customers served by either publicly or privately owned public utilities. a. Reclamation Act of 1906 CITATIONS 11* * * The Secretary of Interior is authorized to lease for a period not exceeding 10 years, giving preference to municipal purposes, any surplus power or power privilege b. Reclamation Act of 1939 (Sec. 485h (c)) 11* * * That in the sale or lease preferences shall be given to municipalities and other public corporations or agencies; and also to cooperatives and other nonprofit organizations financed in whole or in part by loans made pursuant to sections 901-914 of title 7 (Rural Electrification Administration)." c. Bonneville Act of 1937 "In order to insure that the facilities for the generation of electric energy at the Bonneville project shall be operated for the benefit of the general public, and particularly of domestic and rural consumers, the Administrator shall at all times, in disposing of electric energy generated at said project, give preference and priority to public bodies and cooperatives." d. Fort Peck Act of 1938 "In order to insure that the facilities for the generation of electric energy at the Fort Peck project shall be operated for the benefit of the general public, and particularly of domestic and rural consumers, the Bureau shall at all times, in disposing of electric energy generated at such project, give preference and priority to public bodies and cooperatives." e. Flood Control Act of 1944 "***The Secretary of the Interior *** shall transmit and dispose of such power and energy in such manner as to encourage the most widespread use thereof at the lowest possible rates to consumers consistent with sound business principles, the rate schedules to become effective upon confirmation and approval by the Federal Power Commission. Preference in the sale of such power and energy shall be given to public bodies and cooperatives. The Secretary of the Interior is authorized, from funds to be appropriated by the Congress, to construct or acquire, by purchase or other agreement, only such transmission lines and related facilities as may be necessary in order to make the power and energy generated at said projects available in wholesale quantities for sale on fair and reasonable terms and conditions to facilitates owned by the Federal Government, public bodies, cooperatives, and privately owned companies ***" 4. RATES FOR SALE OF ELECTRIC ENERGY The Department of the Interior will dispose of power and energy at the lowest possible rates to consumers consistent with sound business principles. Rate schedules will be prepared on a basis which will provide for the cost of producing and transmitting the energy and will return the capital investment in generation and transmission facilities together with interest in not more than 50 years. If reclamation costs are assigned to power, rates for power shall be such as to recover these additional costs within a reasonable time. Rates will be reviewed at periodic intervals, generally not exceeding 5 years, and at such times adjustments will be made to reflect actual costs where only estimates were available before, to reflect additions to the system which are in operation at the time of application of the new rates, and other proper items. CITATIONS a. Reclamation Project Act of 1939 (43 U. S. C. sec. 485h (c)) "*** Any sale of electric power or lease of power privilege made by the Secretary in connection with the operation of any project or division of a project, shall be for such periods, not to exceed 40 years, and at such rates as in his judgment will produce power revenues at least sufficient to cover an appropriate share of the annual operation and maintenance costs, interest on an appropriate share of the construction investment at not less than 3 percent per annum, and such other fixed charges as the Secretary deems proper." b. Bonneville Act of 1937 (16 U. S. C.) "Schedules of rates and charges for electric energy produced at the Bonneville project and sold to purchasers as in this chapter provided shall be prepared by the Administrator and become effective upon confirmation and approval thereof by the Federal Power Commission; and such rates and charges shall also be appli-cable to the disposition of electric energy to Federal agencies. Subject to confirmation and approval by the Federal Power Commission such rate schedules may be modified from time to time by the Administrator***" (sec. 832e). ***Rate schedules shall be drawn having regard to the recovery (upon the basis of the application of such rate schedules to the capacity of the electric facilities of the Bonneville project) of the cost of producing and transmitting such electric energy, including the amortization of capital investment over a reasonable period of years" (sec. 832f). "Contracts entered into under this section shall be binding in accordance with the terms thereof and shall be effective for such period or periods, including renewals or extensions, as may be provided therein not exceeding in the aggregate 20 years from the respective dates of making such contracts. Contracts entered into under this subsection shall contain such provisions as the Administrator and purchaser agree upon for the equitable adjustment of rates at appropriate intervals, not less frequently than once in 5 years" (sec. 832d). c. Fort Peck Act of 1938 (16 U. S. C. sec. 833d) "Schedules of rates and charges for electric energy produced at the Fort Peck project and sold to purchasers as in this chapter provided shall be prepared by the Bureau and become effective upon confirmation and approval thereof by the Federal Power Commission. Subject to confirmation and approval by the Federal Power Commission, such rate schedules may be modified from time to time by the Bureau and shall be fixed and established with a view to encouraging the widest possible diversified use of electric energy. The said rate schedules may provide for uniform rate or rates uniform throughout prescribed transmission areas in order to extend the benefits of an integrated transmission system and encourage the equitable distribution of the electric energy developed at the Fort Peck project." d. Flood Control Act of 1944 ****The Secretary of the Interior *** shall *** dispose of power and energy *** at the lowest possible rates to consumers consistent with sound business principles, the rate schedules to become effective upon confirmation and approval by the Federal Power Commission. Rate schedules shall be drawn having regard to the recovery (upon the basis of the application of such rate schedules to the capacity of the electric facilities of the projects) of the cost of producing and transmitting such electric energy, including the amortization of the capital investment allocated to power over a reasonable period of years 5. RESALE RATES OF ELECTRIC ENERGY Ordinarily in contracts with public agencies or cooperatives for the sale of electric energy no resale rate controls will be imposed by the Department of the Interior. It will be presumed that such bodies are responsible directly to customers they serve and are fully protecting the interests of these customers. In all contracts with customers other than public agencies or cooperatives, provision will be made to prohibit the resale of energy unless the purchaser is a public utility serving principally domestic and rural customers. In the latter event, provision will be made to insure that power is furnished to ultimate consumers at the lowest rates which shall reflect as nearly as possible the cost of the service plus a reasonable return on the investment at work. CITATION a. Bonneville Act of 1937 (16 U. S. C. sec. 832d) (* * * Contracts entered into with any utility engaged in the sale of electric energy to the general public shall contain such terms and conditions, including among other things stipulations concerning resale and resale rates by any such utility as the Administrator may deem necessary, desirable or appropriate to effectuate the purpose of this chapter and to insure the resale by such utility to the ultimate consumer shall be at rates which are reasonable and nondiscriminatory." EXHIBIT 2 UNITED STATES DEPARTMENT OF THE INTERIOR, MEMORANDUM To: Secretary of the Interior. From: Commissioner, Bureau of Reclamation. Subject: Marketing criteria for Western Division-Missouri River Basin, Colorado, Wyoming, and western Nebraska. The present status of power supply from existing powerplants and those anticipated to go into operation in the near future, and its relation to the power requirements of existing and prospective customers, have caused us to review the Bureau's entire plan of power marketing in the Western Division of the Missouri River Basin. As a result of our study, we propose and recommend the following plan for disposal of available power in Colorado, Wyoming, and western Nebraska. For your convenience in considering the plan, a map of the affected area is attached. This map shows the lines of the Bureau which exist and are under construction as well as delineating generally the areas covered by existing wheeling arrangements. The plan is discussed in the following paragraphs under the respective headings of "Power Supply," "Marketing Criteria," and "Rates." Power supply 1. The power and energy available for sale on a firm power basis will be determined after taking into consideration the hydrology of stream flow, the length and severity of less than average water conditions, the integration of water operations on different streams, the load pattern of separate sections of the marketing area, and other pertinent factors. Determinations also anticipate the purchase of thermal generated energy from available sources in the area to supplement energy available in low water years to an amount not exceeding that which would be available under average water conditions. As a minimum, firm energy capabilities may be considered to be not less than 110 percent of adverse year energy provided this does not result in greater than average year energy. Experience has shown that sale of power on an average year basis has not required curtailment of service due to insufficiency of water and inability to augment such energy to average year conditions. In the application of this criteria, it must be recognized that the Federal Government does not assume a utility responsibility and there |