We do not believe that the Bonneville Power Administration can reasonably be expected to serve the firm power needs of preference customers outside the proposed marketing area, ahead of customers inside the area. This would have dire economic consequences within the region to industries that have invested large sums in plant. Moreover, as a practical matter, the Federal Government does not generate enough hydroelectricity to serve the firm power needs of ail preference customers within the economic transmission distance outside the region. This would lead to rationing or other undesirable marketing conditions.

On the other hand, we believe that any temporary surpluses of Federal hydroelectric power available in the Northwest should be sold outside the region. To sell such surpluses would avoid waste of a valuable resource; help utilities in other regions serve their customers more economically, and conserve exhaustible fossi fuel, and produce revenue for the Bonneville Power Administration to help meet its obligation to the Treasury without a rate increase, or with only a small increase. Under terms of the legislation before you, the economic uses of an interti between regions are permissible, and these uses are described in such way as to assure the economic operation of a Pacific Northwest, Pacific Southwest intertie. with great benefit to the Pacific Southwest, as well as the Pacific Northwest. Adopted by the board of directors of the Idaho Cooperative Utilities Association in session this 14th day of May 1963, at Rupert, Idaho.

WILLIAM T. NORDEEN, Secretary.

Mr. ROGERS. The Chair would advise the members that he expects to ask for unanimous consent of the House to resume these committee hearings this afternoon at 2 o'clock.

Mr. HOSMER. May I ask the chairman what is the intention with respect to the additional witnesses that were discussed this morning the witnesses from the Department, and if he has in mind a sort a rump hearing here that would end up today, or are we going to get a chance to inquire into the ramifications of the legislation?

Mr. ROGERS. The Chair would advise the gentleman from California that this subcommittee does not hold rump hearings. The hearings will be held in accordance with the rules, and the first witness this afternoon will be Mr. Luce of the Bonneville Power Administration who is scheduled first on your list.

Mr. HALEY. Mr. Chairman?

Mr. ROGERS. The gentleman from Florida.

Mr. HALEY. I might say there is legislation on the floor of the House today that I know many members of the committee are interested in, and if I am over there, I propose to object to this committee sitting this afternoon.

Mr. ROGERS. The gentleman has that right. That is the reason. the Chair wanted to be fair and advise you what he intended to de The subcommittee will stand adjourned until 2 p.m., and if objection is made, we will resume these hearings at 9:45 in the morning.

(Whereupon, at 11:50 a.m., the subcommittee adjourned, to recetvene at 9:45 a.m., the following day, May 15, 1963.)

MARKETING AREA OF BONNEVILLE POWER

ADMINISTRATION

WEDNESDAY, MAY 15, 1963

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON IRRIGATION AND RECLAMATION OF THE
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D.C.

The subcommittee met, pursuant to adjournment, at 10:30 a.m. in the committee room, 1324 Longworth House Office Building, the Honorable Walter Rogers (chairman of the subcommittee) presiding. Mr. ROGERS. The Subcommittee on Irrigation and Reclamation will come to order for the further consideration of the pending business, H.R. 994 and other bills of a similar nature involving the proposition to guarantee electric consumers in the Pacific Northwest first call on electric energy generated at Federal hydroelectric plants in that region and to guarantee electric consumers in other regions - reciprocal priority, and for other purposes.

The committee members will remember yesterday it was whispered around here that they desired the Secretary of the Interior to be present for these hearings. I want to say the Chair is glad to announce this morning that the Secretary of Interior, in his usual manner of responding to even the whispers of the populace, called me up and said he would be most happy to be here.

So we have with us this morning the Secretary of the Interior, a former member of this committee, a former distinguished Member of Congress, the Honorable Stewart Udall.

Mr. Udall, it is good to have you.

Mr. HALEY. Mr. Chairman?

Mr. ROGERS. Mr. Haley.

Mr. HALEY. Inasmuch as I was doing the whispering, I did not think it was whispering too low or anything. I, too, am glad to have the Secretary up here this morning to explain what I think is a very important bill. As I understand, he was not rendered that courtesy on the other side.

And, Mr. Secretary, you have just heard us trying to go back and straighten out some of the rapid manipulations of the other body in expending over approximately $31⁄2 billion of the taxpayers' money. I think it is only right, fair, and proper that you, as the head of that Department, should be called before this committee and be able to present your views and the members have an opportunity to question That is the reason I made the request.

you.

Mr. ROGERS. Now the first business to come before the committee this morning, of course, is the testimony of the Honorable Stewart L. Udall, Secretary of the Interior, who is accompanied by Mr. Charles F. Luce, the Administrator of the Bonneville Power Administration.

As I said earlier, Mr. Secretary, it is always a pleasure to have you, and the Chair welcomes you at this time and Mr. Luce.

STATEMENT OF STEWART L. UDALL, SECRETARY OF THE INTERIOR

Secretary UDALL. Mr. Chairman, I did not realize I was so popular or I would have been up yesterday.

I do want to say, however, this is very important enabling legislstion, and I think it is quite appropriate I be here. I want you to understand that I speak for the Department, and I think I speak for all the officials of the Department. I am available here today to discuss any matters the committee is interested in with regard to this legislation and the general power policies that we are pursuing.

I think it would help to expedite the time of the committee and enable us to get down to the problems of the matter the committee is interested in, if Mr. Luce, who has a very lucid statement here, could file it with the committee and perhaps summarize it. I think this would be very helpful.

Mr. ROGERS. Without objection, the statement of Mr. Luce w be included in the record at this point the same as if read

Mr. HOSMER. Reserving the right to object, Mr. Chairman. Mr. ROGERS. The gentleman from California reserves the right to object.

Mr. HOSMER. Although we have Mr. Luce's statement up here, he has considerably shortened it down over the statement he had last year, and for the purpose of laying an understandable background for this discussion this morning he ought to set forth whatever detaile reasons he has in the statement for the support of the bill by the administration. So I do object.

Mr. ROGERS. You object to the inclusion of Mr. Luce's statement in the record?

Mr. HOSMER. Yes, I think he ought to read it.

Mr. ROGERS. Objection has been heard, and the statement will be read. You may proceed Mr. Luce.

Let the record be clear, though, on one point, and I think it ought to be cleared at this point. I think the impression was left yesterday. and I believe the statement was made, that the Secretary of the Iterior and others in the Department had refused to come before this committee. Let the Chair clarify that at this time. There has beer. no such refusal by the Secretary of the Interior at any time that I have been associated with this committee, and the present Secretary of Interior was not asked to come before this subcommittee but volunteered and is here under those circumstances.

Mr. HALEY. Mr. Chairman?

Mr. ROGERS. Mr. Haley.

Mr. HALEY. I do not want to leave anybody under any misappre hension here as to this. It was not the gentleman from Florida tha: suggested the Secretary or anybody else was running out on this meeting, so to speak. As I explained when the Secretary was coming to the witness stand, I merely suggested, inasmuch as he had not appeared before the other body, there being some indication that probably he had not been invited here, I thought in fairness to hir and in fairness to this committee, that the Secretary should be allowed the privilege of coming here and testifying.

Mr. SAYLOR. Mr. Chairman?

Mr. ROGERS. Mr. Saylor.

Mr. SAYLOR. I want to make the record clear that the present Secretary of Interior, Mr. Udall, as far as I know, has never refused to appear before this committee or any other committee of the House or the Senate when he has been asked to appear.

While he and I have found shoulder to shoulder on some matters, on others we have disagreed violently, however, the disagreement has never been of a personal nature. I can assure the Secretary that it will never be of a personal nature, but a difference of ideology. I believe that when history is written Secretary Udall will be recognized as one of the outstanding Secretaries of the Interior of these United States.

Mr. HOSMER. Mr. Chairman?

Mr. ROGERS. Mr. Hosmer.

Mr. HOSMER. I want to say I generally feel with respect to the Secretary the same way the gentleman from Pennsylvania does, and I was delighted to hear him say he would answer questions regarding the general power policies that the Department and the Administration is pursuing, because I think you cannot consider the regional superpreference unequal rights bill outside the general policy. Mr. ROGERS. You may proceed, Mr. Luce.

STATEMENT OF CHARLES F. LUCE, ADMINISTRATOR, BONNEVILLE POWER ADMINISTRATION

Mr. LUCE. Mr. Chairman and members of the committee, my name is Charles F. Luce and I am the Administrator of the Bonneville Power Administration.

The bill before the committee today, as compared to the bills before it last year, has been amended by adding two amendments recommended by Governor Hatfield of Oregon.

The first (subsec. (g) of sec. 1) clarifies the bill by incorporating definitions in the Federal Power Commission "Glossary of important power and rate terms." The second (second sentence of sec. 2) would require the Secretary of the Interior, or his representative, to give Bonneville Power Administration customers at least 30 days' notice of any proposed contract for the sale of surplus hydroelectric energy or peaking capacity for use outside the Bonneville Power Administration marketing area, and upon request to make copies of the proposed contract available to those customers.

The Department of Interior has sent to the committee a section-bysection analysis of the bill. As compared to the bill before this committee last year, there has been a third amendment, in addition to the two recommended by Governor Hatfield, which has been interspersed through the bill by the addition of the word "hydroelectric" wherever the words "Federal plants" appear in last year's bill. In the testimony in support of last year's bill, I explained it was intended to apply only to hydroelectric plants, in answer I think to a question of Congressman Johnson. In the interest of clarification we added that word this year to get this in the bill as well as the legislative history.

The question has been asked me whether the addition of the word "hydroelectric" affects the status of the Hanford plant as regards the applicability of this bill to that power. In our opinion it does not.

The Hanford power actually is sold not to the Bonneville Power Administration but to a group of private and public agencies who, is turn, exchange it to Bonneville for power generated at Federal projects-hydroelectric projects. It would be our interpretation under this bill that the power Bonneville will acquire from Hanford by this exchange arrangement is of the same character and subject to exactly the same restrictions as the Federal hydroelectric power for which it was exchanged.

Last year I explained in detail to this committee the origin and development of this bill. This year's bill, like last year's, contains no authorization for a Federal interconnection between the Pacifie Northwest and other regions. Existing statutes authorize the Secre tary of the Interior to construct such a line. The President's fiscal year 1964 budget contains an item to start Federal construction of two lines between the Pacific Northwest and Pacific Southwest. Congress, therefore, has the opportunity this year to decide the separate question of whether the Department of the Interior, by itself, or in cooperation with one or more non-Federal utilities, will construct these lines.

I might say we have not yet had our hearings on the requested appropriations before either the House or Senate Appropriations Committee.

Our House hearings are scheduled, as I understand it, for June 3. Last year I discussed the report of a special task force of the Department of the Interior which concluded that a Pacific Northwest-Pacific Southwest intertie would be highly advantageous to both regions. This conclusion is confirmed by the fact that, since the report was published, seven non-Federal utilities or groups of utilities have offered to build all or parts of the necessary line or lines.

The bill now before this committee would permit and, in fact, facilitate the fullest practical use of an intertie. It provides for sale of Pacific Northwest secondary power in the Pacific Southwest, where it can be used for steam displacement, with economy to power consumers, provided, of course, it is surplus to the needs of our marketing

area.

It provides, in addition, for sale in the Pacific Southwest, and in other regions outside of the Bonneville marketing area, of existing Pacific Northwest surplus hydro peaking capacity and additional peaking capacity which should be installed in the great dams of the Pacific Northwest if they are to be constructed and operated economically.

It provides for transmission north of energy available in the Southwest, principally in California, to firm up a portion of the Northwest's surplus of secondary hydroenergy, thereby making optimum use of California thermal plants and increasing firm power capability of Northwest utilities. And it provides for taking advantage of the seasonal diversity of loads between the two regions. We in the Northwest have a winter peak and the Southwest generally has a summer peak, each of which will become increasingly larger according to the predictions that we have made.

By seasonal exchanges of power between the regions, new plant investment greater than the cost of the intertie can be saved with resulting economies to electric users in each region. From the standpoint of utility systems whose peak loads occur in summer months,