11 contract previously reported as columbium-tantalum was for tin, columbium-tantalum, tungsten, and

is now included under tin.

2 This category combines rare earths (thorium), monazite, and uranium.

Programs

DEFENSE ELECTRIC POWER ADMINISTRATION

The Defense Electric Power Administration conducts the following programs which are separately discussed below : General supervision of power supply expansion to assure an adequate power supply for the Nation; performance of claimant agency, allocations, scheduling, and expediting functions to assure delivery of the materials and equipment needed by the electric power industry for the power expansion program and for maintenance and operation; allocation of electric energy, through the issuance of curtailment orders where shortages occur; and recommendation with respect to expansion aids provided under the Defense Production Act of 1950 as amended and Internal Revenue Code amendments relating to accelerated tax amortization.

Authority

The authority of Defense Electric Power Administration is derived from: The Defense Production Act of 1950, as amended (50 U. S. C. App. Supp. V, sec. 2061 et seq.; Public Law 429, 82d Cong., 2d sess.); Executive Order 10161, September 9, 1950, as amended (15 F. R. 6105; 16 F. R. 61, 8789; 17 F. R. 1171); Executive Order 10200, January 3, 1951 (16 F. R. 61); DPA Del. 1, January 24, 1951, as amended November 3, 1951 (16 F. R. 11245); DPA Order 1, May 24, 1951, as amended (16 F. R. 4913, 11038; 17 F. R. 899); DPA Regulation 1, as amended February 14, 1952 (17 F. R. 1467) ; NPA Order M-50; Interior Department Order No. 2605, as amended September 10, 1952 (17 F. R. 8366); Revenue Act of 1950, September 23, 1950 (64 Stat. 939).

Power supply

Planning an adequate electric power supply for the Nation is one of DEPA's primary functions. Constant attention is given to determining where and how much power will be required as the defense program advances. This power supply planning forms the basis of DEPA's action in all of its other operations, including the presentation of materials requirements as a claimant agency, the allocation of materials among projects, the scheduling of delivery dates of power equipment, financial aids to expansion, and measuring the need for power curtailments.

The power supply planning function is conducted by means of analyses of power supply conditions by regions. In developing these analyses, two independent methods of data collection are used and checked against each other: First, regional load and capability information is obtained from the power suppliers and, second, national load forecasts are made by category of use.

In collecting load and capability information from the electric utility industry, DEPA secures operating reports from and maintains continuous and close contact with regional power pool coordinating groups throughout the country. These groups prepare estimates of power requirements and loads on an integrated pool or area basis and these estimates are submitted to DEPA through the Federal Power Commission. This technique assures uniformity of reporting. Regional engineers from DEPA meet with such groups at intervals to clarify basic assumptions, to discuss operating conditions, and to compare data from various sources with respect to prospective large power loads.

The second method, called the use category summation method, develops estimates of national residential and commercial loads, along with estimates of power requirements for various segments of industry such as chemicals, steel, aluminum, textiles, and paper. This method makes use of statistical studies by Government agencies, trade associations, and others. The aggregate power loads obtained by this method are used as checks against the national totals obtained from the regional and area estimates.

From the data collected by these two methods, DEPA maintains studies showing month by month for three or more years the expected status of power loads and capabilities by regions and, where required, by local areas.

From time to time DEPA prepares for restricted distribution among other defense agencies reports on the prospective power situation for the principal power regions, with a national summary. Such reports have been prepared as of December 13, 1951, May 1, 1952, and August 1, 1952. The first of these reports furnished basic data for the report by the Electric Power Advisory Committee appointed by DPA to submit recommendations on the size of the power expansion program.

On March 19, 1952, DPA formally established a power expansion goal of 32,000,000 kilowatts of generating capability to be added during the 3-year period 1952-54 above the capability at the end of 1951 which was approximately 75,

000,000 kilowatts. This goal was approximately at the limits set by the productive capacity of manufacturers of heavy power equipment. The goal was extended in August 1952 to cover the installation of 41,000,000 kilowatts for the 4-year period 1952-55, and 1,000,000 kilowatts to be added in 1956 for special defense loads. Except for this 1,000,000 kilowatts, no goal is being established at this time as to the additional capacity to be installed in 1956. The expected steps in attaining the goal for the years 1952-55 are shown below, in comparison with the planned development under the goal as previously established on March 19, 1952.

As indicated in the table, the planned addition for 1952 under the new goal is 2,000,000 kilowatts less than under the previous goal. This slippage of 2,000,000 kilowatts is largely attributable to delay in deliveries of heavy power equipment resulting from the inability of equipment manufacturers to obtain adequate amounts of materials during 1951. The 1952 plants which have slipped should be in service by early 1953. Prior to the steel strike it was expected that this could be accomplished without serious displacement of the 1953 schedules. In other words, it had been contemplated that 1953 completions would include both the 2,000,000 kilowatts which slipped from 1952 and most of the 11,000,000 kilowatts originally scheduled for 1953, although a minor portion of the 1953 scheduled installations would probably have been delayed into 1954 due to limitations in manufacturing capacity.

These expectations were upset, however, by the steel strike and by the diversion of the initial flow of steel after the resumption of production to the military, AEC, and machine-tool programs having priority standing. It is definitely known that these events have already produced a slippage of the order of 3,000,000 kilowatts in the previously established 1953 program. For this reason, as the table shows, the portion of the goal scheduled for 1953 completion has been revised downward to 10,000,000 kilowatts. This set-back to the power program cannot be made up before 1955 because of limitations in manufacturing capacity.

In considering slippage, it should be borne in mind that installations of new generating capacity are usually scheduled to be in service in time to meet peak loads for a particular year. In most sections of the country such peak loads occur in December. If plants due to be in service by December slip into the following year by even 2 or 3 months, the effect on ability to carry load is in many cases as serious as though the slippage had been the full year until the following year's peak.

One of the complicating factors in power supply planning is the emergence of large new loads not previously considered in programing additions year by year. The recently announced AEC expansion, for example, involves very substantial loads, giving rise to a host of changes in power supply planning. New machines must be inserted in manufacturers' schedules which are already crowded; materials must be made available for new power plants which will serve AEC installations. Similar problems will arise with other major additions to the defense program such as possible further aluminum expansion.

In order to reduce the number of disruptions caused by the emergence of such unanticipated loads, the Administrator of DPA, at DEPA's request, established a procedure by which all claimant agencies are to consult with DEPA on power supply before acting on any application for authority to commence construction of a project with power requirements of 2,000 kilowatts or more. In addition, DEPA has requested claimant agencies to consult DEPA during preliminary stages of all expansion programs involving substantial blocks of power, even before specific projects are planned.

Forecasted margins of generating capacity are lower in some areas of the country than in others, such lower power margins in most gases being due to a

heavy influx of defense plants. Moreover, the regions where the margins are smallest are generally the regions where additional large defense loads are most likely to develop. DEPA has established relative urgency ratings for all new capacity additions scheduled for operation up to the end of 1954. These urgency ratings indicate the relative degree of protection against slippage which individual generating projects should receive. The higher urgency ratings have been assigned to plants in areas of lower prospective margins, the very highest ratings being assigned in those low margin areas where vital defense industries are located. The list of urgency ratings has been distributed to the Government agencies, manufacturers, and utilities involved as a guide to their operations. The large slippages in the power program for 1952 and 1953 have been partially offset by similar slippages in the development of expected loads. As a result, the outlook for the winter 1952-53 indicates general ability to carry loads, with the exception of the Pacific Northwest where the situation is serious. In certain other areas, however, the margins of capability over loads are dangerously low. In addition, the possibility of a shortage exists in the summer of 1953 in the South-Central section which has a summer peak. The outlook for the winter 1953–54, except in the Pacific Northwest, is somewhat better depending on whether further slippage can be avoided.

The power supply function also embraces the investigation and encouragement of those interconnections and other transmission lines which can make needed power available. Interconnections are also a subject of discussion with the Federal Power Commission with regard to the grant of exemptions from FPC jurisdiction which are frequently necessary before utilities not otherwise subject to FPC jurisdiction will interconnect.

Materials and equipment

DEPA, as claimant agency for the electric power industry, is responsible for the allocation and distribution, within the limitation of over-all materials allocations made by the Defense Production Administration, of controlled materials required directly by electric utilities for the electric power expansion program, and for the maintenance and operation of electric power systems.

We referred in our previous report to the stringencies which developed as a result of inadequate allotments of controlled materials to the power program and inability to cash allotment tickets during the latter half of 1951. Some of these effects were immediate. For example, to the extent that steel was not available in 1951 for completion of field construction of certain projects, nearterm operating dates were delayed. A more important effect of the 1951 shortages was delay in in-service dates originally scheduled for the latter part of 1952 and the years 1953 and 1954. As a result it became apparent that originally established expansion goals for 1952 could not be met.

The situation was greatly improved in the first two quarters of 1952. The improvement resulted largely from greater recognition of the needs of the power program, notably in the form of increased material allotments, as a consequence of the review of the program by the Electric Power Advisory Committee named by Mr. Fleischmann, and the recommendations by the Joint Committee for Defense Production. This improvement also resulted from the better operation of CMP which led to increased "cashability" of CMP tickets in the first two quarters of 1952.

Schedules which had slipped previously because of lack of adequate allotments were stabilized during this period and the prospect of further slippage appeared to be greatly minimized. Spot problems occasioned by the lack of specific shapes of steel were solved in many instances by the coordinated efforts of NPA, DPA, and DEPA through the Electric Power Coordinating Committee. Such assistance was given both to utilities and to manufacturers of major equipment items. However, shortages of capacity to produce certain steel items, such as tubing and heavy plate, were not solved and remained a very serious bottleneck.

The relatively favorable progress of the first half of 1952 was arrested by the steel strike. Virtually no steel was obtainable for power plant expansion during the 2 months of the steel strike, and additional losses have been suffered during the recovery from the strike for reasons discussed below. As a result, additional slippage now appears inevitable, particularly because of delays in shipment of major equipment items. Even though material allotments henceforth were to permit manufacturers of equipment to operate up to their manufacturing capacity, it will not be possible until 1955, because of capacity limits, to make up for losses incurred as a result of the steel strike. The cumulative effect of delays

resulting from the steel strike superimposed on prior delays is expected to cause delays in in-service dates of from 2 to 6 months. This is reflected in the revision of the power expansion goal discussed in the power supply section of this report. A survey is now in progress to determine the extent of the slippage for each individual project.

The shortage caused by the steel strike caused the recurrence of a fundamental problem of the power program-inability to get priority over less essential programs in obtaining materials during times of shortage. Indeed, insofar as supply to the military and AEC is concerned, power has a lesser priority status than other programs, even though power is indispensable. This is brought about by the B-5 priority procedure which gives special priority for procurement of materials entering into the production of all tangible goods for the military and AEC. The B-5 is not available to get materials for the construction of facilities to produce goods or services for AEC and the military-such as power plants. The provision for AEC and the military of an adequate supply of those materials and services which are dependent primarily upon new plant construction-such as electric power-is thus less well protected than other military requirements.

This fundamental problem was accentuated by control procedures adopted by NPA after the steel strike which were designed to assist the military and atomic energy programs in recovering the production lost because of the strike. The effect of these procedures was to cause further delays to other steel users, including the power program. This operated to increase the threat of inadequate power supply for those programs, in particular the atomic-energy program which is a large user of power. Recognizing the threat, DPA and NPA agreed that special expediting assistance should be extended to selected power plants necessary for service to AEC installations. Arrangements are now being completed to operate under this case-by-case expediting approach for AEC related projects. Whether this solution for AEC related projects is sufficient remains to be seen. It falls short, however, of the measures considered adequate and recommended by DEPA for the power program generally under circumstances where normal controlled materials procedures would not insure timely delivery of materials. To safeguard the power program under such circumstances, DEPA has urged that there be granted for the power program as a whole an automatic priority superior to that available for other expansion programs upon which the Nation's total industrial output is less dependent. This recommendation was initially made at the time NPA and DPA were considering decontrol measures and it appeared that the long lead time power program might be left to drift admist the competition of less essential uses in a free materials economy. The recommendation was made again with regard to the anticipated adverse effect of NPA procedures upon the cashability of CMP allotments for the power program in the period of recovery from the steel strike. On neither occasion did DPA and NPA see their way clear to adopt DEPA's recommendation.

DEPA's proposal that an automatic priority be extended to the whole power program rather than to just a selected part of it was based upon a reality about power curtailments concerning which there is much misunderstanding. Substantial power savings cannot be achieved through curtailment of residential and commercial loads. Experience in all previous power shortage situations clearly demonstrates that if power supply is inadequate, the resulting curtailment or loads must fall as a practical matter primarily upon industrial production. The joint committee's electric power study recognized this problem and pointed out that the only assurance of adequate power supply for defense production is the completion on schedule of sufficient capacity so that curtailments will not be necessary.

DEPA's proposal for an automatic priority rather than for mere expediting assistance was based on the recognition of two inherent deficiencies in the expediting technique: First, expediting assistance does not become available until procurement delays have become definite and sometimes irremediable; second, expediting involves paper work in Washington on a case-by-case basis with attendant further delays.

Scheduling. Under a joint operating arrangement with NPA, the agency responsible for production of power equipment, DEPA is responsible for determining the sequence in which power equipment should be delivered to utilities in order to meet required in-service dates of power projects. This arrangement was reached because of special factors affecting power expansion which merit explanation. First, power plants are essentially custom made, with the result that units designed for one location cannot usually be diverted to other locations. Second, since the power expansion goal calls for capacity operation by