will depend entirely upon appropriations made by the Congress. I am confident, however, that the minimum loss under the terms of the bill now before this subcommittee would be $200,000-the loss could very easily run over $500,000. In addition to loss occasioned by interrupting the construction program, there will be a very serious loss due to the fact that it will be necessary to take units 5 and 6 out of operation in order to construct the foundations for units 7 to 10, due to the fact that it will be necessary to construct a cofferdam in connection with installing these foundations. By all rules of logic and businesslike procedure these foundations should be installed at the same time units 5 and 6 are being completed. If this procedure is not followed the Government will suffer a large loss in revenue from units 5 and 6. These two units will have a capacity of 108,000 kilowatts, which, if sold on a firm basis of $17.50 per kilowatt-year, represents $1,890,000 in revenue for the Federal Government. No accurate estimate is available as to the length of time these two units would have to be shut down, but at best it would be several months, and the loss in revenue would be a very substantial amount. In addition to this, however, what is far more serious is the fact that the Bonneville Power Administration would have its hands tied with respect to sale of power from these units until the foundations of the remaining units are installed and units 5 and 6 are in permanent operation. The reason for this is that any industry desiring to locate in the Pacific Northwest and utilize Bonneville power must of necessity have a guaranty of the delivery without interruption of the amount of power contracted for. This would obviously be impossible as long as the units will have to be taken out of operation whenever the Congress decides to appropriate funds for the completion of the project. NECESSITY FOR INSTALLATION OF FOUR REMAINING GENERATORS In January the Secretary of the Interior wrote to the Secretary of War and indicated the necessity for going ahead with the installation of the remaining four generators. (See p. 223 House hearing Interior appropriation bill, 1941.) He pointed out in his letter that by 1942 there would be a demand for primary power to the extent of 231,920 kilowatts, which is 37,520 kilowatts in excess of the dependable power which will be available at Bonneville if we maintain the reduced appropriation and restrictive language contained in the pending bill as it passed the House. In order to give the committee the details of this estimate I submit a break-down prepared by the Bonneville Power Administration. (Exhibit B referred to above reads as follows:) EXHIBIT B.-The Bonneville project -Summary of estimated primary power demands status as of Dec. 31, 1939 Public utility districts (excluding Rural Electrification Administration): Skamania 2 Senator HOLMAN. I also submit for the record a statement prepared by the Administration which shows that to date a total of 121 applications for primary power have been received, totaling 657,614 kilowatts, which is considerably in excess of the ultimate capacity of the plant-518,400 kilowatts. I submit exhibit C to demonstrate the details. (Exhibit C referred to above reads as follows:) EXHIBIT C.--Power sales progress-total to date Senator HOLMAN. These figures definitely establish that there is a ready market for the maximum capacity of the Bonneville plant. If completion of the project is delayed it necessarily follows that recovery of the Government's investment through the sale of electrical energy will be materially retarded. In addition, such a delay will act as a curb upon the development of the Northwest and will bring to an abrupt halt a program of industrial expansion in that region which is providing new wealth for the country and is resulting in the establishment of strategic industries in the Northwest which are of great importance from the standpoint of national defense. I refer to the recent location of a steel plant on the Columbia River and the possibility of the recovery of strategic war minerals through electrometallurgical processes. We have never had any steel plants operating before. INDUSTRIAL DEVELOPMENT OF NORTHWEST The industrial development of the Northwest will go a long way toward solving our serious unemployment problem. Already, with only two new industries a steel plant and an aluminum plant-an estimated 4,357 new jobs have been created. I submit for the record an explanation of this estimate, together with a statement relative to the ultimate employment possibilities of the region through industrial development made possible by the generation of cheap hydroelectric energy at Bonneville. I submit Exhibit D. I would like to read that, but I imagine that your time is so curtailed that I will have to forego it, but I make a plea to the members of the committee to please read exhibit D. (Exhibit D referred to above reads as follows:) EXHIBIT D.-Employment The amount of direct industrial employment per horsepower installed depends primarily on the ratio of the number of sattelite industries to basic industries. Sattelite industries are those which continue processing from the raw finished state produced by the basic industries. With the increase in the number of sattelite industries, the employment ratio rises. Under a given relationship between basic and sattelite industries the amount of possible employment can be measured. The total complete installed capacity at Bonneville will be 518,400 kilowatts which is equivalent to 698,000 horsepower. Of this amount about 471,000 horsepower will be available for industrial use either through direct Federal wholesale contracts or distribution through the retail agencies. The first segment of the transmission grid was completed in December 1939 when the Bonneville-Vancouver lines were energized. Since that date two major industries have executed contracts with the Bonneville Power Administration Based on information available when these contracts were in process, the early employment possibilities are listed as follows: Employment based on 2 existing Bonneville basic industrial contracts Sierra Iron Co. 500-ton capacity, direct factory employment_ 350 250 167 400 250 300 500 830 350 300 3, 697 Estimated industrial employment that will develop to manufacture aluminum products _ _. Total direct and satellite employment, 2 basic industries.. Retail prime power sales contracts, 26,600 kilowatts executed and 17,100 kilowatts under negotiation, resulting employment.___. Total in sight employment from 2 basic and satellite industries and 660 4,357 It is too early to measure the full employment effect of additional collateral industries which follow the establishment of these basic industries. Initially, only pig aluminum will be produced in the new northwest plant of the Aluminum Co. This pig aluminum will be utilized by the Pacific coast airplane plants. This coast industry is now reported as employing about 40,000 men. The above number of wage earners will increase as sattelite industries are established to meet the needs of the western market in providing native materials in the place of imported raw and fabricted products. Twenty-six thousand six hundred kilowatts of prime power has been sold to distributing agencies, embracing public-utility districts, municipalities, and private utilities. In addition 17,100 prime kilowatts of such power are under contract negotiation. The retail end of this capacity will early furnish employment for 660 men. Therefore, the insight employment from prime-power contracts, executed or under way, will total 4,357. Temporary employment resulting from dump-power sales has not been included in this summary. Concentrated industry in Niagara County, N. Y., with the major power output going to 26 basic industries, furnishes a direct industrial employment of 42.8 wage earners per 1,000 horsepower. In the United States as a whole, with a large ratio of sattelitic to basic industries, industrial employment is around 153 wage earners per 1,000 installed horsepower. The ultimate Bonneville industrial ratio should be intermediate between these two cited limits, or about 85 wage earners per 1,000 horsepower. Measured by such a conservative yardstick, Bonneville should ultimately furnish a direct industrial employment of around 40,000 wage earners. This estimate is in line with the above cited experience of the two initial basic Bonneville industries. 216797 7-40-- 12 With a wider distribution of secondary industries, the number of direct wage earners could be increased to 67,500 which corresponds with the national experience. The latest average figures of the Department of Commerce sets the industrial employment in Oregon as 52,216 and in the State of Washington, 81,780 or a total of 133,996. These employment figures are for direct employment. Industrial direct employment induces indirect employment. In the United States there are about 2.57 indirect wage earners per industrial employee. Full indirect employment will not probably be realized in the Northwest because of a changing agricultural and forestry condition. However, it is reasonable to forecast that the most probable indirect employment will be about 60 percent of the national average, or 1.5 to 1.6 indirect wage earners per direct industrial wage earner. Summarizing this data it may be conservatively stated that a total of between 100,000 and 168,000 wage earners will be employed directly and indirectly as a result of the completion of the Bonneville project. AMOUNT OF INCREASE REQUESTED Senator HOLMAN. Although the Annual Report of the Chief of Engineers for 1939 shows that $7,089,200 could be profitably expended for power facilities during the fiscal year 1941, because of budgetary considerations, I do not propose to ask the committee to include this amount in the bill. It is estimated that $4,000,000 will be necessary to bring the substructure of the last four units to a point where units 5 and 6 will not have to be taken out of operation when the final installation is made. I am informed that $2,500,000 of this amount can be profitably expended in the fiscal year 1941 and $1,500,000 can be profitably expended in the fiscal year 1942, so that on a continuing contract basis it will be possible for the work to proceed in a satisfactory manner if $2,500,000 is added to the bill for work on the foundations of the last four units. An additional $100,000 should be added to accelerate completion of units 5 and 6, so that they will be available for the generation of power on January 1, 1941, instead of sometime in April 1941. There will be a shortage of power in the Portland area next winter and the power generated by these two units, if available in January, can unquestionably be sold. The revenue from these two units for a 3-month period will be $475,000, which is $375,000 in excess of the $100,000 necessary to speed up the completion of these units. it may be seen, therefore, that the appropriation of this $100,000 will result in a material profit to the Federal Government. AMENDMENT REQUESTED My specific request to the subcommittee is that on page 10, in line 16 that is, of the first print Senator THOMAS (interposing). Yes, we have it. Senator HOLMAN (continuing). Strike out $800,000 and insert in lieu thereof $3,400,000. Also that the restrictive language contained in lines 16, 17, and 18 be stricken from the bill. I thank you, gentlemen. Senator HAYDEN. Senator, there is something that I do not quite. understand, and that is as to why appropriations for Bonneville Dam and the Bonneville power project are carried in two bills. There is $800,000 in this bill, which you are asking to be increased to $3,500,000, and then the Interior Bill passed by the House carries an appropriation of $5,650,000 for the same project. |