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CONGRESSIONAL RECORD – SENATE


November 7, 1967


Page 31590


NATIONAL RESOURCE DEVELOPMENT POLICY AND THE DICKEY LINCOLN SCHOOL PROJECT


Mr. MUSKIE. Mr. President, Wednesday, October 25, the House of Representatives voted to reject a compromise appropriation for the Dickey-Lincoln School project on the upper St. John River in the State of Maine. It was an unfortunate action, which reflected misunderstandings as to the value of the project to Maine and the rest of New England, a departure from our basic national resource development policy, and pressures from a powerful group of lobbyists organized on a national scale.


Earlier I had something to say about the kind of tactics and pressures that have been utilized by the private power lobby over the past 3 years in opposition to this project.


I should like to make the record this afternoon with respect to one of the latest of such efforts exerted by that lobby. What I have to say has to do with the activities, the testimony, and the statements of Mr. Albert A. Cree, who is chairman of the Electric Coordinating Council of New England.


On May 11 of this year, Mr. Cree made a statement to the Subcommittee on Public Works of the Senate Appropriations Committee relating to the economic feasibility of the Dickey-Lincoln School Project. The distinguished chairman of that subcommittee requested that the Federal Power Commission, and specifically its Bureau of Power, make an analysis of that statement by Mr. Cree for the benefit of the subcommittee.


Under date of June 12, 1967, the Federal Power Commission submitted to the Senator from Louisiana [Mr. ELLENDER] a memorandum report prepared by the Federal Power Commission's Bureau of Power, analyzing Mr. Cree's statement to the subcommittee. I ask unanimous consent that that memorandum report be Printed in the RECORD at this point.


There being no objection, the report was ordered to be printed in the RECORD, as follows:


FEDERAL POWER COMMISSION,

Washington D.C.,

June 12,1967.


Hon. ALLEN J. ELLENDER,

Chairman, Subcommittee on Public Works,

Committee on Appropriations,

U.S. Senate,

Washington, D.C.


Dear SENATOR ELLENDER: As requested in your letter of May 13, 1967, we have had our staff analyze the testimony on the Dickey Lincoln School project presented by Mr. Albert A. Cree, Chairman, Electric Coordinating Council of New England. The staff analysis and comments are included in the enclosed memorandum report. The analysis is based principally on staff studies made in December 1966 for the Survey and Investigation Staff, House Appropriations Committee.


The Commission has previously considered the Dickey-Lincoln School project, and in 1964 reported to the Secretary of the Interior that the proposed development was economically well justified and merited early construction. The current staff studies support this conclusion.


Sincerely,

LEE C. WHITE,

Chairman.


MEMORANDUM REPORT PREPARED BY THE FEDERAL POWER COMMISSION'S BUREAU OF POWER ANALYZING A STATEMENT MADE BY ALBERT A. CREE TO THE SUBCOMMITTEE ON PUBLIC WORKS, SENATE APPROPRIATIONS COMMITTEE, REGARDING APPROPRIATIONS TO COMPLETE STUDIES FOR THE DICKEY-LINCOLN

SCHOOL PROJECT, MAINE


This memorandum report has been prepared in response to the request in a letter dated May 13, 1967, from Senator Allen J. Ellender, Chairman, Subcommittee on Public Works, Committee on Appropriations. The letter from Senator Ellender included four attachments as follows:


(1) The Corps of Engineers justification for $1,676,000 to complete pre-construction planning for the Dickey-Lincoln School project in Maine,


(2) A statement to the Subcommittee on Public Works, Committee on Appropriations, United States Senate, dated May 11, 1967, by Mr. Albert A. Cree in opposition to the appropriation of additional funds for the Dickey-Lincoln School project,


(3) A review of Dickey-Lincoln School project, dated December 1966, by the Electric Coordinating Council of New England, and


(4) A report on Power Supply for New England, 1973-1990, dated February 1967 and prepared by Ebasco Services, Inc.


Mr. Cree's statement discusses six points. These are listed below as separate headings. Following each heading we have briefly summarized Mr. Cree's views as expressed in his statement and in the review report of the Electric Coordinating Council of New England. Our comments follow these brief summaries.


Point 1. "A review and appraisal of the completeness and adequacy of the study conducted by the Corps of Engineers and the Department of the Interior on which the report was based recommending the project for authorization."


Mr. Cree contends that a complete and adequate study has not been made of the Dickey-Lincoln School project.


Most of Mr. Cree's comments relate to the August 1964 report on the International Passamaquoddy Tidal Power Project and Upper St. John River Hydroelectric Power Development, the latter being the proposed Dickey-Lincoln School project. While it is true that the 1964 report does not contain some details that are normally included in survey reports by the Corps of Engineers, there have been continuous studies of the Dickey-Lincoln School project since that date. The detailed cost estimates for the Dickey project, as prepared by the Corps of Engineers in 1964 and shown on pages 17-29 of the report by the Electric Coordinating Council, are evidence, however, that considerable study had been made of the project even at that date.


Point 2. "An analysis of the soundness of the cost estimate of $218.7 million."


Mr. Cree expresses the view, based upon studies made by Chas. T. Main, Inc., that the construction cost of the Dickey-Lincoln School project will be at least $284 million, compared to the Corps of Engineers estimate of $218 million, and that an allowance for escalation in the cost of labor and material between 1964 and the 1975 date of construction completion would add approximately $55 million to the construction cost.


We have not attempted to evaluate the separate cost estimates of the Corps of Engineers and Chas. T. Main because such an evaluation could not be made within the time available for the preparation of these comments We note, however, that the Corps of Engineers has had widespread experience in estimating the costs of reservoir projects throughout the United States.


Nevertheless, actual construction costs may differ significantly from estimated costs, either on the high or low side. Several recent bids by contractors to build large reservoir projects for the Corps of Engineers have been less than the Corps estimates of costs. Examples are the Libby project in Montana, the Dworshak project in Idaho, and the Carters project in Georgia. In March 1967, the contractors who are to build the Libby dam in Montana near the Canadian border bid $82.9 million to construct this project. This is $5.5 million less than the Corps' estimated construction cost of $88.4 million. Due to adverse winter weather conditions the construction season for Libby will be similar to that which would be available for the Dickey-Lincoln School project. We note also that the Corps’ more detailed studies of the Dickey-Lincoln School project, made since 1964, have resulted in a decrease in their estimate of construction cost from $218.7 to $212.1 million. In reference to possible escalation in costs of labor and material, the Electric Coordinating Council's review report (page 46) recognizes that a comparable escalation would result in the cost of constructing alternative sources of power.


Point 3. "An analysis of the soundness of the estimated allocation of the annual project benefits to power, flood control and area redevelopment."


Mr. Cree agrees that the allocation of almost 98.5 percent of the project benefits to power and the $40,000 annual benefit to flood control are both reasonable. He states that the allocation of $409,000 (now estimated by the Corps to be $467,000) of annual benefits to area redevelopment should be reviewed in the light of past experience at other locations, particularly in the Massena, New York, area of the large St. Lawrence River Power Development.


Whether or not costs are allocated to area redevelopment is a matter of policy. In the case of the Dickey-Lincoln School project, the amount of the proposed allocation of project costs to this purpose is too small to have a significant effect on the economics of power development.


Point 4. "An appraisal of the plans for the marketing of power including the proposed power rates to be charged and the payout schedule."


Mr. Cree states that there is no evidence that a marketing plan exists for the output of the Dickey-Lincoln School project and that the seven major electric utilities in southern New England would not be interested in purchasing peaking power from the project at a price of $15 per kilowatt per year plus three mills per kilowatt-hour, with availability of approximately two hours per day five days per week.


If the Dickey-Lincoln School project is constructed, the Department of the Interior, under terms of the 1944 Flood Control Act, would have the responsibility for marketing the power output. We are not aware of Interior having specific plans for marketing the project power, but representatives of that Department have suggested that 100,000 kilowatts of capacity at 50 percent annual load factor would be marketed to preference customers in Maine and the remaining capacity would be sold as peaking capacity to major electric utility systems in New England.


Our studies show that a price of approximately $15 per kilowatt-year plus three mills per kilowatt-hour would be required to pay all operation, maintenance, and marketing expenses and to amortize within 50 Years all power investment costs, including the cost of transmission facilities.


The assumption that the peaking power would be made available approximately two hours per day five days per week would not provide for the best utilization of the capacity. The large storage capacity that would available in the Dickey reservoir would permit operation of the project on a seasonal basis so as to provide more hours of operation per day during peak load periods. Also, it is understood that consideration is being given to installing two or more reversible units in the Dickey plant. This would require the purchase of electric energy for pumping but would permit a further increase in the number of hours that peaking capacity could be made available each day.


As is indicated in our comments under point 5, we do not agree that the investor owned utilities could provide alternative capacity at a cost that would be lower than the delivered cost of power from the Dickey Lincoln School project.


Point 5. "A comparison of the estimated cost of power production under the project with costs under alternative means, including steam plants, nuclear plants, and pumped storage and nuclear combinations."


Mr. Cree contends that the investor-owned utilities in New England, by constructing combinations of nuclear plants and pumped storage hydroelectric plants, could supply power equivalent to the output of the Dickey Lincoln School project at annual savings of roughly $2.2 million. Computations in support of this conclusion are shown on page 59 of the Electric Coordinating Council's review report. Mr. Cree repeats his argument under Point 2 that the cost estimate of the Dickey Lincoln School project is too low; states that a realistic interest rate of 4¼ percent would conform more nearly to the requirements of Senate Document No. 97 than the 3⅛ percent used by the Department of the Interior; and contends that a realistic service life of 50 years rather than 100 years should be used for economic analyses to conform to the generally accepted amortization period for Federal projects.


It is our conclusion that the indicated annual savings of $2.2 million is unrealistic for a number of reasons. The comparative analysis upon which Mr. Cree's statement is based assigns no value to the Dickey-Lincoln School project for downstream benefits to hydroelectric plants in Canada. The latter benefits have been estimated to average 350,000,000 kilowatt-hours annually and it is understood that one-half of this amount of energy would be made available by Canada to the United States each year as payment for the benefits to the Canadian plants. The analysis makes no allowance for the greater periods of outages of nuclear plants as compared with those of hydroelectric plants. It assumes that alternative pumped storage plants would be available at a capital cost of $72 per kilowatt, an amount which is considerably less than our estimates. Also, it assumes that all pumping energy required by the pumped storage plants would be low-cost energy available from nuclear plants. Our studies show that such energy would not be available for pumping during the early years of operation of the Dickey-Lincoln School project.


In reference to the interest rate, the rate of 3⅛ percent was furnished by the Treasury Department as being in conformance with the method for determining the interest rate for Federal water resource projects as outlined in Senate Document No. 97.


A period of 100 years or the estimated economic life, whichever is shorter, is normally used in economic analyses of major water resource projects. This is in accord with the provisions in Senate Document No. 97. In financial analyses, made for the purpose of determining repayment requirements, it is customary to assume that all power costs will be amortized within a period of 50 years from the in-service date of the facilities.


Last December the Commission staff furnished information to the Surveys and Investigation Staff, House Appropriations Committee, on the estimated cost of power from sources alternative to the Dickey-Lincoln School development. We believe a summary of this information would be more useful than a step-by-step analysis of the estimates presented in the Electric Coordinating Council review report. Therefore, we are presenting below our estimates of (a) alternative power costs, (b) our economic evaluation of the Dickey-Lincoln School project, and (c) our determination of the rate that would be required to repay the power costs of the Dickey-Lincoln School project.


(a) Estimated cost of power from sources alternative to Dickey-Lincoln School development Estimates have been made by the Commissions' staff of the unit costs of power from various sources alternative to the Dickey Lincoln School development. These unit costs have been derived and converted to at market values applicable at load centers in Maine and in the Boston area. Alternative costs were estimated on the basis of the cost of power from conventional steam, nuclear steam, and pumped storage developments.


The estimated costs of power from a nuclear steam-electric plant in Maine are based upon the costs of power from a plant located in the Boston area with a portion of the output being transmitted to Maine. It was found that such an arrangement would provide power at lower cost than a plant located in Maine. This is due to the substantial transmission facilities that would be required to market the power if a large nuclear plant were constructed in Maine in the near future. No estimates are included for the cost of a pumped storage development in Maine because such a development would be incapable of supplying load at average system load factor. Therefore, a pumped storage project could not be an alternative to the 100,000 kilowatts of power from Dickey-Lincoln School which, it is assumed, would be marketed at system load factor in Maine.

Fixed charges assure private financing and include the cost of money at 7.0 percent, depreciation, interim replacements, insurance, and taxes based on the experience of utility companies in the area. Operation and maintenance costs, including administrative and general expenses, were based on the latest available information.


The alternative conventional steam-electric plants in the Boston and Portland areas and the alternative nuclear plant in the Boston area were each assumed to be located 15 miles from the existing transmission network. The estimated costs include, therefore, estimates of the cost of transmitting the power output a distance of 15 miles. The estimated cost of nuclear power in Maine includes the cost of transmitting power from a plant in the Boston area to Portland, Maine. Alternative pumped storage developments were assumed to be available an average of 75 miles from Boston. Therefore, the cost of power from such developments includes the cost of 75 miles of transmission facilities.


The three following tables show the derivation of the estimates of the unit cost of power from (1) conventional steam-electric plants, (2) nuclear plants, and (3) pumped storage projects. The resulting costs were converted to at-market power values and these are summarized below:

Some important differences between the staff estimates, as shown in Attachments (1), (2), and (3), and the estimates made by the Electric Coordinating Council are discussed below.


The staff made a capacity value adjustment of ten percent in favor of the Dickey-Lincoln School capacity in the comparison with costs of conventional steam-electric and nuclear power, and an adjustment of five percent in the comparison with pumped storage hydroelectric power. The staff believes that in developing a value for the dependable capacity of a project such as Dickey-Lincoln School, based upon the cost of power from an alternative thermal-electric plant, adjustments must be made to reflect the difference in system reserve requirements, operating flexibility, service availability, and other factors. Most hydroelectric plants, for example, are particularly well adapted for serving peak loads and operating as synchronous condensers or as spinning reserve. Under favorable water conditions they may supply capacity in excess of their dependable capacity, making possible savings in overall system costs. The hydroelectric plant involves the use of rugged machinery operating at low speeds and temperatures, in contrast to the modern thermal-electric plant which is an intricate and complex mechanism involving high-speed, high-pressure, high-temperature equipment. Thus, the thermal-electric plant is subject to more equipment outages for maintenance and repair.


Based upon studies made for the National Power Survey, average forced and scheduled outages for steam-electric units rated at 600 megawatts will range from about 11.0 to 13.5 percent whereas the comparable outage rate for hydroelectric units is about 2.2 percent. Based-load nuclear plants are shut down about once a year for refueling and are inoperative during such. periods which usually range from three to five weeks. Am additional credit could be assigned to hydroelectric capacity owing to its fast-loading characteristics. Based upon these considerations the staff selected a capacity value adjustment of ten percent in favor of hydroelectric capacity when deriving the value of power based upon the cost of alternative thermal-electric sources. There is, of course, an element of judgment in selecting the adjustment factor which should be used. In a pending application for license to construct a hydroelectric project, a large investor-owned electric utility has submitted an economic analysis to the Commission in which it uses an adjustment of 15 percent in favor of the hydroelectric project. Thus, this is not a factor which is recognized only by the Commission's staff.


A conventional hydroelectric project having a large storage reservoir has certain inherent advantages that would not be available in the average pumped storage project. The Dickey project will have 2.9 million acre-feet of usable power storage and will have a reregulating reservoir to permit peaking operations without restrictions. It can provide almost instantaneous reserve capacity 24 hours a day or it can provide continuous operation at full load for 24 hours or more if needed. In contrast, a pumped storage project must cease operations when its upper reservoir is empty, probably after only a few hours of operation. Also, during the daily pumping cycle the generating units are not available as a source of system reserve capacity. For these important reasons it is considered that a credit should be given to the conventional hydroelectric development. The amount of five percent was selected on the basis of engineering judgment.

The Electric Coordinating Council's review report (page 49) cites three potential pumped storage projects which it indicates can be constructed for costs ranging from $64 to $76 per kilowatt. No details are given in support of these estimates which are much lower than the $95 per kilowatt used by the staff.


Selection of the size and unit cost of alternative pumped storage developments involves some judgment based on information relative to the few projects which have been constructed and estimates for potential developments. The following tabulation, based upon latest information available to the staff, shows the actual and estimated costs of pumped storage projects constructed or under construction under FPC licenses.


Estimates for other projects proposed by various interests range from $70 to $140 or more per kilowatt. Unit costs depend upon site conditions, unit and plant sizes, and other factors. Costs may be less when the lower reservoir is already provided, as at Muddy Run and Kinzua, under construction, or at the proposed Cornwall and Northfield Mountain projects.


The Commission staff has made reconnaissance estimates for a number of potential pumped storage developments in the New England area. Sixteen of these with installations of 500 raw or more each would be located within 100 miles of Boston and would provide an aggregate installed capacity of about 10 million kilowatts. The average plant size would be about 600 mw and the weighted average cost was estimated at about $96 per kilowatt.


Consideration of the above led to selection of the alternative pumped storage project of 600 mw capacity costing $95 per kilowatt.


The analysis in the Electric Coordinating Council's report assumes that pumping energy required for pumped storage plants would cost 1.91 mills per kilowatt-hour. The staff assumed such energy would cost 3.0 mills per kilowatt-hour.


Pumping energy must be supplied by plants other than those operating in the base of the load. As nuclear plants are introduced into the power systems, such plants are used to supply base load generation because of their low energy costs. Thus, in the early years of operation of pumped storage plants, the sources of pumping energy would be conventional steam-electric plants. For estimating purposes the incremental costs of generation at such plants may be assumed to be equivalent to the cost of fuel. Such costs for 1964 are shown in the Commission's publication entitled, Steam-Electric Plant Construction Cost and Annual Production Expenses. A review of the fuel costs at plants of 100 mw and more located within a 100-mile radius of Boston shows that fuel costs ranged from 2.97 to 7.18 mills per kilowatt-hour at 18 plants having a total installed capacity of 4,266 mw. The weighted average cost was 3.67 mills per kilowatt-hour. These are at-site costs and do not include any allowance for transmission costs and losses that might be incurred if the energy were transmitted to a pumped storage plant for pumping use. The costs of energy for pumping would decrease as the older conventional plants are retired and today's base load plants are moved higher on the load curve. Eventually, it is expected that nuclear plants would be available to supply energy for pumping purposes but this would be many years in the future, probably not before one half of the total generating capacity is nuclear. Thus, the cost of pumping energy would be expected to decrease over the life of the pumped storage development. Considering all of these factors, the staff estimated 3.0 mills per kilowatt-hour as a reasonable life-time cost of pumping energy.


(b) Economic evaluation of Dickey-Lincoln School project


In preparing an estimate of the value of power from the Dickey-Lincoln School development, consideration was given to the manner in which the Department of the Interior proposes to market the project power. It is understood that the intent is to sell 100,000 kilowatts of capacity at 50 percent load factor in Maine and to sell the remaining capacity at about 10 percent annual load factor in the Boston area.


Consideration was also given to the proposed use of the United States entitlement to energy gains at Canadian plants resulting from operation of the Dickey reservoir. Under terms of the proposed treaty with Canada, the United States would receive 175,000,000 kilowatt-hours annually, less transmission losses. At least one percent of this amount would be returned weekly. On this basis the Department of the Interior expects to market 85,000,000 kilowatt-hours of the annual entitlement as firm energy.


Our studies showed that the lowest cost alternative source of 60 percent load factor in Maine would be a conventional steam-electric plant. For power at ten percent load factor delivered in the Boston area, the lowest cost source of alternative power would be a pumped storage project. Therefore, in this analysis of the value of power output of the Dickey-Lincoln School project, the value of the portion to be marketed in Maine has been based on the cost of power from a steam-electric plant and the value of the remainder has been based on the cost of power from a pumped storage project


The following table shows the derivation of the at-market value of project power, exclusive of downstream benefits:


3 Total project capacity of 794,000 kw less at-site capacity of 105,000 kw (100,000 kw plus 5,000 kw losses) marketed in Maine.


4 Total project annual output of 1,010,000,000 kwh less 372,000,000 kwh (353,000,000 kwh plus 19,000,000 kwh losses) marketed in Maine.


The total benefits attributable to the project may be derived by adding to the above power benefits, the downstream power benefits and the non-power benefits as obtained from the Department of the Interior and the Corps of Engineers.


Should all energy available at the market, including at-site production and the downstream entitlement, be marketed at 3.0 mills per kilowatt-hour the annual revenue would be $3,331,500 (1110.5 million kwh x 3 . 0 mills) . The capacity available at the market (723.5 mw) would then cost $14.50 per kilowattyear. Allowing $0.50 per kilowatt for annual administrative costs, the resulting rate would be about $15 per kilowatt-year. This is substantially below our estimated cost of capacity from alternative power plants constructed with private financing.


Point 6. "An overall appraisal of the need and significance of the project in meeting power requirements in the light of the expansion program planned by the New England land utilities."


Mr. Cree states that in view of all that is currently being done in New England for provision of the economical supply of the power needs of the people of the region, there is no need for, and no significance to, the Dickey-Lincoln School project in meeting the future power requirements of New England. He reports that by 1980 the Dickey-Lincoln School project would be capable of supplying less than 2.5 percent of New England's peak load capacity requirements, and less than one percent of New England's annual energy requirements. He concludes that even if the entire output of the Dickey-Lincoln School project were given to New England customers for nothing, it would have no significant effect on the cost of electricity in the region.


The above statements are not very meaningful because they could be applied to any single power source whether it be a conventional hydroelectric development, a pumped storage plant, or a thermal-electric plant. New capacity additions are needed to provide for load growth and to replace existing equipment as it becomes obsolete. The major electric utility systems of New England are to be commended for their long range planning to serve future anticipated loads. The February 1967 report of Ebasco Services Incorporated on Power Supply for New England shows that new generating resources of about 29 million kilowatts will be required in New England between 19,73 and 1990. It is proposed in the report that some six million kilowatts of new peaking capacity be provided during this period through the development of pumped storage projects. It is apparent, therefore, that the capacity at Dickey-Lincoln School could be readily utilized in the region and that it would be a relatively small component of the total electric generating capacity in New England. However, the 100,000 kilowatts which would be marketed to preference customers in Maine could provide a substantial reduction in the cost of power to those systems.


From the standpoint of reliability of service, it is desirable that a part of the generating capacity be capable of taking on additional load very quickly. Hydroelectric capacity, both conventional and pumped storage, is best adapted for providing peaking capacity and spinning reserve for load protection. Gas turbines are also used for peaking but require more time for loading. They are, however, capable of being loaded much faster than conventional and nuclear steam electric capacity. The latter are not suitable for peaking use and load protection because of economic and operating considerations. They have their greatest value in operating as base-load plants and constitute desirable partners of peaking plants.


There are many undeveloped conventional hydroelectric sites in New England but the power potential of most of the sites is small. As a result, the cost of power development may be greater than the cost of power from alternative sources. The proposed Dickey project has, by far, the largest power potential of any of the undeveloped sites. It is apparent that it and several of the potential pumped storage developments in New England will be needed in the foreseeable future.


The Dickey project with its large storage reservoir normally would be operated as a peaking plant, but in case of emergency it would be capable of continuous operation for a considerable period. In contrast, the usual pumped storage development normally would have a small headwater reservoir which would limit the power plant to a few hours of continuous operation.


Another factor to consider in planning pumped storage projects as a source of future peaking capacity is the availability of off-peak energy for pumping. A detailed study would be required to determine the maximum amount of pumped storage capacity which could be utilized without encountering limitations in availability of off-peak energy for pumping. A considerable amount of off-peak energy would be required because it takes approximately three kilowatt-hours of pumping energy to produce two kilowatt-hours of on-peak energy by a pumped storage project. This means also that the time required for pumping is about 1.5 times the generating time, assuming operation at full load.


When considering the merits of the Dickey Lincoln School project, it should be noted that such a development is essential to comprehensive development of the St. John River. The Dickey reservoir will provide seasonal storage for the entire system of plants on the river and will increase the generation at the downstream hydroelectric plants in Canada by an average of about 350 million kilowatt-hours per year. Also, the existence of this project near the Canadian border would enhance the opportunities for coordinating the operation of electric systems in Canada and the United States. Our studies indicate that the project would be a valuable addition to the power supply resources of New England.


Mr. MUSKIE. Mr. President, I shall read from that memorandum report just briefly, in order to make a point which will become evident when I get to it.


In the concluding paragraphs of its memorandum, the Federal Power Commission said this:


There are many undeveloped conventional hydroelectric sites in New England but the power potential of most of the sites is small. As a result, the cost of power development may be greater than the cost of power from alternative sources. The proposed Dickey project has, by far, the largest power potential of any of the undeveloped sites. It is apparent that it and several of the potential pumped storage developments in New England will be needed in the foreseeable future.


The Commission continued:


When considering the merits of the Dickey Lincoln School project, it should be noted that such a development is essential to comprehensive development of the St. John River. The Dickey reservoir will provide seasonal storage for the entire system of plants on the river and will increase the generation at the downstream hydroelectric plants in Canada by an average of about 350 million kilowatt-hours per year. Also, the existence of this project near the Canadian border would enhance the opportunities for coordinating the operation of electric systems in Canada and the United States. Our studies indicate that the project would be a valuable addition to the power supply resources of New England.


As I have stated, Mr. President, that memorandum report was sent by the Federal Power Commission to the distinguished Senator from Louisiana [Mr. ELLENDER] in response to his request.


That did not end the matter. Mr. Cree, as Chairman of the Electric Coordinating Council, was not satisfied to let the record stand at that point; and so, in September of this year, he issued a report on the FPC memorandum from which have just read, and his report lists the following subheadings as findings of the Federal Power Commission.


Square, if you will, Mr. President, what I am about to read as a description of that report, with the language I have just read from the report itself.


First: FPC findings show Dickey-Lincoln would be constructed solely for power purposes.

Second: FPC findings show proposed Dickey-Lincoln rate would not recover cost.

Third: FPC findings show Dickey-Lincoln a hopelessly inefficient means of producing power.

Fourth: FPC findings show Dickey-Lincoln power would exceed equivalent cost of alternative power.


This is the most incredible distortion of the facts and of the findings of a Government agency on a project that I suspect the history of public power projects in our country ran disclose. Compare, Mr. President, the language I have just read from the report itself, and especially the last sentence, "Our studies indicate that the project would be a valuable addition to the power supply resources of New England"--with this one from the Electric Coordinating Council, that "FPC finding shows Dickey-Lincoln a hopelessly inefficient means of producing power."


Mr. President, Senators and Members of the House of Representatives have told me -- Members who have been around a long time -- that they cannot recall a more vicious lobbying campaign against a single project than in the case of Dickey-Lincoln. I have repeated that observation to many people in Maine, and I understand that the power companies challenged this as an unfair accusation. I ask, Mr. President, whether or not that accusation does not stand up by the comparison which I have made this afternoon.


But I shall not stop there. My distinguished colleague [Mrs. SMITH] who has been in the forefront of the fight for this project, also received, as a member of the Public Works Subcommittee of the Appropriations Committee, a copy of the memorandum report, and of the Electric Coordinating Council's report on the memorandum. So she submitted the Electric Coordinating Council report to the Federal Power Commission for comment.


I ask unanimous consent, Mr. President, that the reply and analysis of the Federal Power Commission to Senator SMITH be printed in the RECORD at this point.


The PRESIDING OFFICER (Mr. BYRD of West Virginia in the chair). Without objection, it is so ordered.


The reply and analysis were ordered to be printed in the RECORD, as follows:


FEDERAL POWER COMMISSION,

Washington, D.C.


Senator MARGARET CHASE SMITH,

U.S. Senate,

Washington, D.C.


DEAR SENATOR SMITH: This is in response to your request for comments on a report, dated September 1967, prepared by the Electric Coordinating Council of New England and titled, Federal Power Commission Review Confirms Dickey-Lincoln Project Economically Inefficient, Single-Purpose Power Plant.


The Federal Power Commission review to which the Council refers is the memorandum report prepared by our Bureau of Power and transmitted to Senator Allen J. Ellender with my letter of June 12, 1967. That letter and report, except for three attachments to the report, are printed in the Senate Hearings on Public Works Appropriations for 1968, pages 3377-3384. I am enclosing for convenient reference a copy of the letter to Senator Ellender and the memorandum report.


The June memorandum report of our Bureau of Power is an analysis of a statement made on May 11, 1967 by Mr. Albert A. Cree, Chairman, Electric Coordinating Council of New England, to the Subcommittee on Public Works, Senate Appropriations Committee, regarding appropriations to complete planning studies for the Dickey-Lincoln School project in Maine. The points covered in that analysis correspond generally to the questions discussed in the Council's September 1967 report. The latter report shows the following as findings of the Federal Power Commission.

I. FPC finding shows Dickey-Lincoln would be constructed solely for power purposes.

II. FPC finding shows proposed DickeyLincoln rate would not recover cost.

III. FPC finding shows Dickey-Lincoln a hopelessly inefficient means of producing power.

IV. FPC finding shows Dickey-Lincoln power would exceed equivalent cost of alternative power.


The Federal Power Commission has not made any of the above findings. To the contrary we reported to Senator Ellender that the then current studies supported the conclusion reported to the Secretary of the Interior in 1964 by the Federal Power Commission that the proposed Dickey-Lincoln School development was well justified and merited early construction. Our staff advises that it has no new information that would warrant a change in this conclusion.


Our staff's June 1967 report was based upon estimates by the Corps of Engineers that the Dickey-Lincoln School project would cost $212.1 million for construction, $17.2 million for interest during construction, and $82.5 million for transmission facilities, a total investment of $311.8 million. We understand the Corps of Engineers has reviewed these estimates and has presented testimony in support of them, and has concluded that no changes are warranted. The Council in its September report estimates the total investment cost of the project to be $380 million.


The Council has made a number of modifications of material in our staff's June report, including use of the $380 million cost estimate, to reach different conclusions which it reports as FPC findings. Within the limits of time and available data, our staff's analyses of the modifications made by the Council do not support those changes. Analysis of the modifications by the Council shows they rely largely upon anticipated construction cost increases. They do not employ similar increases for alternative facilities that would be constructed in lieu of the Dickey-Lincoln School project.


Our staff has reviewed the Council's September report and a copy of its analysis is enclosed.


Sincerely,

LEE C. WHITE,

Chairman.


REVIEW BY THE FEDERAL POWER COMMISSION STAFF OF A STATEMENT BY THE ELECTRIC COORDINATING COUNCIL OF NEW ENGLAND, SEPTEMBER 1967, ENTITLED "FEDERAL POWER COMMISSION CONFIRMS DICKEY-LINCOLN

PROJECT ECONOMICALLY INEFFICIENT, SINGLE-PURPOSE POWER PLANT"


The subject report by the Electric Coordinating Council of New England makes a number of changes in material furnished with the Federal Power Commission's letter of June 12, 1967, to Senator Ellender on the Dickey-Lincoln School project, Maine. On the basis of the modified material the report states that the Commission has confirmed that Dickey-Lincoln School is an economically inefficient single-purpose project. As shown in the following analysis, the changes made by the Council are unwarranted and the conclusion that the Commission has confirmed the economic inefficiency of the project is not proper.


The material furnished with the Commission's June 12, 1967 letter was prepared in response to a request from the Chairman of the Subcommittee on Public Works of the Senate Committee on Appropriations. The letter and enclosures were printed, beginning at page 3377, in the Senate Hearings on the 1968 Public Works Appropriations bill. A copy of the letter is attached hereto for ready reference.


The following analysis of the council's September 1967 report follows the headings in that report.


1. FPC FINDINGS SHOWS DICKEY-LINCOLN WOULD BE CONSTRUCTED SOLELY FOR POWER PURPOSES


As shown in all previous reports and studies, the benefits ascribable to DickeyLincoln School include those for power, flood control, and area redevelopment. Although the largest share of monetary benefits would accrue from power development, the project is multiple-purpose in character and it is not proposed to be constructed solely for power.


FPC FINDING SHOWS PROPOSED DICKEY LINCOLN RATE WOULD NOT RECOVER COST


With regard to the Corps' estimated construction cost of Dickey-Lincoln School, point 2 in the material furnished with the Commission's letter of June 12, 1967, includes comments on this subject. It points out that the Council's report then under review recognized that any escalation of Dickey-Lincoln School costs would be accompanied by a comparable escalation in the cost of constructing alternative sources of power. The Corps has presented testimony in both the House and Senate Committee Hearings on the 1968 Appropriation supporting its current estimated construction cost of $212 million. Including estimated transmission costs and interest during construction, the resulting project investment would be about $312 million. The FPC economic and revenue analyses were based on that amount and no different basis would now be used. It is believed that the Council's $380 million estimated investment cost has not been supported.

The FPC analysis showed that rates of $15 per kilowatt-year for capacity plus 3.0 mills per kilowatt-hour for energy would be sufficient to recover the Dickey-Lincoln School project investment allocated to power over a 50-year period. Such a repayment schedule would meet the requirements of the Flood Control Act of 1944.


The Council notes that the above rates would apply to power delivered to the low voltage side of substations near load centers. Additional transmission or wheeling costs could be required to bring the project power to distribution systems. However, such additional costs would also apply to any alternative power supplied to the same users. The fact that the indicated "rates" were lower than the FPC estimate of the cost of power supplied from utility sources to the same points clearly indicates that the Dickey Lincoln School power development would be financially feasible.


III. FPC FINDING SHOWS DICKEY-LIN60LN A HOPELESSLY INEFFICIENT MEANS OF PRODUCING POWER


The FPC analyses did not include a comparison of Dickey-Lincoln School project costs with the cost of power from Federally financed alternative plants. However, the Corps of Engineers did prepare such an analysis based on FPC's estimated cost of Federally financed alternative plants. That analysis, presented on page 3374 of the Senate Committee Hearings, shows a "comparability ratio" of 1.12. Also, material prepared by the Department of the Interior and shown on page 439 of the House Committee Hearings indicates that the cost of Dickey-Lincoln power would be lower than the cost of power from Federally financed alternative power sources.

The Council's corresponding analysis was based on the use of its higher capital costs for Dickey-Lincoln School, a 50-year rather than a 100-year period of analysis as used by the Corps and Interior, and apparently a neglect of the non-profit benefits. The result was an unfavorable "comparability ratio." Such a finding should not be attributed to the Federal Power Commission.


IV FPC FINDING SHOWS DICKEY-LINCOLN POWER WOULD EXCEED EQUIVALENT COST OF ALTERNATIVE POWER


The FPC estimate of the cost of power from sources alternative to Dickey-Lincoln School and its economic evaluation of the project based on the use of such alternative costs are covered in Point 5 of the material furnished with the June 12, 1967 letter. The results are summarized below:


There appear to be no valid reasons for basic modifications of the above FPC analysis. However, by modifying the Dickey-Lincoln School project cost and by making lower estimates of alternative power costs, the Council derived an unfavorable comparison for the project. Among the reasons for the unfavorable finding are the Council's higher estimated cost of Dickey-Lincoln School, its much lower estimate of transmission costs associated with alternative power sources, and its use of the low-cost Northfield Mountain pumped storage development as the basis for alternative peaking power in the Boston area.


The latter point above was discussed in some detail in Point 5 of the June 12 material. The low Northfield Mountain project cost of $72 per kilowatt results in part from the fact that the lower pool is an existing development. Although there is little actual experience with pumped storage costs, those now existing or under construction range in costs from $84 to $124 per kilowatt. The staff reconnaissance showed an average cost of about $95 per kilowatt for a number of potential sites within 100 miles of Boston. The FPC staff was of the opinion that power values for a potential water resource development should not be based on a single low cost plant but a cost that might be realized at a number of sites. Thus, the analysis was based on use of $95 per kilowatt for a pumped storage peaking plant to serve in the Boston area. Such an estimate appears reasonable, pending further construction experience with such projects.


V. GOVERNMENT TAX LOSS SHOULD BE CONSIDERED IN DETERMINING GOVERNMENT COST OF DICKEY-LINCOLN POWER


As pointed out in the Council's report, Senate Document 97 provides that "taxes foregone" are not to be included in the cost of Federally constructed projects. Therefore, the FPC analyses did not include such tax costs.


In reporting to the Congress on the possible recapture of privately owned licensed projects at the end of the license terms, the Commission does include an indication of the taxes that would be lost as a result of Federal operation. In these cases, there is a question of actually foregoing Federal, State, and local taxes that have been collected over the license term. In the case of Dickey-Lincoln School there is no question of actually foregoing a previously collected amount of taxes.


Incidentally, the FPC economic analysis given under IV above shows an excess of benefits over project costs of about $7.7 million per year. Thus, the inclusion of $3 to $6 million of "taxes foregone" as an economic cost, as suggested in the Council report, would still leave Dickey-Lincoln School as an economic project.


VI. EXCLUDING TRANSMISSION, DICKEY-LINCOLN POWER WOULD COST MORE THAN ALTERNATIVE POWER


As shown in item IV above, the FPC analysis based on a comparison of the cost of the Dickey-Lincoln School project with the cost of power from alternative sources shows a benefit-cost ratio of about 1.6 to 1.0 Deducting the cost of transmission from both the project costs and the alternative costs would, according to the FPC analysis, still show a favorable economic ratio. This would be true even with the inclusion of an item of "taxes foregone" in costs.


VII. IF BUILT, DICKEY-LINCOLN WOULD PROVIDE HIGH COST POWER


The above conclusion of the Council is based largely on the premise that the project cost would be substantially greater than now estimated. As previously noted, if the project costs escalate materially, it would be expected that alternative power costs would also increase. As noted by the Council, the power would need to be sold at rates sufficient to recover project costs allocated to power over a 50-year period. The FPC analysis shows that the indicated rates needed to repay the cost of project power would be lower than the presently estimated cost of power from alternative sources expected to be available. Under such conditions, it would be expected that the construction of Dickey-Lincoln School would contribute to the lowering of the cost of power in New England as forecast by the National Power Survey.


Mr. MUSKIE. The four findings that the Electric Coordinating Council purported to describe the FPC as making, were commented upon in the letter to Senator SMITH as follows:


The Federal Power Commission has not made any of the above findings. To the contrary, we reported to Senator Ellender that the then current studies supported the conclusion reported to the Secretary of the Interior in 1964 by the Federal Power Commission that the proposed Dickey-Lincoln School development was well justified and merited early construction. Our staff advises that it has no new information that would warrant a change in this conclusion.


Mr. METCALF. Will the Senator from Maine yield at that point?


Mr. MUSKIE. I am happy to yield to the distinguished Senator from Montana.


Mr. METCALF. The Senator from Maine comes from an area where the power rates are probably the highest in America. He also comes from an area which thus far has failed to have the benefit of Federal development.


The Dickey-Lincoln project is one of the most feasible projects remaining in North America for power, for water resource conservation, for all the things that we take into consideration when we build one of these Federal projects. It is one of the last remaining undeveloped highly feasible programs. I compliment the Senator from Maine, his colleague [Mrs. SMITH], and his colleagues in the House of Representatives, all of whom have strongly supported this project.


I do not know whether he is suffering from the most vicious attack that I have ever experienced. I can recall our experience in the Hells Canyon project in Idaho and the Knowles project in my State of Montana. The same things were said about those programs.


I do want to say to the Senator from Maine that it seems to me that, in the, public interest, one of the last remaining great feasible projects should be built also in the interest of that region of New England. The Federal Government should go in and build a project for a yardstick program, as they have built projects in Montana, in the Northwest, in the case of the TVA, and in the Southwest, so that the New England section of the country, which has an opportunity for the development of a great water resource development program, should have the same opportunity we had in our area to bring our power rates down to compare with the power rates in various other areas of the United States.


I can understand how utilities have fought so hard, because they want to have the benefit of the overcharges of $5, $6, $7 a month for every residential consumer in Maine and New Hampshire and Vermont. And they do not want this yardstick to apply to their power rates for New England or the Consolidated Edison in New York City or any of the other areas.


I want to say to the people of America that the Senator from Maine [Mr. MUSKIE] and his colleague, the senior Senator from Maine [Mrs. SMITH] have made a significant report to the people of America in an effort to bring power rates down in their area and they have made a significant contribution by this effort.


I compliment them on their effort, and I compliment them on joining the club of the Northwest and the Southwest and the Southeast in trying to get a feasible and effective power project in their area.


Mr. MUSKIE. Mr. President, if the Senator will bear with me a moment, I would like to show him a map. I know that we do not have much of an audience here at the present time, but I show him a map on which the Army Engineers have identified by black dots every Federal power project that has been authorized or constructed or is under construction in our country at the present time.


The Senator will notice that in the Northwest and in the Southwest and the South and the Southeast, the map is literally covered by these black dots. However, if the Senator will look at my section of the country, from Virginia north, he will see not a single public power project. The Dickey-Lincoln School meets the same tests of feasibility, the same guidelines of public policy that have been created on all of these Federal power projects to the benefit of the consumers of those areas, to the end result that we in New England pay higher rates than any other area in the country, and that is no mystery when one looks at the map.


Mr. METCALF. I suggest that in the Northwest, in Tacoma and Seattle, the residential rate is about $5 per month. Down in this area of the map in which there are so many Federal power projects, in the Southeast, the rate is about the same as in the Northwest, $5 per month.


In the area of the country from which the Senator comes, where there are no Federal power projects to make a yardstick, the rate is $11 or $12, so that if one is a residential owner and buyer power in Tacoma or Seattle or in another area of the country in which there are so many Federal power projects, for 500 kilowatts per month a person will pay a residential bill that amounts to approximately one-third of the bill that a residential consumer will pay in the State of Maine.


And as one who has benefitted in the State of Montana from the Federal power projects represented by these black dots, at Hungry Horse, and Yellow Tail, and Fort Peck, and so forth, as well as being the beneficiary of these downstream dams on the Columbia, I say to the people in Maine and New England that a good way to bring their cost of living down is to have the Dickey-Lincoln project authorized.


Mr. MUSKIE. These dots represent more than 170 Federal projects built in other areas of the country. And it is because they have been built that we experience the wide gap between rates in New England and other parts of the country.


Mr. METCALF. The Senator is exactly correct.


Mr. MUSKIE. All we can ask for here is the same kind of treatment, the same kind of public power yardstick that the Congress of the United States has made available to other areas of the country.


This is the record up to date, and I personally, as a member of the Committee on Public Works, have participated in the committee action resulting in the authorization of 28 Federal public power projects across the country. And of the 28, 25 had lower benefit-cost ratios than Dickey. And not one of those 25 has been attacked as a single item as this one has in the House of Representatives.


In my committee work I supported resource development with Federal dollars because I believed it to be right. I believed it to be in the interest of the country as a whole. And it never occurred to me in 9 years of such service that we had one policy for the rest of the country and a different and discriminating policy for New England.


I have said this in letters to Members of the House of Representatives. And not one of them has challenged me on the merits of this project. Those who have replied have assured me that they believe in a policy that benefits all areas of the country alike. And yet the result in the other House is vote after vote against the Dickey-Lincoln School.


This cannot conceivably be on the basis of the merits, because as I have said, Dickey meets every test that has been required in any other Federal power project, including all of those which have been built.


I suggest that the best proof and the strongest proof of the feasibility of Dickey-Lincoln is in the viciousness of the private power lobbying effort against it. If this project were as worthless as the private power companies argue that it is, what do they have to fear from it? What is there in it that causes them to exert this effort, this coast-to-coast effort, against this project? What are they fearful of? And why do they have to attack it by means of pressure and the kinds of distortion and misrepresentation that I have placed in the RECORD this afternoon, if they were not fearful of it on its merits? They do not want the test of the public power yardstick applied, and they will fight it to their last resource.


The people of my State understand this. I have just come back from a weekend in Maine. And, let me tell the Senator that they understand what the issues are here. They know who their enemy is. They know what the merits of this case are, and they want this project.


We have said to the House of Representatives in every way that we know that we want this project, that it deserves support, that it meets every test that every other project has met. And the only reason that we are not getting the kind of action we ought to have is this private power lobby.


It is for that reason that I supplemented my earlier remarks with his record which I have gone into in some detail of the kind of gross and untruthful distortions that the private power lobby uses to defeat this project.


Now, Mr. President, I wish to review our national resource development policy, point out the salient facts about the values of the Dickey-Lincoln School project, and encourage my colleagues to insist on the Senate position that the Dickey-Lincoln School project planning funds be provided for fiscal year 1968.


Since 1959, 1 have been a member of the Public Works Committee, where the bulk of our resource development projects are reviewed and evaluated. In the 7½ years I have worked with my colleagues on hundreds of projects, I have followed a simple rule: A project should be evaluated on its merits -- without reference to the region in which it is located -- and approved, if it meets the tests of being in the public interest, if it contributes to the welfare of the area in which it is located, and if it is economically feasible. These are the tests the Public Works Committee and the Senate have applied.


When it is examined objectively, Dickey-Lincoln School meets all of these tests.


The project is the product of a long series of studies beginning with the New England-New York Interagency study of the late 1940's and early 1950's, coupled with the earlier Passamaquoddy tidal power project, advocated by President Franklin D. Roosevelt.


In 1959, the Joint Engineering Board of the International Joint Commission -- United States and Canada -- recommended the construction of the Passamaquoddy tidal power project, coupled with the construction of a high dam on the upper St. John River at Rankin Rapids. The Rankin Rapids project was designed to provide low-cost flexible hydroelectric energy to smooth out the peaks and valleys in power production at the tidal generating station. It would have flooded the upper St. John and the Allagash Rivers.


The engineering report was referred to the International Joint Commission for review and evaluation. In April 1961, the Commission rejected the proposed Passamaquoddy tidal power project, but suggested possible development of the upper St. John, which is an international river, rising in Quebec Province , flowing through Maine, forming part of the boundary between Maine and New Brunswick and flowing through New Brunswick to the sea.


In the meantime; the National Park Service of the United States had proposed the protection of the Allagash River as a free-flowing wilderness waterway.


I recommended to President Kennedy that the Department of the Interior be assigned the responsibility of reviewing the recommendations of the Joint Engineering Board, the findings of the International Joint Commission, and the recommendations of the National Park Service for the purpose of recommending a balanced development of the resources of northern and eastern Maine.


In July 1963, after 2 years of study, Secretary of the Interior Udall recommended to the President the development of the Dickey-Lincoln School project on the Upper St. John as a flood control and hydroelectric program, designed to provide 100,000 kilowatts of low-cost firm energy, and 650,000 kilowatts of low-cost peaking power. The project would consist of a high dam on the upper St. John, above the confluence of the St. John River and the Allagash River in the town of Dickey, and a low, reregulating dam below the confluence of the two rivers at the site of Lincoln School. The project, which would fit into the power requirements of Maine and New England, was hailed by conservationists because of the protection it provided the Allagash River.


This past year the State of Maine and the Department of the Interior entered into an agreement under which the State of Maine is acquiring title to land on both sides of the Allagash and protecting this beautiful river in its primitive state. The Federal Government and the State are sharing in the costs of the project.


The 1963 proposal contained an additional recommendation that the Passamaquoddy project should receive continuing study, particularly with reference to technological advances.


I want to underscore the fact, Mr. President, that the 1963 proposal, which is the foundation for the present project, was based on the concept of a generating station designed to produce the bulk of its energy as peaking power which is absolutely essential to a soundly balanced power system in which there are very large thermal plants-fueled either by fossil fuels or nuclear energy. Dickey Lincoln School is not an alternative to thermal plants; it is an essential complement to them.


Thermal powerplants -- whether powered by coal, oil, or nuclear energy -- are efficient only when used to generate at maximum load factor -- 80 percent or above is considered efficient -- 24 hours a day. They are neither efficient nor practical as sources of intermittent power requirements. Hydroelectric plants are ideal for this latter purpose. Dickey Lincoln School is designed to produce peaking power as a hydroelectric plant.


Dickey-Lincoln School is important to New England as a substantial source of low-load factor power which will be available for short periods of peak demand such as rush hours, early evening and early morning -- the kind of power the Northeast needed and did not have on November 9, 1965.


Dickey-Lincoln School is an eminently sound project, with a benefit-cost ratio of 1.91 to 1. It would provide wholesale firm energy for Maine communities at rates substantially below those now charged by the private utilities in our area. It would supply essential peaking power to the New England market at rates substantially below current charges and at costs lower than the best alternative proposals made by the private companies.


Since its authorization in 1965, Dickey Lincoln School has been the subject of the most intensive restudy ever required for a public works project. The staff of the House Committee on Appropriations conducted a special study of the project, including an extensive analysis of the findings of the Corps of Engineers, the Department of the Interior and the Federal Power Commission. They reviewed the allegations made by New England's private utilities. The staff findings sustained the favorable verdict of the Federal agencies and discredited the arguments advanced by the private companies.


The private power companies have claimed that Dickey-Lincoln School would not affect power rates in New England. The fact is that the threat of Dickey-Lincoln has already had an impact on the power companies of my own State.


Between 1946 and 1963 the three privately owned power companies in Maine sought increases --but no reductions -- in their rates. Indeed, during my terms as Governor, the Public Utilities Commission was virtually overwhelmed by the onslaught of power company attempts to push their rates higher and higher.


But in 1963, when the Department of the Interior recommended the construction of the Dickey-Lincoln School project, the three companies suddenly discovered it was possible to reduce rates.


The reductions were not impressive and they provided almost no benefits for homeowners, but they were reductions. The total reductions, in 18 announcements made by the power companies since the advent of the Dickey-Lincoln proposal, have totaled $4,161,527.


The 1963 applications were as follows: Central Maine Power Co. sought a reduction of $1,000,000, and Bangor Hydroelectric Co. sought a reduction of $19,000, both to take effect September 1. Maine Public Service Co. sought a $100,000 reduction, effective September 18. Secretary Udall's recommendation to President Kennedy was dated July 1, 1963.


In 1964, while the authorization proposal for Dickey-Lincoln School was in the final stages of preparation, and when the project received President Johnson's unqualified endorsement, Maine Public Service -- the private company located closest to the project and charging the highest rates in Maine -- announced another proposed reduction of $180,000.


In 1965, the legislation authorizing the Dickey-Lincoln School project was introduced.

Between the time Dickey-Lincoln School was reported -- June 17 -- and the time of the final authorization -- October 15 -- Central Maine Power Co. announced three rate reductions: $591,000 to take effect September 1; $15,000 to take effect September 30; and $33,737 to take effect October 1. Bangor Hydro, initiated a reduction of $275,000 that year.


In 1966, the rate reduction pattern continued, as the House debated Dickey's second planning appropriation. Central Maine sought reductions of $45,000 for August 1 and $100,000 for September 1. Bangor Hydro sought four reductions: $595,404 for July 1; $26,285 for August 5; $13,000 for October 1; and $16,201 for December 8.


It should be noted that all but one of these six reductions were announced prior to or during the hearings and floor consideration of the Dickey-Lincoln school project.


This year's fight on Dickey-Lincoln School is still going on. So far, Central Maine and Bangor Hydro have sought two reductions apiece, all announced during hearings and consideration of Dickey. Central Maine announced reductions of $200,000 for September 1 and $470,000 for October 1. Bangor Hydro announced reductions of $211,209 for September 1, and $281,668 for November 1.


This record is extraordinary for companies which had not sought reductions and had been busy pushing rates up for the preceding 17 years. This record, plus the record of rate reductions in other areas of the country where publicly owned power projects are located, indicate the desirability of competition in the power business. In Maine we have only had a taste so far.


It should be noted that the rate reductions in Maine did not result in any belt tightening by the private utilities. A study of the rate of return received by the power companies indicates that during and since the reductions, two of the three utilities involved have been getting returns in excess of the 6 percent normally set by the Maine Public Utilities Commission. As a result of the discussion stimulated by Senator METCALF'S book, "Overcharge," the Maine Public Utilities Commission has contracted for a special study of rates of return for Maine utilities.


The Maine overcharge problem is matched in the rest of New England. A study of Federal Power Commission statistics shows that in 1965, for instance, the New England private power monopoly overcharged New England consumers $21,034,000. This estimate is based on the normal rate of return of 6 percent applied to this industry.


A study of 28 New England power companies shows that 14 of them had a rate of return of 7 percent or more. Five had a rate of return of 8 percent or more, and one had a rate of 11.18 percent. At these rates of return, it is not surprising that New England homeowners pay up to 35 percent more for power than the national average.


The private power companies have made one other gesture in the direction of improved operations since the advent of the Dickey-Lincoln school project. Even that is a mixed blessing.

In January 1966, the power companies released a series of advertisements, announcing the establishment of the "Big 11 Power Loop." In and of itself it was a confession of past weaknesses, but it promised an integrated power system for the region, based on large nuclear power plants and larger transmission lines.


Later, one of the power company executives admitted in a Vermont public hearing that planning for the "Big 11" program consisted of preparing the advertisement. The House Public Works Committee could find no evidence of regional planning by utilities, including generation and transmission, except in the advertisements. The staff study concluded that:


Although representatives of the council advised that they have planned to meet the problems of supplying the power needs of New England on a central coordinated basis, they have not produced any document supporting this central planning with the exception of an advertisement that appeared in the public press in January, 1966.


Recent developments indicate that that the underlying intent of the private companies in promoting the "Big 11" proposal is not so much an improvement in reliability and service as it is another step in their effort to tighten their grip on the New England power market. They have flatly refused to permit the publicly owned utilities to join in a regional transmission system.


As I pointed out earlier, Mr. President, one of the great advantages of the Dickey-Lincoln School project has been its careful planning in terms of conservation of the natural resources of northern Maine. In recent weeks we have received complaints from some conservationists who have apparently forgotten that one of the key features of the project is the preservation of the Allagash as a free-flowing river, protected in a cooperative venture by the U.S. Government and the State of Maine.


Gifford Pinchot, one of our country's greatest conservationists, defined conservation as "the wise use of the earth and its resources for the lasting good of men."


He said:


Conservation is the foresighted utilization, preservation and/or renewal of forests, waters, lands and minerals, for the greatest good of the greatest number for the longest time.


Dickey-Lincoln School is part of a national resource development and protection program which is consistent with the Pinchot definition.


I ask unanimous consent that two letters I have received from the Department of the Interior and the Department of the Army, Corps of Engineers, be printed in the RECORD at this point. One is from Assistant Secretary of the Interior Kenneth Holum, and discusses the conservation considerations which entered into the original decision to recommend Dickey-Lincoln School. The second is from Brig. Gen. Charles C. Noble, Acting Director of Civil Works, Department of the Army. His letter outlines the steps being taken to protect the fish and wildlife habitat of the area.


There being no objection, the letters were ordered to be printed in the RECORD, as follows:


U.S. DEPARTMENT OF THE INTERIOR,

Washington, D.C.,

October 27,1967.


Hon. EDMUND S. MUSKIE,

U.S. Senate,

Washington, D.C,


DEAR SENATOR MUSKIE: This is in response to your inquiry as to whether the Saint John

River has ever been considered for wild river status in connection with proposed wild and scenic rivers legislation. You asked, also, for our comments on the resolution adopted by the Associated Sportsman's Clubs of Cumberland County on July 27, 1967, and the comments of the Natural Resources Council of Maine relating to the planning and construction of the Dickey-Lincoln School Project on the Upper Saint John River.


The Saint John River, in toto, has never been studied or proposed by this Department or considered by the Congress for wild or scenic river status. Confusion on this matter may have arisen from the fact that the Allagash River, a tributary of the Saint John which flows into the Saint John River below the Dickey Dam site and above the low Lincoln School Dam site, was proposed and has been committed to preservation as a freeflowing river. The Department of the Interior first suggested preservation of the Allagash in connection with the New England-New York Inter-Agency Committee survey and the proposal was identified in the Inter-Agency Committee's report issued in 1955. In that report, also, the Department of the Interior proposed that the Dickey-Lincoln School site be considered as an alternate to the Rankin Rapids site in order to avoid flooding the Allagash River and thus destroying the natural character of that stream.


Following the initial proposal around 1955, several studies were made of the Allagash, looking toward its preservation as a free-flowing river. The Department of the Interior fully supported such status and recommended that the area be managed by the State of Maine. In January 1966, the Maine Legislature passed the Allagash Riverway Act, a special act of legislation establishing the Allagash Wilderness Waterway. In November 1966, the people of the State of Maine approved a $1.5 million bond issue to finance the acquisition and protection of the area. Following these actions by the State, the Secretary of the Interior matched the State portion with a $1.5 million grant from the Land and Water Conservation Fund.


A further area of confusion may arise from the fact that the proposed Wild Rivers legislation now under consideration in the Congress contains a provision which would enable the Allagash Wilderness Waterway area to be included as part of the proposed National Wild Scenic Rivers system, although it would remain a State-managed area. This provision would further protect the Allagash from uses and developments non-compatible with the Wild River program.


We would call attention to the fact that the Saint John River downstream from the Lincoln School Dam site becomes the boundary between northern Maine and Canada. For the rest of its length, it flows through Canada. Thus, that portion of the Saint John River which is an international river could not be designated a part of the United States wild or scenic rivers system.


The Department of the Interior's response to the resolution of the Associated Sportsman's Clubs of Cumberland County is the subject of the enclosed copy of our September 21 letter to Mr. Edward T. Allen, Secretary of the organization. You will note that this letter was prepared in coordination with the Corps of Engineers.


It seems to us that both the Maine Natural Resources Council and the Associated Sportsman's Clubs are confusing the question of conservation planning and recreational development with the issue as to whether the Dickey-Lincoln School Project should be built. I want to take this opportunity to again point out that the development of the Upper Saint John River was planned giving the fullest consideration to conservation and proper utilization of our natural resources. As pointed out above, the selection of the Dickey-Lincoln School Project was done in such a manner so as to preserve the Allagash Wilderness Waterway.


In the preconstruction planning for the Dickey-Lincoln School Project, the Fish and Wildlife Service has been preparing necessary studies which will enable them to recommend fish and wildlife measures for incorporation in the over-all plan for the Dickey-Lincoln School Project.


We expect the Fish and Wildlife report to indicate specifically those features which will be required to enhance fish and wildlife resources in the area and to compensate for changes in habitat and access. We anticipate that the report of the Fish and Wildlife Service will be available some time before the first of the year.


After the preconstruction. planning is completed and the Dickey-Lincoln School Project enters the early construction stage, our Bureau of Outdoor Recreation and Fish and Wildlife Service will be working with the Corps of Engineers and the State and local agencies to prepare an over-all recreation plan. This plan will be incorporated as part of the constructed project.


In summary, let me reiterate, the Saint John River has not been studied or proposed for wild river status; nor has it been included in any of the several bills submitted to establish a wild or scenic rivers system. It should be quite clear that the Corps of Engineers, the responsible agencies of this Department, and Secretary Udall, personally, have given full consideration to the proper planning of the Upper Saint John River development. We can, therefore, again assure you and others that construction of the Dickey-Lincoln School Project does, and will, make the best utilization of the natural resources of the Upper Saint John River basin.


Sincerely yours,

KENNETH HOLUM,

Assistant Secretary of the Interior.

U.S. DEPARTMENT OF THE INTERIOR,

Washington, D.C.,


September 21, 1967.

Mr. EDWARD T. ALLEN,

Associated Sportsman's Club, of Cumberland County,

Portland, Maine.


DEAR MR. ALLEN: Thank you for your letter of August 7, 1967, outlining the resolution adopted by the Associated Sportsman's Clubs of Cumberland County, Maine, regarding the Dickey-Lincoln School project.


The Secretary has consistently and vigorously opposed any development of the Saint John River which would flood the Allagash River. The Dickey-Lincoln School project will preserve for future generations the superb Allagash recreational area, one of the finest wilderness areas in this country.


In collaboration with the Corps of Engineers, we are submitting the following comments which we trust will be helpful to you:


Actually the Dickey Impoundment, at maximum power pool elevation 910, would inundate approximately 86,000 acres, or approximately 135 square miles, using a conversion factor of 640 acres per square mile


The Dickey Reservoir at elevation 910 would inundate approximately 53 miles of the St. John River, 25 miles of the Little Black River, 65 miles of the Big Black River, 7 miles of Pocwock Stream, 4 miles Of Chimenticook Stream, and 65 miles of other smaller named streams. The Lincoln School reregulating pool, at elevation 610 would inundate 11 miles of the St. John River.


The report by the U.S. Fish and Wildlife Service on the Rankin Rapids Reservoir, dated October 1, 1959, contains an evaluation of the fish and wildlife resources of the St. John and Allagash River areas. In this report, the Fish and Wildlife Service suggested that investigations be made for development of the Big Rapids-Lincoln School Reservoir in lieu of the Rankin Rapids project, which would have inundated a major portion of the Allagash and St. John Rivers. The Big Rapids project, which would have been basically the same as the Dickey project except that the dam site would be located farther upstream, was suggested as it would have far less detrimental effects on the fish and wildlife resources of the area.


The report assessed the St. John River and its tributaries as having excellent seasonal trout habitat, with brook trout well dispersed and active during spring, early summer and fall.

However, it stated:


“In comparison to the St. John River and its tributaries, trout habitat in the Allagash drainage is superior in both quality and quantity. Water levels are far more stable and the stream channel, in general, is deeper."


The Allagash is also a far greater canoe stream than the St. John. For example, a reconnaissance trip was made of the St. John River early this summer by a civil engineer and a fishery biologist of the New England Division, Corps of Engineers. They floated the river from the southwest branch approximately 110 miles to the Dickey dam site in four days. Both are experienced avid canoeists. Although the trip was very enjoyable and exciting to both, they found the river to be very shallow in many areas requiring them to do much pushing and pulling while walking beside the canoe. The run through the steps at the Big Black Rapids was the highlight of the trip.


The party learned that thirty parties made this trip in 1966 as compared to 2,000 parties on the Allagash in the same period. This year, particularly favorable for canoeing, an estimated 150 parties may make the St. John trip as compared to 3,000 on the Allagash, The Dickey Dam was located above the mouth of the Allagash River expressly to preserve the wilderness canoe trip region of the Allagash, although a dam located farther downstream in the vicinity of Rankin Rapids would be more advantageous as far as power production is concerned.


The statement is correct that the flooded area would destroy deer range including 34 known deer yards and displace countless hundreds of fur bearing animals. In this respect, all possible measures will be taken to minimize the adverse effects of the project on fish and wildlife. Provisions will be made to mitigate to the fullest extent possible any losses of fish and wildlife habitats as recommended by the State and Federal agencies. Mitigation measures that could be provided, if warranted, would be acquisition of suitable land, including proper management, to replace the lost deer yards.


The maximum draw down of the project would be 40 feet between elevation 910 and 870. However, this would not happen in any one year. The average annual draw down between April 15 and October 15 would be 10 feet. The heaviest draw down period would be in the winter months due to the larger power demands in that season. Due to the generally precipitous nature of Dickey Reservoir area, it is not considered that the shoreline areas when exposed would have the graphic features of mud flats.


It is not known how a day would be lost from the Allagash canoe trip. The maximum pool of the Lincoln School project at elevation 610 would back up the Allagash River approximately 2.0 miles and would eliminate the oxbow just above the confluence with the St. John. The most northern limit of the Allagash Wilderness Waterway, as established by State law in 1966, is the confluence of West Twin Brook with the Allagash. This point is 2 miles upstream of the 610 contour of the Lincoln School pool.


The Corps of Engineers, in planning a project of this type, always considers the recreational aspects. In the case of Dickey, we have a new lake which, in size, will be about 15 percent larger than the Moosehead. This will have a profound impact on the recreational pattern of the area as time goes on and as Maine continues to develop its recreational appeal to the nation.


The creation of a lake the size of the Dickey Reservoir, adjacent to the Allagash Wilderness Area, will provide tremendous recreational facilities for boating, camping, lake fishing and access by water to areas not now accessible to the general public. Mr. Lawrence Stuart, Director, State Park and Recreation Commission, Augusta, Maine, in a letter dated March 15, 1966, to the Corps of Engineers, stated "It would seem to me only reasonable in connection with this reservoir that there would be a sizable recreation area comparable to a state park facility. . . ."


We recognize the importance of the nonmonetary aspects and that there will be losses to existing fish and wildlife habitat. On the other hand, there will be the gains of lake recreation. Our planning for the provision of lake-type recreational facilities is in itself a major effort and, frankly, we are just beginning. In this we are and will continue to work with State and Federal recreation and Fish and Wildlife agencies.


All possible measures will be taken to minimize the adverse effects of the project on fish and wildlife. Provisions will be made to mitigate to the fullest extent possible any losses of fish and wildlife habitats as recommended by the State and Federal agencies. Mitigation measures that could be provided, if warranted, would be acquisition of suitable land, including proper management, to replace the lost deer yards. A fish hatchery could also be provided to stock the lake with suitable game fish.


The estimated cost of the Dickey-Lincoln School project, including interest during construction, is $235,400,000, not $400,000,000. While it is true that the cost of energy produced by nuclear plants is coming down they are not suitable to supply the relatively short time peak demands for electricity. Nuclear-fueled plants and conventional fossil-fueled plants operate at maximum efficiency under relatively constant load conditions. Hydro-electric plants, on the other hand, can rapidly adjust to varying load demands and can easily be shut down or started as required. If a source of natural streamflow is not available, pumped storage hydro-electric plants are often used as sources of peaking power. It should be pointed out that pumped-storage plants do not produce energy, but actually consume energy, requiring approximately 3 kilowatt hours of pumping energy for every 2 kilowatts they generate.


In a report by the Federal Power Commission in July of this year on the Northeast power failure of November 9 and 10, 1965, it was stated that where hydro-electric power is readily available, systems are relying upon this source for quick start-up power, and then are arranging circuits for simplified switching in time of need. Systems which had access to hydro-electric power were among the first to restore service on November 9. Nine utilities in the Northeast have made changes in facilities or operating instructions to assure that hydro-electric power can be routed to thermal plants for station service.


Sincerely yours,

KENNETH HOLUM

Assistant Secretary of the Interior.


DEPARTMENT OF THE ARMY,

OFFICE OF THE CHIEF OF ENGINEERS,

Washington, D.C.,

October 26,1967.


Hon. EDMUND S. MUSKIE,

U.S. Senate,

Washington, D.C.


DEAR SENATOR MUSKIE: I welcome the opportunity to comment on the letter you received from Mr. Clinton B. Townsend, President, Natural Resources Council of Maine.

Mr. Townsend is concerned only about preserving the natural resources of the Saint John River in their present state. In this form they benefit only the few hardy people who are able to venture into this wilderness area. For example, a reconnaissance party from our New England Division office made the Saint John canoe trip this July. The party learned that thirty (30) parties made this trip in 1966 as compared to two thousand (2,000) parties on the Allagash in the same period.


This year, particularly favorable for canoeing, an estimated one hundred fifty parties (150) may make the Saint John trip as compared to three thousand (3,000) on the Allagash. The Dickey Dam was located above the mouth of the Allagash River expressly to preserve the wilderness canoe trip region of the Allagash although a dam located farther downstream in the vicinity of Rankin Rapids would be more advantageous as far as power production is concerned.


Mr. Townsend is correct in his statement that no public hearings have been held in the State of Maine by the Corps of Engineers or by the Department of the Interior. However, much publicity has been given the project in the press and over the radio and television stations of Maine. A meeting, sponsored by the Fort Kent Chamber of Commerce, was held at Fort Kent on April 16, 1964. This was attended by over 500 people of the area. Mr. Kenneth Holum, Assistant Secretary of the Interior, was the principal speaker. Governor Reed, of Maine, and Premier Robichaud, of New Brunswick, also spoke in favor of the project. Mr. John W. Leslie, Chief, Engineering Division, of our New England Division office, presented a paper on the project before an annual meeting of the American Society of Civil Engineers at the University of Maine on November 5, 1965. In March 1966, Mr. Leslie spoke at a dinner party by the Fort Kent Chamber of Commerce before 150 people.


A community meeting, sponsored and arranged by Mr. Thomas C. Sweetser, Extension Agent at Presque Isle, Maine, and Mrs. Marilyn Plissey, Extension Agent at Fort Kent, Maine, was held in the Allagash High School, Allagash, on January 22, 1966. About 50 people attended this meeting at which a representative from the New England Division discussed various aspects of the project as it would affect the local economy. Several meetings have been held with representatives of the timber landowners and Mr. Austin Wilkins, Maine Commissioner of Forest Service. On the 19th of June 1967, Mr. Leslie and Colonel Remi 0. Renier, Acting Division Engineer of our New England Division, briefed both Houses of the Maine Legislature on the Dickey-Lincoln School project.


Governor Curtis, as you know, has established a Task Force to develop practical plans for the people of the area as regards their health, education, welfare, housing, and employment. One of the important duties of this Task Force will be to determine the capabilities of the land and water resources so that reasonable use may be made of the available land. The first meeting of this group was held at the State House, Augusta, Maine, on August 31, 1967. An Ad Hoc Committee was established to define all problem areas associated with developments in the area and to determine the means for their resolution.


The Corps of Engineers in planning a project of this type always considers the recreational aspects. In the case of Dickey, we have a new lake which, in size, will be about 15% larger than Moosehead. This will have a profound impact on the recreational pattern of the area as time goes on and as Maine continues to develop its recreational appeal to the nation. The creation of a lake the size of the Dickey reservoir, adjacent to the Allagash Wilderness Area, will provide tremendous recreational facilities for boating, camping, lake fishing, and access by water to areas not now accessible to the general public. Mr. Lawrence Stuart, Director, State Park and Recreation Commission, Augusta, Maine, stated in a letter to this office, March 15, 1966, "It would seem to me only reasonable in connection with this reservoir that there would be a sizable recreation area comparable to a state park facility . . . . 1.


We recognize, along with Mr. Townsend, the importance of the non-monetary aspects and that there will be changes to existing fish and wildlife habitat. On the other hand, there will be the gains of lake recreation. Our planning for the provision of lake-type recreational facilities is in itself a major effort and, frankly, we are just beginning. In this we are and will continue to work with state and federal recreation and fish and wildlife agencies.


Our design effort has been concentrated on those features of the project required to enable construction to start at the earliest possible date. The recreational features of the project, which are not critical to initiation of construction, will be studied in detail with full coordination with the appropriate state and federal agencies.


All possible measures will be taken to minimize any possible effects of the project on fish and wildlife habitats as recommended by the state and federal agencies. Measures that would be provided, if warranted, include acquisition of suitable land, including proper management, to replace the lost deer yards and a fish hatchery to stock the lake with suitable game fish.


The loss of prime timberland is surprisingly small. In fact, a study of the aerial photographs of the area to be inundated by the Dickey reservoir reveals that almost no timbering has been done in the area below the proposed water line. The forest landowners will, of course, be paid the fair market value for their land and any merchantable timber on it and will have the option to remove timber at the time of sale.


With regard to clearing, every effort will be made to coordinate the reservoir clearing operations to the extent that maximum benefit will be derived from the salvage of the useable timber. The vertical limits of reservoir clearing will extend from up to 3 feet above the maximum power pool down to 5 feet below the 10 year frequency draw down. Under normal projects operations, therefore, no trees or stumps will ever be exposed.


The Division Engineer believes specific recommendations should be developed by additional studies prior to scheduling full scale public hearings. The time required to complete these studies will be governed by the availability of additional planning funds.


Sincerely yours,

CHARLES C. NOBLE.

Brigadier General, U.S. Army, Acting Director of Civil Works.


Mr. MUSKIE. In another effort to detract from Dickey-Lincoln School, the private power companies have attacked the project as a "subsidized" venture while suggesting that they never receive subsidies or any other considerations. The fact is, of course, that the companies benefit from the assured rate of return which is part of the consideration granted a public utility, and in their heavily advertised nuclear powerplants, they have been receiving considerable assistance from the public investment in nuclear technology development and in indirect assistance under the Federal atomic energy program.


I would like to call my colleagues attention to the subsidies received by the Yankee Atomic Plant at Rowe, Mass., the only operating nuclear power facility in New England.


First. Research and development assistance: $5 million is the cost of AEC assistance in the design, engineering, and fabrication of the reactor portion of the plant.


Second. Waiver of fuel use charge: $3.7 million was the cost of the initial load of fuel in the reactor. This fuel was supplied free of charge by the AEC -- enriched uranium from Oak Ridge -- as part of the AEC's role due to the experimental nature of the reactor. Subsequent loadings of the reactor have been paid for by the utilities.


Third. Plutonium buyback: $2.1 million. At the time of construction of the Rowe, Mass., plant, there was no private market for uranium and, therefore , had the AEC not agreed to buy back the plutonium, the utilities would have had to dispose of it as waste.


The subsidies I have listed will not be available to the nuclear powerplants being constructed, considered or advertised in the New England area, but the new plants will continue to receive the benefits of nearly $2 billion the Atomic Energy Commission has spent in research and development of the civilian nuclear power program and related reactor technology and safety programs, and the incentives provided by the Price-Anderson Indemnity Act which provides liability protection between the coverage provided by private insurance companies and total liability of $560 million. In the instance of the Connecticut Yankee Atomic Plant, the utility will be able to obtain $486 million worth of liability coverage from the Federal Government at a cost of $44,000 per year, while obtaining only $74 million worth of liability insurance from private sources for $280,000 a year.


I do not object to these incentives, or subsidies. They are designed to accomplish a positive public good. I do object to the doubletalk we get on the subsidy question.


This question was raised frequently before the Joint Atomic Energy Committee during hearings on renewal of that program. The statements by the utility executives speak for themselves:


In response to the following question from Representative HOSMER, Mr. Francis E. Drake, vice president, Rochester Gas & Electric Corp., had an interesting comment:


Representative HOSMER. In the light of your answer to Mr. Price, how do you view this Price-Anderson thing? A lot of people say this is a big subsidy. Some other people say it is a method, technique, to permit the installation of nuclear electric generating plants in this country. I suppose there are some other variations in concept of its philosophy. What is Rochester's view, yours in particular?


Mr. DRAKE. My View, Congressman Hosmer, is that the Price-Anderson indemnity provision has been a most effective encouragement to the private industry and also the manufacturing industry to go forward with an industry which is in the public interest. Nuclear power as a source of energy is one that we are all very optimistic about. Without the Price-Anderson Act, I do not think that the progress we have made would have been made and could have been made in the industry. I think it has been very farsighted of the committee and of Congress to have passed the Price-Anderson Act.


Mr. George C. Kinsman, vice president, Florida Power & Light Co., said the following:


Because of our interest in nuclear power, we are concerned about extension of the

Price-Anderson law. The importance of the extension is emphasized by the inclusion in the first proposal we have received on our nuclear project which contains the following statement: "The offer is based on the extension of governmental indemnification authority." This indicates to us that this matter is considered essential by the manufacturing industry.


And adding an interesting colloquy with Representative PRICE on the subject:


Representative PRICE. Mr. Kinsman, you say in your statement that this matter -- the extension of the Price-Anderson Act -- is considered essential by the manufacturing industry. Now what about the utility industry and particularly what does your company think about the necessity of extension of this act?


Mr. KINSMAN. We feel the same way, Mr. Price.


Representative PRICE. You think it is essential to the continuation of the nuclear power development program?


Mr. KINSMAN. Yes Sir; I do.


Mr. James Davenport, executive vice president, Southern California Edison Co., stated:


We believe that it would be unwise to remove the aggregate limitation of liability provided by the Price-Anderson Act. The removal of this feature of the Price-Anderson system would result in the exposure to uninsured liability claims which also could be a deterrent to future developments in the nuclear energy field.


We believe that the Price-Anderson program is fully warranted since it is the only means of providing the necessary nuclear liability coverage for the nuclear power industry.


In connection with the subsidy argument, Mr. President, it should be noted that the Dickey-Lincoln School project would repay the entire Federal investment, with interest, in 50 years. It will return to the Federal Treasury nearly $2 for every one of the $227 million in Federal funds invested in the project during that time period. It will continue to pay a substantial return on the public investment many, many years beyond the end of the payback period.


I have yet to hear one private power company offer to reimburse the Federal treasury for the nearly $2 billion Federal investment in the civil nuclear reactor program.


Mr. President, I think the record should be clear that the Dickey-Lincoln School project has met the tests of national interest and economic feasibility. In addition, it has overwhelming support in the State of Maine. Two Maine Governors -- one Republican one Democrat -- two Maine Senators -- Mrs. SMITH and I -- three Maine Congressmen -- one Republican and two Democrats -- and two Maine Legislatures -- one Republican and one Democratic -- have supported this project since it was sent to Congress.


In spite of all these factors a majority of the House of Representative has opposed the project. In considering the disagreement between the Senate and the House, I hope my colleagues will keep the following facts in mind -- in addition to those which I have outlined on the substantive issues:


First, the northeastern area of the United States -- and New England in particular -- has not received the heavy investment in resource development funds which has been accorded other regions.


From 1960 to 1966, the per capita distribution of public works authorizations showed a consistent pattern of large investments in areas outside the Northeast, as demonstrated in the following table:


New England's allocation is only $1.57 per capita.


Second, many of the opponents of the Dickey-Lincoln School project have been inconsistent in their positions on the public works appropriations bill, voting against Dickey-Lincoln School -- which has a benefit-cost ratio of 1.91 to 1 -- while supporting rivers and harbors projects in their own districts which do not measure up to the Maine project.


In the July 25 vote in the House of Representatives, Congressmen representing districts in which 193 projects covered by the bill were located voted against the Dickey-Lincoln School project.

134 of those projects, with appropriations totaling $241,527,000, had no benefit-cost estimate or had a benefit cost ratio of less than 1.9-1. This represented 24 percent of the total appropriations approved by the Senate for construction and planning of public works projects.


In the October 25 vote in the House, there were a number of individual shifts in connection with the Dickey-Lincoln School project. Of the projects contained in the conference report, 132 having no benefit-cost estimate or a ratio less than 1.9 to 1 are located in the districts of Congressmen who voted against Dickey Lincoln School on October 25. Appropriations for these projects totaled $234,155,000, or 24 percent of the total recommendation of $968,474,000.

I cite these figures to demonstrate that there is no consistency in the opposition to Dickey-Lincoln School, that the House Position threatens a national policy based on the merits and economic feasibility of projects, and that our region is not one to be placed at the top of the list for cutting back on public works Projects.


I urge my colleagues to support the Senate position and to insist that the Dickey-Lincoln School project be included in the Public Works Appropriations Act of 1968.


Mr. President, I yield the floor.