chorage's population are employees of the Federal Government. I might add here between eleven and twelve thousand according to latest reports from the employment office. Therefore, a large portion of Anchorage's people are rendering services for the benefit of the entire United States. The presence of the Federal Government as an employer is unquestionably a tremendous asset to business of the community. On the other hand, since the Federal Government is exempt from local taxes, it is difficult for the local government to raise sufficient revenues to provide the desirable type of municipal services and community facilities which make the community a most desirable place in which to live. The exemption of the employer creates unbalance in the sharing of responsibility of local government but an equal sharing of the benefits provided by the local government. Since most of the people that the city of Anchorage serves are here because of Federal services, then it appears that our city problems should carry a serious interest to this committee.

As private enterprise develops in Anchorage, it improves the balance of the local tax structure, thereby improving both living and business conditions and an improvement in local sharing of the Federal Government's nonpayment of local taxes. Since the Federal Government cannot participate in the local tax structure, it is hoped that a reponsibility to the Anchorage community will be recognized through other means, such as (1) development of power, (2) assistance through Alaska Public Works in construction of community facilities, (3) recognition of the city's financial limitations, (4) development of a port, and (5) recognition of benefits of statehood to local government. All of these will encourage and promote private enterprise, economic development, and, in turn, be of direct value to the Federal Government through improved municipal services to its establishments. That is the Federal Government's establishments. At this point, Mr. Chairman, I would like to introduce William H. McKinley, superintendent of the municipal light and power department, who will present a brief picture of our electric power situation for the city of Anchorage-what our plans are and some suggestions to this committee.

Mr. BARTLETT. You want to have Mr. McKinley to appear now? Mr. SHANNON. Yes, sir.

Mr. BARTLETT. Mr. McKinley.

STATEMENT OF WILLIAM H. McKINLEY, SUPERINTENDENT, MUNICIPAL LIGHT AND POWER DEPARTMENT, ANCHORAGE, ALASKA

Mr. MCKINLEY. Mr. Chairman, ladies and gentlemen of the committee

Mr. BARTLETT. Do you have a prepared statement?

Mr. MCKINLEY. This is a written statement, and I will touch on some of the highlights to stress the more important points.

Mr. BARTLETT. That would probably be well if your statement is lengthy. In any case it will be made a part of the record, and we would be pleased to hear from you.

Mr. MCKINLEY. The primary problem in Alaska with regard to power supply is in the reluctance to date of any agency to come to Alaska and develop those power potentials.

There are three reasons for that. Private power companies have not seen fit to come into Alaska to invest their capital for various reasons too numerous to go into at this time. Municipalities are unable to finance these large power projects when there are also requirements to finance other utilities and community facilities, and there has been a reluctance on the part of the Government up until the time Eklutna has been completed to come in and develop these hydro projects.

Prior to February of 1955, the Greater Anchorage area was in a critical condition as regards power supply and had been in a critical condition since 1945. There have been times in the past when it was necessary to ration power in order that all consumers could get some power throughout a 24-hour period.

Since Eklutna came on the line, we have probably been lulled into a false sense of security.

Let's compare the growth of the power system of the city of Anchorage with what is considered a national average, that is, that the system requirements usually double in a 10-year period. In 1944 our generation totaled 17,294,000 kilowatt-hours, in 1954 our city use totaled 50,223,000 kilowatt-hours. These figures do not give a true picture of growth because the 1944 figure includes generation of all power used by the Anchorage area and Matanuska Valley. The city generation plant was the only civilian central station plant in the area. The 1954 figure represents power purchased or generated by the city for distribution to city consumers only.

The records show that the city requirements alone have more than tripled in the 10-year period. The records further show that the city power requirements more than doubled in the 6-year period from 1948 through 1953. Load curves and other statistics are made a part of this presentation. It is significant to note from the load curves that there was an apparent recession of power use from the period of 1953 to 1954. We who live in Anchorage know the reason. We did not have any power to sell. You will also note on the load curve that in 1955 when Eklutna came on the line that the use curve steepened very much, and that was made possible because of the lower cost of power and the fact that we reduced our rates.

No matter how we make our calculations we always come up with the answer that we are going to be out of power from the present sources by 1957 or early 1958 at the latest.

There are several projects that affect the Greater Anchorage area that have been mentioned for possible development. There are sites on the Kenai Peninsula, one of which is currently being investigated by the Central Alaska Power Association, and the second project is Crescent Lake, being investigated by the city of Seward. We believe that the power from both of these sites will be required on the Kenai Peninsula. At the present time both Homer and Seward are obtaining their power, expensive power I might add, by the use of diesel engine. driven generators.

The next most likely looking site for development appears to be on Caribou Creek about 55 miles from Palmer. The Bureau of Reclamation is making a study of this site and perhaps this year, because of the financial assistance given to them by the Matanuska Electric Association of Palmer and city of Anchorage, they will be able to complete all field work so that a preliminary report can be written

this winter. If the Congress appropriates money for the construction of Caribou Creek at the next session of Congress and construction is started immediately thereafter, the city of Anchorage will have been ready for the power long before it could be completed. The development of power generation at this site is what is needed most at the present time. Any help that this committee can give us in expediting the construction of the powerplant will be most appreciated.

The development of the Susitna River power potential has been considered by Alaskans for quite some time. In the past it has been a dream into the far distant future, today the need of this project or the intital development of that project is just around the corner. If our present rate of growth continues, which we must presume it will equal or even exceed our present rate of growth, we will be ready for Susitna River project by the time it is ready to come on the line.

There are many other sites in Alaska that have been mentioned, the largest of which are Woods Canyon and the Rampart site, but they do not concern the immediate Anchorage area except insofar as they should be tied to the transmission grid and be integrated with the Anchorage area.

Perhaps the next question to be answered is: Who should develop these various sites? There are three Government agencies or Government financed agencies capable of developing the hydro sites operating in the Territory at the present time, and in our opinion each of these are logical agencies to develop certain projects. The REA financed cooperatives should develop the projects in the Kenai which would be of the most benefit to their member cooperatives. The Bureau of Reclamation should develop Caribou, Susitna, in fact all other sites that are single-purpose power projects. The point that we must put across to Congress is that the Bureau of Reclamation operating in Alaska is not competing with private enterprise. Private enterprise in the power business in Alaska is an insignificant percentage of the total. A vast majority of the power distribution and generation is either municipal or REA financed.

The Corps of Engineers is the logical agency to develop any multipurpose dams such as the possible flood control of the Knik River with the attendant power development.

The development of the Knik River flood-control project would give us a substantial block of power close to Anchorage.

We believe that some attention should be given to a possible longer period of financing being allowed by the Congress for projects in Alaska which are built either by the Bureau of Reclamation or the Corps of Engineers. To use an example, if the amortization period for the Eklutna project were 75 years or even 100 years instead of the 50 years, we would have been able to obtain truly low-cost power from Eklutna. We are not trying to shirk our obligations, but we would like to have them spread a little more thinly.

Mr. ABBOTT. While it is the intention, I believe, of the committee to wait until the city people have finished and then question them en banc, I should like to address one question to Mr. McKinley. Is it not true that during the rather lengthy hearings during the early part of the 83d Congress and the latter part of the 82d Congress with respect to the Eklutna project, then under construction, that a great deal of testimony was given that the pay-out period as pre

scribed by the reclamation law would be met, and could be met without danger to the power market in this area?

Mr. MCKINLEY. That is perhaps correct. I am not familiar with those hearings. However, the thing that we are suggesting is sure, we can meet the pay-out period. It is the lowest cost power we have had to date. We are not complaining, we are trying to get truly low-cost power so that we could coax industry to come to Alaska.

Mr. ABBOTT. That is understood, Mr. McKinley. You are probably aware that an amendment was proposed which would have required a minimum of 11-mill power, and I believe the committee has been advised informally-or perhaps Mr. Roberts of the Bureau of Reclamation in his testimony pointed out-that it was about 10%1⁄2 mill power; is that right?

Mr. MCKINLEY. Yes, sir, that is about what it costs.

Mr. ABBOTT. Of course, that is not power at a rate which would attract industry.

Mr. KCKINLEY. No, sir.

Mr. ABBOTT. All right. Thank you.

Mr. MCKINLEY. The city of Anchorage is behind the Bureau of Reclamation to the limit as the agency to develop and furnish power to the city of Anchorage and to operate the power grid and the power pool. We have demonstrated our cooperative attitude by making financial contributions not alone to assist in the development or the investigation of Caribou Creek site, but also in gathering statistics and data for the Eklutna project. The city of Anchorage has no desire to be in the generation business. They would much prefer to buy it wholesale from the Bureau of Reclamation. We believe that all efforts should be made to make such authority in financing as are necessary to develop hydro power in Alaska available to the Bureau of Reclamation so they can proceed in the development of power. The Bureau has given us the lowest cost power to date. They are in business at Eklutna and they have the administrative organization setup. We believe they should continue in business and be the major power generation and wholesaling agency in the Territory.

The Bureau of Reclamation is probably the only agency in the Territory who would be able to enter into an integration agreementwith the Military Establishment in order to use the generation facilities of the military to maximum efficiency. I speak now of the use by the military of dump energy generated from excess stored water in Eklutna Lake during the summer months when the heat load is low on the military steam plants. In the wintertime when civilian peak demands are high and the military demands for steam heat are high, they would be able to furnish excess power through the power pool through the Bureau of Reclamation.

To sum up the important matters, we will list them in order.

1. Expedite the necessary legislation to finance and authorize the Bureau of Reclamation to proceed with the construction of a project as soon as the Bureau reports that a project is feasible and recommends construction. As has been pointed out, additional generation facilities will be needed just as soon as they can be installed. Speed in approval of the next project is important.

2. Recommend legislation to grant an extension of the amortization period of loans in the Territory of Alaska for power purposes so that we may obtain truly low-cost power.

3. Recommend passage of the necessary legislation to put the Bureau of Reclamation in the power-generation business in Alaska on a permanent basis, not on a year-to-year basis as at present.

4. Assist in convincing the military authorities that cooperation with the Bureau of Reclamation in the interchange of energy and use of excess energy from Eklutna would be in the best interest of their economical operation.

5. Recommend legislation which would permit municipalities of Alaska to obtain Federal insurance on utility revenue bonds so that a more favorable interest rate could be secured.

6. Recommend that the Corps of Engineers investigate and construct, if feasible, flood-control works and a powerplant with transmission lines at Lake George, and the causeway and low head-power facilities at Anchorage.

(The full statement submitted by Mr. McKinley follows:)

STATEMENT OF WILLIAM H. MCKINLEY, SUPERINTENDENT,
MUNICIPAL LIGHT AND POWER, ANCHORAGE

AREA POWER PROBLEMS

The effect of low cost abundant power upon the economic welfare of an area is well known. Where there is abundant low-cost power, industry, manufacturing and generally good business conditions prevail, and it is an important factor in the location of industries, often the deciding factor. Past history indicates that industry moves to an area having ample low-cost power so that new sources must be developed on a continuing basis.

In Alaska we have neither abundant power nor low-cost power, even though as has been pointed out repeatedly by others, the hydroelectric potential of the Territory is almost beyond comprehension. There are three reasons why these sources of hydroelectric power have not been developed: First, a reluctance on the part of any private power companies to come into Alaska and develop the projects; second, the limitations of financing large power-generation projects by municipalities when financing of other utilities and community facilities are required at the same time; and, third, the reluctance on the part of the Government to come into Alaska and develop these projects in an aggressive manner.

Prior to February of 1955, the Greater Anchorage area was in a critical condition as regards power supply and had been in a critical condition since 1945. There have been times in the past when it was necessary to ration power in order that all consumers could get some power throughout a 24-hour period.

Since Eklutna came on the line, we have probably been lulled into a false sense of security. Generally speaking however, those in direct contact with the power problems of the community continued to press for further development of power. Let's compare the growth of the power system of the city of Anchorage with what is considered a national average, that is, that the system requirements usually double in a 10-year period. In 1944 our generation totaled 17,294,000 kilowatt-hours, in 1954 our city use totaled 50,223,000 kilowatt-hours. These figures do not give a true picture of growth because the 1944 figure includes generation of all power used by the Anchorage area and Matanuska Valley. The city generation plant was the only civilian central station plant in the area. The 1954 figure represents power purchased or generated by the city for distribution to city consumers only.

The records show that the city requirements alone have more than tripled in the 10-year period. The records further show that the city power requirements more than doubled in the 6-year period from 1948 through 1953. The city of Anchorage average yearly increase from 1947 through 1955 is approximately 15 percent compared to a national average of 7 percent.

Load curves and other statistics are made a part of this presentation and will be submitted to the committee. You will note from the load curves that there was an apparent recession in the use of power from 1953 to 1954. The reason we