Pacific Gas & Electric Co. gets a real service out of this, too, because they can shut down their high-cost units from time to time and have their cheaper units producing a higher share of their total power. So it is a good system for both of us. We do not duplicate transmission lines and we don't bill the individual retail customers. We market power to REA's, municipalities, and other preference customers and they in turn distribute it to the individual customer and sell it that

way.

Mr. HANSEN. With regard to the preference customers, then you are stating that you do not sell except to REA's and this type of thing, that you are not selling to large privately owned concerns of one sort or another who might use a great amount of electricity?

Mr. DOMINY. In the case of the Central Valley project we have more demand from preference customer groups than we have power. Under the law, 100 percent of our power goes first to preference customers. If we had more power than the preference customers wanted, we would market to whomever was on the market to buy it.

Mr. HANSEN. This is not the case in the Northwest?

Mr. DOMINY. In the case of the Northwest, there is a lot of Bonneville power going to industry as contrasted to the preference customers as defined in the Federal law.

Mr. HANSEN. Do you feel that this block of power that you are referring to in this project will change the picture at all in California or do you believe that this will still only allow you to serve these previous categories of preference customers?

Mr. DOMINY. As the Secretary and Mr. Johnson pointed out, if we do not get on the line with the Auburn-Folsom power on schedule, we would have to actually cut back on service to preference customer groups as the pumping loads grow. We do have contracts that permit us to do this. Naturally, it isn't a very happy prospect.

Mr. HANSEN. I do not want to enhance the problem in some other area. This is why I am concerned. You feel, then, that there is no controversy here at all in the power aspects of this particular project with Pacific Gas & Electric?

Mr. DOMINY. There is no corollary here with the problem you mentioned incident to bringing Bonneville power into Idaho. We have had service to a group of preference customers and we do have commitments of a maximum load that we can carry to the extent that we can meet their needs. A few have other arrangements for their own power production or to purchase from Pacific Gas & Electric Co., which some of them do. The city of Sacramento is the only one that has major production of its own. A few others, including Sacramento, rely upon a standby contract with Pacific Gas & Electric Co. to pick up the power over and above that which we can supply under our

contract.

Mr. HANSEN. This is for preference customers! How does the city of Sacramento stand? Which category do you classify them in?

Mr. DOMINY. They are a preference customer as a municipal-owned utility, but they are large enough so they have gone into producing their own power over and above what they buy from us.

Mr. HANSEN. Thank you, Mr. Chairman.

Mr. ROGERS of Texas. Mr. White of Texas?

Mr. WHITE of Texas. We are also happy to see that the needs of the people in the Northwest will be met and maybe they will share this eventually with the Southwest. Thank you very much, Mr. Udall. Mr. ROGERS of Texas. Mr. Reinecke?

Mr. REINECKE. I would like to join with Mr. White and Mr. Hansen and Mr. Wyatt in saying that I hope we can develop enough water in California so we do not have to pay the cost of it clear up there. I think you stated of the 240,000 kilowatts, 165,000 was a dependable supply.

Mr. DOMINY. We are building some peaking into the 240,000 kilowatt capacity.

Mr. REINECKE. When you go over the 400,000, still everything over 165,000 will be peaking; is that right?

Mr. DOMINY. Yes, sir.

Mr. REINECKE. So the 165,000 is a static load?

Mr. DOMINY. Yes.

Mr. REINECKE. You mentioned also on the banking aspect, working in conjunction and cooperation with the Pacific Gas & Electric Co.. that they are able to shut down their high-cost units during times of high flow on the river. Does the rate change to them or from them? Mr. DOMINY. No, sir; we pay similar to interest charged by banks, on a loan, we pay a small amount of interest.

In other words, if we bank 100,000 megawatts we don't get 100,000 megawatts back. We get a large portion of it. We pay them a small carrying charge for this service.

Mr. REINECKE. How about these customers now? When the hydropower shuts down because of low flow does the power rate remain the same to the city of Sacramento?

Mr. DOMINY. Yes, we have a standard rate structure. We can tell pretty well over a period of time how this is going to work.

Mr. REINECKE. So there is no shifting of the rates between the thermal and hydro power?

Mr. DOMINY. No.

Mr. REINECKE. No further questions.

Mr. ROGERS of Texas. Mr. Roncalio?

Mr. RONCALIO. No questions.

Mr. ASPINALL. Mr. Chairman, I have a reservation of time and I would like to ask the Secretary two questions and as I understand it, Mr. Dominy, you are going to give a statement and you will be available for questioning after the Secretary leaves?

Mr. DOMINY. Yes, sir.

Mr. ASPINALL. Mr. Secretary, on the first page of the statement. you have, you make this statement:

Painstaking studies by the Department of the Interior, begun immediately after the disastrous floods of 1955, reveal that this proposal not only is a model of multipurpose development, but also is buttressed by a benefits-to-cost ratio of nearly 4 to 1—and exceptionally impressive margin which merits consideration by the Congress.

As far as consideration of Congress is concerned, does it make any difference whether a project has 1.1 to 1 or 3.6 to 1 ratio?

Secretary UDALL. Well, I think, Mr. Chairman, that there might be some difference of opinion on that. As far as my own view is concerned, looking at it from the departmental level and our clearance of projects, if a project has a favorable cost-benefit ratio, this in effect qualifies it, gets it by the standards, gets it over that hurdle and it is then up to Congress to weigh the merits of the project. Certainly a project which has a higher cost-benefit ratio may appear to be a better investment or better risk. But if it qualifies, if the repayment ability is there, it seems to me that this project is just as sound, really, as a project which may have a little extra benefit in it.

Mr. ASPINALL. "What I am trying to find out from you is, whether or not the Department downtown can give priority of attention to a project such as this over one of the others which you have studied and which happens to be a favorable project as far as benefit-cost ratio is concerned. That is what I was driving at.

Secretary UDALL. I want to make a clear, correct answer and the committee is entitled to understand that in our evaluation of all these projects, we don't go out and study projects on the basis of finding ones that have the highest cost-benefit ratio and then recommend those projects. We are trying to lay out a program for the entire West and we recommend any project which qualifies and has a favorable cost-benefit ratio, if it meets our standards and tests. We are trying to have a program that is sound in terms of the development of the water resources of the entire West, and this is our approach to it.

Mr. ASPINALL. Then, on page 2 you have the statement:

Local interests would be expected to build deep wells and other facilities to insure optimum use of water.

Is there any danger-maybe I will have to ask somebody from the area itself is there any danger that building deep wells here will sooner or later bring up salts?

Secretary UDALL. I think there is a salinity problem, Mr. Chairman. Maybe one of the experts can answer this; I believe this is the problem.

Mr. DOMINY. The yield of water in this entire Central Valley area is based on a continual pumping load within the capacity of the aquifer when the surface supply is taken into account. This emphasis in the Secretary's statement was to point out that we are not undertaking a well drilling program. It is to be coordinated with the water supplies being brought in and it will be within the predetermined capacity of the aquifer.

Mr. ASPINALL. You might as well have said wells and forgotten the word "deep."

Mr. DOMINY. Right.

Mr. ASPINALL. Thank you, Mr. Udall.

Mr. ROGERS of Texas. Thank you, Mr. Secretary.

Secretary UDALL. Thank you, Mr. Chairman.

Mr. ROGERS of Texas. Mr. Dominy?

Mr. DOMINY. Yes, sir.

STATEMENT OF FLOYD E. DOMINY, COMMISSIONER, BUREAU OF RECLAMATION; ACCOMPANIED BY R. J. PAFFORD, JR., REGIONAL DIRECTOR, SACRAMENTO, CALIF.; AND D. V. MCCARTHY, CHIEF, DIVISION OF PROJECT DEVELOPMENT, BUREAU OF RECLAMATION

Mr. DOMINY. I have Regional Director Pafford here from region 2, which comprises the Central Valley area of California, and I would like to have him join me.

Mr. McCarthy, will you come up, too?

Mr. Chairman, I think I can save the time of the committee if you will permit the filing of my statement in full and then I will just highlight those elements that I believe ought to be highlighted as a result of the discussion thus far and not duplicate anything that has already been presented.

Mr. ROGERS of Texas. Is there objection to the insertion of the statement?

Mr. HOSMER. Reserving the right to object, Mr. Chairman.

Mr. ROGERS of Texas. Yes.

Mr. HOSMER. If that is it, the best way to have the overall view is to have him read the statement.

Mr. ROGERS of Texas. Objection is heard. You may proceed to read the statement.

Mr. DOMINY. Mr. Chairman, the Bureau of Reclamation again presents its plan of development for the Auburn-Folsom South unit of the Central Valley project for your consideration. This proposal was considered in the 88th Congress, and after hearings before this committee the bill was reported favorably. Since we presented the plan of development in detail last year, and the record is printed, we will only summarize the physical data this year and concentrate upon changes in the financial and economic analyses of our proposal.

The feasibility of the Auburn-Folsom South unit was demonstrated in our report which was transmitted to the Congress on January 15, 1962, and was printed as House Document 305, 87th Congress. A supplemental report which was printed as House Document 171, 88th Congress, reflected revisions of the physical plan, specifically providing for a larger Auburn Dam and Reservoir and powerplant, and correspondingly greater benefits and accomplishments than the previously reported plan.

The Auburn-Folsom South unit is a fully justified and feasible water resource development proposal designed to fit into the long-range plan for complete development of the Central Valley of California. The plan of development consists of a large multiple-purpose storage reservoir on the North Fork, American River, a major canal to deliver water for irrigation and other purposes, and two small developments, also multipurpose in character, which are closely associated with the major features. The unit is located in central California, east and south of the capital city of Sacramento. The water supply is to be derived from American River, which originates in the Sierra Nevadas and flows westerly through the city of Sacramento into the Sacramento River and then into the Pacific Ocean.

Auburn Dam will be a high earthfill structure, rising about 690 feet above the bed of the North Fork of American River. The damsite is ideally suited by topography, geology, and location for such a dam, being only a short distance upstream from the backwater of the existing Folsom Reservoir. The reservoir formed by the dam will have a total capacity of about 2,500,000 acre-feet, of which 2,131,000 acre-feet will be active storage. The entire reservoir will be contained within the rugged canyons of the North and Middle Forks of American River where it will form a beautiful lake covering 10,390 acres at normal water level. To assure the conservation of of the enormous recreation potential of the site, we propose to acquire a total area of 37,500 acres of which 22,500 acres are privately owned. A powerplant will be located at the toe of the dam, consisting of three turbine-drive units of 80,000 kilowatts capacity, making a total initial installation of 240,000 kilowatts. Further studies are to be undertaken after authorization of the unit to determine what provision should be made for future installation of two additional generators. If only three units are installed, the Central Valley project power system will be improved by the addition of some 613 million kilowatt-hours of energy available at load centers and by 169,000 kilowatts of dependable capacity.

Water regulated and conserved in Auburn Reservoir and the existing Folsom Reservoir will be delivered through the Folsom South Canal to the lands, cities, and streams where it is to be put to use. The concrete-lined canal will flow southerly from Nimbus Dam, by gravity, about 6711⁄2 miles to Lone Tree Creek, near Stockton. The initial canal capacity required to serve the Folsom South area is 3,500 cubic feet per second. The first 24 miles of the canal will be sized to this requirement. From that point southward, the canal will be enlarged to carry some 5,000 cubic feet per second of water for the potential East Side division of the Central Valley project in addition to the diminishing capacity required to serve the Folsom South area.

Providing new and supplemental irrigation water service to some 400,000 acres of land under the Folsom South Canal will entail construction of distribution and drainage works. We propose that we be authorized to construct such works if they are not built by nonFederal financing. The construction of deep wells will be the responsibility of the local interest. A large area of dry land, designated the Malby area, lies South of Folsom Reservoir but too high to be served from Folsom South Canal. We propose to pump water from Folsom Reservoir, through a pipe conduit to the county line reservoir on Deer Creek, in the center of the Malby area.

Those lands are not suitable for agricultural use, but due to their proximity to existing industrial establishments and their attractiveness for suburban residential use the proposed water supply works are needed and justifiable. By providing water supplies to such areas, suburban expansion is encouraged where it will not result in retiring productive lands from agriculture. This occurs when suburban growth takes place on the valley floor. Eventually, the diversion of our most productive lands to municipal and industrial uses, which is now occurring at a rate in excess of 1 million acres a year, will pose a serious

45-696-65- -7