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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 101⁄2 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 agreement with 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

leveled off in that year was because we had no power to sell. You will note that in 1955 when Eklutna came on the line, and we made a rate reduction, the use curve became steeper. We believe our forecasts for the future are quite conservative.

No matter how we make the calculations we always come up with the same answer; that by 1947 the city of Anchorage will have used up its commitment of power from the Eklutna project. If there is plenty of water available, we might be able to obtain our full power requirements from Eklutna until 1958. The question is where do we obtain power after 1957 or 1958? There are several projects in the Greater Anchorage area or that affect the Greater Anchorage area which have been mentioned for possible development. Although they have been listed many times, I will repeat them here.

There are several sites on the Kenai Peninsula, one of which is currently being investigated by the Central Alaska Power Association, a rural electric co-op, as a potential source of power for their member agencies, a second project at Crescent Lake is being investigated by the city of Seward for a power supply for that city. We believe that the power developed from both of these projects will be needed on the Kenai Peninsula. At the present time both Homer and Seward are generating their expensive power by diesel engine driven generators. The Bureau of Reclamation has made preliminary studies on several other sites in the Kenai area. However, there is at present no active interest in the immediate construction of a power project except the two mentioned above.

The next most likely looking site for development appears to be on Caribou Creek about 55 miles from Palmer, close to the Glenn Highway. The Bureau of Reclamation is presently making a study of this site and perhaps this year, because of the financial assistance given to them by the Matanuska Electric Association and the city of Anchorage, they will be able to complete all field work so that the preliminary report can be written this winter. If the Congress appropriates money for its construction at the next session of Congress, and construction is started immediately thereafter, the city of Anchorage will have been ready for power from the plant long before it could be completed. The development of power generation at this site is what is needed most at the present time. Its rapid completion is sorely needed by the community. Any help this committee can give in expediting the construction of the plant by the Bureau of Reclamation will be 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 at least the initial development is just around the corner. If our present rate of growth continues, which we must presume that it will, or that it will even exceed past experience, by the time Devils Canyon will be ready to come on the line with the first unit, the capacity of Caribou will be completely used up. Devils Canyon requires considerable stream gaging and investigation, all of which takes time; time is running out. We presumed that when Eklutna came on the line, we would be pretty well fixed for power supply for many years to come, now we see that we will be out of power by 1957 and Eklutna has not yet been in service a year. We must keep ahead, we must have a firm supply of cheap power available for at least the future 10-year period before we can coax industry to come to Alaska.

However,

There are many other sites in Alaska that should be developed. they do not concern the immediate Anchorage area, only insofar as their output should be tied to the rail belt transmission grid by high voltage transmission lines. The two largest sites are Woods Canyon and the Rampart site on the Yukon River.

Perhaps the next question to be answered is who is to develop these various projects? There are three Government agencies or Government-financed agencies, capable of developing hydro plants, 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 by the Lake George ice dam project. A permanent dam to hold back the waters of Lake George

and control the discharge of the lake would be of great benefit to this community in the control of the floodwaters of the Knik River, and would also develop a substantial amount of power close to the city of Anchorage. An additional benefit in the control of Lake George would be the possibility of the establishment of a low-head powerplant on the proposed Knik Arm causeway when such is built. The Corps of Engineers would be the likely agency to construct the causeway and companion power facilities.

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 increased sufficiently, it would enable us to obtain truly low-cost power from the project.

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 toward the Bureau by contributing funds to assist in the investigation of the Caribou site. The city of Anchorage has no desire to be in the generation business. We would much prefer to buy at wholesale from the Bureau of Reclamation. We believe that all efforts should be made to make such authority and financing as are necessary to develop hydro power in Alaska available to the Bureau of Reclamation so that 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 set up. We believe that they should continue in business and be the major power generation and wholesaling agency in the Territory. Any hydro plants constructed by the Corps of Engineers should be turned over to the Bureau for operation.

The Bureau of Reclamation is probably the only agency in the Territory who would be able to enter into an integration agreement with the military establishments 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 military demands for steam heat are high for heating purposes, they would be able to furnish excess power to the power pool through the Bureau of Reclamation.

To sum up in a few words how this committee can assist the greater Anchorage area in their power problems, 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.

Mr. BARTLETT. Thank you, Mr. McKinley, for a very clarifying statement.

As Mr. O'Brien has suggested and as the committee members agreed, we will defer questioning until all the witnesses for the city have appeared. Is that agreeable?

Then we will proceed with the next witness.

Mr. SHANNON. Mr. Chairman, I wanted to point out to the committee that the Corps of Engineers has been very gracious in making

some displays available to the committee here in the auditorium, and the power project that Mr. McKinley was describing would be found on the map displayed in the rear of the room and this map here is other types of civil works projects that the Corps of Engineers is proposing in the Territory of which we have interest in 1 or 2.

Mr. BARTLETT. We had noticed those displays when we came into the room, and we were most grateful to Colonel Farrell and those associated with him for making them available. They really help us. Mr. SHANNON. Mr. Chairman, we would like next to present evidence of the serious efforts on the part of the city and it's energetic citizens to promote economic development as further illustrated in a description of the efforts and progress toward construction of a seaport to serve western Alaska. The Anchorage Chamber of Commerce will have a separate presentation on this subject later during these hearings. However, the city would like to present Mr. Fred Axford, a member of Anchorage Port Commission, to introduce the subject and acquaint the committee with the city's participation in this program. I would like to introduce Mr. Fred Axford.

Mr. BARTLETT. Mr. Axford, would you be seated and identify yourself for the sake of the record.

STATEMENT OF FRED AXFORD, MEMBER OF THE ANCHORAGE PORT COMMISSION, ANCHORAGE, ALASKA

Mr. AXFORD. I am Fred Axford, member of the Anchorage Port Commission.

Mr. BARTLETT. By way of preliminary is that a permanent position being a member of the port commission?

Mr. AXFORD. Yes, it is until we have established a deep water port probably.

Mr. BARTLETT. Are you members salaried?

Mr. AXFORD. No, we are not.

Mr. BARTLETT. You are in business here, Mr. Axford?

Mr. AXFORD. Yes, sir.

Mr. BARTLETT. And serving on the commission as a civic duty? Mr. AXFORD. Yes, sir.

Mr. BARTLETT. Proceed in your own way.

Mr. AXFORD. Mr. Chairman, Congressman O'Brien, Delegate Bartlett and members of the committee, I too would like to welcome you to Alaska and to Anchorage. I have had the opportunity of meeting some of you personally, and I do know that some of you are the hardest working of Congress, and we in Alaska do appreciate that because you have our problems and we appreciate your efforts to solve some of them. We know you spend many hours listening to testimony, some of it is not of the greatest interest and some of it is a little bit long winded. I would like very much to be able in a few minutes to talk about the rail belt transportation problem and the ports that serve the rail belt, and tell you about the various Government agencies that are involved and some of the obstacles that we must overcome if we are to develop a deep water port in Anchorage. I am very reluctant to read a statement. However, because of the complexity of the problem, I am sure it will be much more concise if I am allowed to read the short statement.

Mr. BARTLETT. Surely, Mr. Axford, proceed.

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