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Letter to Senator Hayden on the Effect of Certain House Amendments on Hydroelectric Power Policy.
June 11, 1951

Dear Carl:

I am writing to express my deep concern over certain drastic limitations on the use of our Nation’s power resources which appear in H.R. 3790, the Interior Department appropriation bill for the fiscal year beginning July 1, 1951, in the form in which that bill passed the House of Representatives and is now before your subcommittee.

These limitations are contained in amendments to the bill added on the House floor. Two kinds of amendments were made. First, in a number of cases, the House cut out funds to build badly needed transmission lines which could carry the power produced at Government dams to the areas where it is to be used. Second, a legislative "rider"—the so-called Keating Amendment-was tacked on to the bill. This rider would go much beyond these appropriation cuts and result in an entirely new policy for disposing of the power produced by Federal projects.

Taken together, these amendments would seriously restrict the operation of Federal hydroelectric power projects for the national defense and in the public interest. They would, moreover, reverse basic power policies which have been approved many times by the Congress in order to promote balanced economic growth throughout the country.

For many years, we have been developing hydroelectric power as an integral part of the Government’s task of harnessing our rivers for navigation, flood control, reclamation, and other beneficial public uses. In many areas, such low-cost power, added to other power supplies, has brought rapid economic growth.

Today, the need for more power is immediate and pressing. The expansion of our power resources has become one of the most essential basic tasks in our mobilization effort. Government and industry alike recognize that more power is vitally needed to strengthen the national defense. We must move as fast as we can, within current limitations on materials, to increase all available supplies of power, public and private, so that we can meet the growing demands of defense industry and agriculture in all parts of the country. Federal public works which will produce sizable amounts of power have been given the highest priority among the limited numbers of public works now being built by the Government.

It is absolutely imperative that we move forward with these Federal power projects, as well as with the expansion of private facilities now planned or underway. But it is not enough to produce the power. When taxpayers’ funds are invested to produce power, the benefits of that power ought to be made widely available to people who need it, at the lowest possible rates consistent with sound business principles.

To achieve this end, the Congress has provided by law that public bodies (such as ’municipalities and public utility districts) and cooperatives (such as rural electrification cooperatives) should receive power from Federal projects as preference customers-since these organizations are obviously interested in low rates, rather than in high profits. To the same end, the Congress has authorized the Federal power agencies to build transmission lines where necessary to carry power to "load centers"—convenient places for marketing power at wholesale to preference and other customers.

Without the authority to build transmission lines, the Government would be unable to carry out the mandate of Congress to see that Federally-produced power is sold at low rates. Private power companies have always been willing to buy Federal power at the "bus-bar"—that is, at the dam site—and resell it at rates yielding them high profits. To keep power rates down, the Government has built many transmission lines to load centers and, in most instances, has served preference customers directly over its own transmission facilities. In addition, where private companies have been willing to carry Federal power from load centers to preference and other customers for a satisfactorily low charge, the Government has made so-called "wheeling" agreements for this transmission service.

Both of these methods can and do work successfully. But if they are to work successfully, the Government must have the authority and funds to plan and construct needed transmission lines. Without this, the Government—or, more accurately, the consumers of power from Federal projects-would be at the mercy of the private power companies. That is exactly what would be achieved by the amendments made to H.R. 3790 on the House floor.

Funds were included in the January Budget for transmission lines only in cases where they are urgently needed to carry out the mandate of Congress in marketing power from Federal projects. These funds were substantially approved by the House Appropriations Committee. And yet they were slashed—on the House floor—and if these slashes stand, consumers in the southeastern states, in the southwestern states, in California, in the Missouri Basin, in the Pacific Northwest, will have to pay higher prices-or not get the power they need.

Furthermore, the Keating amendment, barring Federal transmission lines in "areas" where wheeling agreements are in effect, would throw away the authority needed to ensure widespread benefits from Federal power at low cost.

Wheeling agreements, in general, do not guarantee the delivery of power to preference customers—they simply make the surplus carrying capacity of the private power company’s lines available to the Government. At any time the private company makes use of its lines for other purposes, preference customers may be dropped from service. Obviously, therefore, the Government needs continuing authority to build transmission lines in case the wheeling agreement does not bring the results it was intended to achieve.

Furthermore, most of the present wheeling agreements do not take care of the additionalpower that will be produced from dams now being constructed. When that power is ready for marketing, if the Government does not have the authority to build transmission lines, there is no assurance whatever that it will be possible to reach satisfactory wheeling agreements for the new power. Indeed, past experience indicates the contrary. A number of the present wheeling agreements were successfully negotiated only after the Congress had actually appropriated funds for the construction of specific transmission lines in the areas affected.

For these reasons, it is clear that the amendments made on the House floor would disregard past experience and the will of Congress repeatedly expressed after careful deliberation. These amendments would be a long step in the direction of making the taxpayers’ investment in power facilities serve the profits of the private power companies.

In some cases, these cuts, in addition to playing into the hands of the private utilities, will result in the waste of Government funds already spent. For example, the House eliminated funds to complete work on the Western Missouri Project—a group of important transmission facilities being built by the Southwestern Power Administration. This project is already sixty percent completed, at a cost so far of nearly $3 million. This money will be entirely wasted—and the real need for these facilities ignored—if construction is now stopped for lack of further funds.

This bill, as it passed the House, makes such a sweeping attack on Government transmission lines that it would actually limit the supply of critically-needed power. The Government builds transmission lines in many cases to interconnect its power projects, because that is the way to operate most efficiently and get the most power produced for the money invested. And yet funds needed for such purposes were left out of the House bill.

For example, funds were left out of the bill for the badly needed interconnection between the Government’s power projects in the Pacific Northwest and in California. That interconnection will mean more power in the Northwest and more power in California, because it will make it possible to send power which is not needed in one area to the other at times when it is needed there. Such an interconnection is simply a matter of common sense—it is a good, fast way to increase the Nation’s power supply.

I earnestly hope that the unfortunate amendments incorporated in H.R. 3790 will not be allowed to stand and that the funds requested by the Interior Department at the hearings of your subcommittee will be restored to the bill. I am sure that many of those who voted for the amendments in the House were misled as to their effects. I am confident that once the facts are known the Congress will wish to provide, in this time of emergency, for the full use of our hydroelectric power projects for the national defense and in the public interest.
Very sincerely yours,
HARRY S. TRUMAN

[Honorable Carl Hayden, The United States Senate, Washington, D.C.]

NOTE: On August 31, 1951, the President approved H.R. 3790, the Interior Department Appropriation Act, 1952 (65 Stat. 248).