gate increase of only three positions. We have been able to hold down this increase by transferring personnel from other Commission functions with less pressing time priorities. ELECTRIC POWER-GENERAL Our responsibilities in electric power regulation are even more varied and far-reaching than in natural gas, and they are more difficult to describe in a few paragraphs. Basically, we have four tasks under the Federal Power Act, and several more under other Federal statutes. Three of these stem from the Commission's original responsibility-regulation of the nation's navigable water resources utilized for hydroelectric power purposes. We not only license all non-Federal hydroelectric projects which are on navigable streams or affect Federal lands or interstate commerce, but have rate-making responsibilities for many Federal projects, and assist other agencies to determine the power potential of proposed and authorized Federal developments. The latter two functions are fairly constant by hydroelectric licensing is a never-expanding area of the Commission's electric power activity. HYDROELECTRIC LICENSING The Commission has exercised licensing jurisdiction for nearly fifty years but there are still many good hydro sites that can be developed, particularly through the application of the new pumped-storage technique. In licensing any hydroelectric project, the Commission is expected to consider not only the traditional factors, such as power, navigation and flood control, but many others such as protection of fish and wildlife, promotion of recreation, human and industrial needs, aesthetic considerations, water pollution abatement and on one occasion thus far, even air pollution. Only recently, the courts reemphasized our responsibility to explore the alternatives to any proposal which might affect these interests. The licensing process is becoming more complex, with formal hearings expected in an increasing number of cases. I believe that this trend is in the public interest, in spite of the added strain on Commission staff resources. In addition, a continuing program to bring under license all projects which affect the interstate transmission or generation of energy has been so successful that it has created its own problem: license applications for constructed projects now constitute a sizeable backlog. This program received fresh impetus by a Supreme Court decision several years ago, and is rendered more complex by the increasing emphasis on nonpower social values, already mentioned. Applications for pumped-storage projects are increasing in proportion and because of their complexity have increased our workload significantly. RECAPTURE OF LICENSED PROJECTS Finally, and perhaps most significant in terms of new manpower requirements, is the problem of relicensing or recapture by the Government at the end of the initial license term. This work cannot be deferred. We have submitted one report to Congress already, on a license expiring in 1968. A large number of major licenses will expire in 1970, and we will have to allocate a substantial amount of staff time in 1968 to the appraisal of these projects. We will shortly recommend to Congress a legislative proposal designed to facilitate Congressional and Commission consideration of relicensing and recapture matters, but no legislation of which we are aware will alleviate the severe strain on FPC resources. While only two additional positions have been requested for this program, their loss would have a crippling impact on the program. ELECTRIC RATES Congress has provided the Commission over the last several years with adequate resources to revitalize important work in the electric rates and service area. This work is particularly important now, when scientific and technological advances in the industry are bringing more of the wholesale transactions of electric utilities within the Commission's jurisdiction. The increasing productivity of our staff should be adequate to offset these new demands. A small but important increase, however, is required in the staff element charged with responsibility for the corporate regulation of electric utilities, mainly because the increasing importance of corporate realignment in the electric utility industry, paralleling the technological impetus for system coordination, forecasts increased merger activity. A reduction of effort here would adversely affect the Commission's oversight of electric utility mergers. Consumer electric costs which rose approximately five points on the cost of living index between 1955 and 1961 have now leveled off and are declining. Since 1961 the cost-of-living index for all items increased over nine points. We believe that the decline in electric costs can be attributed in part to the effectiveness of our electric rate regulation program. ELECTRIC POWER SYSTEM RELIABILITY Several years ago Congress approved extra staff resources to conduct the 1964 National Power Survey. The wisdom of this step has been widely recognized, even among industry groups which had been wary of government involvement in industry affairs. When the Survey was first considered, a decision had to be made as to whether it would be a one-time report or whether the joint industry-government organization built up for the purpose would be continued as a source of Commission expertise. The latter choice has definitely been justified by events which followed the Northeast blackout of November 1965 when the Commission had an essential industry-government resource organized and available to assist in conducting the investigation and subsequent studies on the reliability of the nation's bulk power supply. Our final report to the Congress and the President on the Northeast blackout will be issued any day now. The report emphatically highlights the need for acceleration in regional and interregional coordination of power systems and the construction of many additional EHV transmission lines. We foresee the need for much further Commission action if these requirements, which bear on the reliability and economy of electric service alike, are to be met in time. The need for acceleration in improved regional coordination of power systems, and in modernization of interconnection facilities and equipment designed to avert massive power shutdowns was again illustrated on June 5, when large areas of New Jersey, Pennsylvania, Delaware, and Maryland were blacked out by a sudden power failure. This major failure re-emphasizes the need for further Commission action on this front. Along this line, the Commission has established a special ad hoc panel of industry and government experts to study in depth the problem of bulk power supply reliability in the area affected by this latest blackout. The panel will recommend measures to minimize the possibility of a recurrence. OTHER REGULATORY CONSIDERATIONS The Commission has more than a responsive role to industry decisions in the two areas of natural gas and electric power. Economic considerations are not the only elements included in the public interest. Low rates for the consumer and fair returns on investment for industry, while prime concerns, cannot be the sole bases for the decisions of the Commission. Confronting us today are many issues of major importance which did not exist a few years ago. With our expanding population, public demands for clean water, unpolluted air, recreation areas, natural beauty, plant and wildlife conservation, reliable electric power, and safety require that we reconsider, and, in many cases, adjust our regulatory standards. CONCLUSION The Federal Power and Natural Gas Acts require us to make judgments in the public interest. In practical application the public interest comes to include enormously difficult and conflicting factors, and involves many competing interests such as consumers, distributors, pipelines, power companies, and natural gas producers. The Commission must weigh each of these factors with great care each time it is called upon to find the public interest in a particular case. Our goal is to serve all, even though often there are seemingly irreconcilable differences between them. We must attempt to bring all of the varying and conflicting interests together, weigh their comparative values and judge fairly so that systems of production, transportation, and distribution of natural gas and electric power develop with sense and economy. I believe that the record shows reasonable success. We in the Commission know only too well the traps and pitfalls to be avoided if regulation is to be successful. We also know that decisions of regulatory agencies have tremendous impact upon industry and the public. A poor decision may have the most serious consequences. In today's world sound regulatory judgment requires a grasp of more and more complex information-reliable, pertinent and timely. We can obtain much of it under our present authority and, with the use of latest techniques in automatic data processing, are improving our ability to handle it. The Commission looks forward to new challenges in carrying out the mandates of the Federal Power and Natural Gas Acts. Your encouragement and understanding throughout the appropriation process are a welcome incentive to us. I am sure that there are points in this budget and in our work that you may wish to discuss in some detail. The Commission and the senior staff members who are present will join me in answering any questions you may have. Thank you. This proposed amendment will enable the Federal Power Commission to initiate a National Gas Survey. The survey will be conducted in cooperation with the natural gas industry and will be of value to both the Government and the industry. The survey was not proposed at the time of the President's budget transmittal pending a clarification of its relationship to possible studies of other energy resources. This point has been resolved and early completion of the survey will enable the Federal Power Commission to carry out its regulatory responsibilities in the natural gas area. EXPLANATION OF APPROPRIATION LANGUAGE CHANGES Language changes reflect the 1968 appropriation estimate of $14,530,000, and the revised citation for hire of consultants due to recodification of Title 5, U.S. Code. Summary of estimates and increases, by activity, fiscal year 1968 |