to the production of more resid, you would have paid a higher price throughout for resid, but it wouldn't have been rising so much now. Whether it would be higher today than the present system is another thing. Probably not.

But the average price of resid over 10 years, say, probably would have been higher than over the last 9 years plus this year.

Mr. HORTON. In other words, if they had participated it would not have created a shortage? That is the thing that I am concerned about, whether there would be a shortage of No. 2 oil.

Mr. STEIN. No, I don't think there would have been a shortage of any of these things. The shortage arises largely in the overseas dependence. And as we indicate here, consumers would have paid a price throughout for avoiding this dependence. So that instead of having this year's shortage, they would try to obtain a higher price over a longer period.

Mr. HORTON. You are not saying, though, that we can meet all of our needs domestically, with our own domestic oil production; are you?

Mr. STEIN. Well, what I am saying is that that would be very expensive. But probably up to this point-it would have been very expensive and undoubtedly could not have gone on indefinitely, but perhaps could have gone on to this point.

Mr. HORTON. That is all.

Mr. SMITH. Mr. Hungate.

Mr. HUNGATE. Thank you, Mr. Chairman. Mr. Stein, you mentioned the operations of the economic system on the market, I believe, and the benefits accruing therefrom. Now, when was the present oil import quota system first adopted?

Mr. STEIN. 1959, I believe.

Mr. HUNGATE. And was the economic system functioning well prior to that date?

Mr. STEIN. Well, it was functioning with respect to the objectives which were then recognized, yes. It was decided, of course, to superimpose another objective on the one of the unrestricted market.

Mr. HUNGATE. And the proposed possible fuel shortages which we have discussed here earlier, if I understood your testimony correctly, you stated that those were not the result of any mismanagement on the part of the Government. Do I understand you correctly? Mr. STEIN. Yes: I think that is correct.

Mr. HUNGATE. Would you have a view on that?

Mr. STEIN. I would make some exceptions to that.

Mr. HUNGATE. Would you have a view as to the wisdom or the need for power projects such as the Dickey-Lincoln that has been annually proposed for the Northeast part of the United States?

Mr. STEIN. I wouldn't have any view about that. I don't even know what it is.

Mr. HUNGATE. Do you think that the price, the cost to the consumer, is higher or lower because of the import quota system, oil import quota system?

Mr. STEIN. I think the price to consumers of all oil products over all time is higher.

Mr. HUNGATE. Would you have, as an economist, an estimate of what that increased cost would be over a 1-year period, say, 1969, 1968?

Mr. STEIN. No. There were estimates in the oil import study, and I wouldn't second-guess them. I don't have an estimate. I haven't made an independent estimate of that.

Mr. HUNGATE. Thank you very much.

Thank you, Mr. Chairman.

Mr. SMITH. Mr. Stein, I want to thank you for coming and for your extended testimony and answers to questions.

(Off the record.)

Mr. SMITH. We will proceed, then, with Mr. Mansfield, and have a short recess and come back for Mr. Radin.

Mr. Mansfield, do you have a statement?

You may proceed.

TESTIMONY OF D. BRUCE MANSFIELD, PRESIDENT, OHIO EDISON CO., AND PRESIDENT, EDISON ELECTRIC INSTITUTE; ACCOMPANIED BY JOHN J. KEARNEY, EDISON ELECTRIC INSTITUTE PROFESSIONAL STAFF

Mr. MANSFIELD. Thank you very much, Mr. Chairman.

My name is D. Bruce Mansfield. I am president of the Ohio Edison Co., which is located in Akron, Ohio. I am also president of the Pennsylvania Power Co., its wholly owned subsidiary.

I also happen to be this year president of the Edison Electric Institute, the National Trade Association for the investor-owned segment of the electric utility industry, on whose behalf I appear before you today.

I have with me Mr. John J. Kearney, of the professional staff of the Edison Electric Institute.

The institute includes 182 electric power companies serving 98 percent of all customers of the investor-owned segment of the electric power industry in the United States. These customers comprise 77 percent of our Nation's customers for electricity.

Electric power is vital to the health, welfare, and economic wellbeing of every citizen of this country. We in the electric utility industry are dedicated to providing America with an adequate and reliable supply of electric energy at the lowest feasible price. In the past few years, electric power systems in some parts of the country have experienced difficulties in fulfilling their responsibilities because of their inability to bring in needed facilities on schedule. More recently, a serious problem appears to be developing in some parts of the United States concerning the adequacy of fuel supply for generating electricity.

During the past summer, there were some areas where generating reserves were less than desirable and where difficulties were encountered during periods of very hot weather. These supply problems have resulted principally from obstacles of getting major generating units in operation on time.

There have been delays caused by strikes, shortages of skilled labor, late equipment deliveries, poor quality workmanship, and extended regulatory procedures. In addition, opposition from conservationists and environmentalist groups has been growing and such opposition could become an important factor in delaying added generating capacity in the future.

It is essential that methods be developed to permit expediting the construction of needed electric utility facilities, with proper attention being given to both the need for electric power and the need to protect the Nation's environment. Our industry is alert to this problem and our representatives have met twice with members of the Federal Government's Interagency Panel on Plant Siting. We have also prepared recommendations for consideration by the Panel and by the Congress.

Despite our existing difficulties we believe the electric supply situation will improve. Electric power companies are discussing plans for their major facilities with appropriate regulatory agencies as soon as plans are reasonably well formulated. Toward this end, studies of possible environmental effects are becoming increasingly important in early evaluations of potential powerplant sites.

Major electric power systems, through the regional reliability councils, of which there are nine, also will be making load forecast and short- and long-range planning information available to the Federal Power Commission in accordance with its order No. 383-2, issued April 10, 1970.

All of these steps should give responsible Government agencies and civic groups ample opportunity to comment on the manner in which the electric power companies intend to meet their responsibilities. In addition, electric power companies are increasing the lead time for the construction of needed facilities in an effort to offset the adverse effect of factors not under their control such as strikes and shortages of skilled labor.

These factors are reflected in the estimates of installed reserve capacity for the years ahead. The reserve margin of generating capacity overdemand for the total electric utility industry in the contiguous United States was estimated at 18.2 percent for the summer of 1970. The actual figure must await information that is now being compiled. This compares with a reserve margin of 16.6 percent at the time of the summer peak in 1969.

Looking ahead, the reserve margin for the summer peak of 1971 will be an estimated 19.5 percent; 21.7 percent for 1972 and more than 22 percent for the years 1973 through 1975. These estimates are contained in EEI's 47th Semiannual Electric Power Survey which presents, as of this past April 1, actual and forecast data of the Nation's electric utility industry. EEI power surveys have been made semiannually ince 1947 in cooperation with power systems and the principal manufacturers of heavy power equipment.

I have with me a copy of the EEI survey as of last April 1 which provides detailed load and capacity information through 1975. This survey will supply you with the type of information requested in your letter, Mr. Chairman, of September 28, to Mr. W. Donham Crawford, managing director of EEI. I propose to leave a copy with you for whatever use it may be to the subcommittee. The 48th Semiannual Electric Power Survey, which will cover the actual situation this summer, will be available later this year. We shall be pleased to send a copy to you if you so desire when it comes out.

Without going into detail, you may be interested in some of the other highlights as reported in the most recent EEI power survey. A peakload of 418 million kilowatts for the total electric utility industry is

expected for the summer of 1975, which is 35.6 million kilowatts more than the peakload forecast for December 1975.

This 1975 summer peakload projection represents an average annual increase in load of approximately 8.2 percent for the 5-year period commencing in the summer of 1971. A 7.2-percent annual increase would approximate a doubling every 10 years. During the same period, the average annual increase in capability at the time of the summer peak is expected to be about 9 percent.

At the end of 1970, the capability of the total electric utility industry is expected to be 343.2 million kilowatts, or 10.2 percent higher than the actual December 1969 capability of 311.5 million kilowatts. Capability is expected to reach 530.2 million kilowatts by the end of

1975.

Assuming median waterflow conditions, the forecast represents a net increase of 187.1 million kilowatts of capability during the 5-year span beginning December 1970, for an average annual increase of 9.1 percent.

The anticipated margin of reserve in December 1970 is estimated at 30 percent, compared with 31.6 percent in December 1969, and an estimated 32.2 percent for December 1971.

Output of electric energy by the total electric utility industry in 1975 is projected by the survey to be 2.265 trillion kilowatt-hours. This exceeds the anticipated 1970 output by 717.3 billion kilowatthours, and represents a 5-year average annual increase of almost 8 percent. These figures include utility generation plus net imports from other countries and purchases from certain industrial installations that are interconnected with utility systems.

The survey further reports that as of April 1, 1970, more than 200 million kilowatts of new generating capacity were on order with scheduled dates for operation. This amount exceeds the total electric utility capacity in operation as recently as the beginning of 1963. Of this total, about 32.5 percent is in nuclear units, about 60.4 percent is in other thermal units and the remaining 7.1 percent is in hydraulic units, both conventional and pumped storage.

It is significant that 118 of the thermal units, totaling 105.2 million kilowatts or 56.6 percent of all the new thermal capacity on order, are in units of 700,000 kilowatts and larger.

As I indicated in my opening remarks, a serious problem appears to be developing in some parts of the United States concerning the adequacy of the fuel supply for generating electricity.

Some electric utilities, particularly in the East, have, over the past year or so, seen their coal stockpiles reduced below desirable levels · and they have found it most difficult for various reasons to increase the quantity of coal they have on hand. One contributing factor has been new air pollution control standards in various locations which disqualify substantial quantities of coal for power generation.

Labor interruptions in the coal industry, the initial impact of some of the provisions in the Federal Mine, Health and Safety Act of 1969, and problems of railway coal car availability have also had an adverse effect. There is concern, too, that increased export of coal has, and will, in certain areas, reduce, and will further reduce, the amount which otherwise would have been, and would be available for generating electricity.

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Various electric utility companies are also having difficulty in obtaining adequate supplies of low-sulfur fuel oil. Such oil is required in some localities to meet newly enacted air quality standards. New refineries now being planned and built may alleviate this situation in the future, but at present the low-sulfur oil supply is very tight. In fact, even obtaining adequate supplies of higher sulfur oil is becoming difficult, as we understand it, because of supply disruptions in Syria and in Libya and because tankers must take the long route around Africa since the Suez Canal is closed.

Insofar as natural gas is concerned, some utilities which use this fuel for power production have been finding it more and more difficult to obtain sufficient quantities for their future generating needs.

The full extent of the fuel supply problem is not clear at this point. Studies are currently underway by both Government and industry to determine the short-term and long-term availability of coal, oil, and gas, and to find out where the most serious difficulties might be.

The institute is cooperating in a study being made by the FPC. At the request of the Commission, EEI is making monthly surveys of the fuel situation of investor-owned companies. It is our understanding that this survey will be continued on a regular basis until the present difficulties are overcome. We have forwarded to the FPC the information we have compiled and we assume that Chairman Nassikas will be discussing with you the results of the FPC study.

Suggestions have been made by some for rationing and price controls of fuel oil and coal. We do not believe the present situation calls for such drastic measures.

We believe it would be far more desirable for industry and Government, working cooperatively together, to develop procedures and policies which would assure that adequate and reasonably priced supplies of fuel of the required characteristics will be available to the electric utilities.

To help alleviate the near-term fuel supply problem, we offer the following suggestions for consideration:

(1) Establish a system of priorities as to which communities should have access to low-sulfur fuel oil.

(2) Increase imports of fuel oil-both crude and residual; both high- and low-sulfur-at least on a temporary basis. The means would be left up to the Government. In this regard, we emphasize our belief that, to combat air pollution, restrictions should be removed on the import of low-sulfur oil that would be used in power generation.

It seems anomalous that some Government regulations require that utilities burn oil of a certain quality, but that other Government policies make it difficult or even impossible to obtain fuel of that quality. If it is necessary to continue import restrictions, authorizations for importing low-sulfur oil for power generation should be granted for a period of several years. At present, these authorizations are on a year-to-year basis, which makes it very difficult for utilities and oil companies to develop realistic plans and make statisfactory

contracts.

(3) Embargo the export of coal.

(4) Increase the depletion allowance for coal-mining operations. (5) Develop on a crash basis a practicable method of removing sulfur from stack gases, so that high-sulfur coal deposits may continue to be used for power generation.