a similarity in developing between oil and the coal companies. The coal companies are cutting back and charging more for their coal and at the same time, the oil companies are charging more for their oil, or perhaps withholding supply.

So in looking at this whole crisis, we have one even more immediately raised than elsewhere, oil in New England. You probably know more about this than I do. I wish you could do something about it now. Senator KENNEDY. I just wish to ask, Mr. Lydon, what you see down the road this winter in terms of oil resources?

Mr. LYDON. Senator, as far as Boston Edison is concerned-I have not spoken to Mr. Nichols, but I believe as far as New England Electric is concerned also we do not see a problem looking down the road this winter. This is primarily due to the fact that we do have long-term fuel contracts which run up through 1974. We have been in discussion with our suppliers on fuel oil supply. We know that as a total market problem, this one is a situation which seems to be getting worse as far as New England is concerned. But as far as our companies are concerned, it appears that we will have an adequate supply. Mr. SHEA. Senator, if I may interject very briefly, Mr. Spiegel has indicated that not only municipal plants are involved, but school districts are involved and town after town is beginning to report this shortage.

Senator KENNEDY. I could not agree with you more. I think all of us have been impressed by the shortage. I think this will be of major proportions next winter. And the oil that will be made available to those who have not the good fortune to have long-term contracts is going to be at a very significant increase in cost over the current year. Mr. SHEA. But, Senator, if we did not have the oil import quota system, No. 2 fuel oil would be in plentiful supply. If they mix, it could probably be converted to some degree for industrial purposes. If we did not have that system imposed on New England, things may not be that bad.

Senator KENNEDY. I could not agree with you more on that.

Gentlemen, I want to thank all of you very much for your appear ance and comments this morning. I feel that the hearing has been useful. I think that we are in an extremely critical period in terms of the power resources and their availability to the consumers here in Massachusetts and generally throughout New England. The comments that we have heard during the course of the morning show quite clearly that there will be a significant increase in demand on the existing resources available to the people here in this State and New England, that there is going to be a continued problem with reliability, and with the increased stresses and tensions that are placed upon existing facilities there is a very serious question about the availability of power to many of the people in this region.

I think the fact that this morning we have had representatives of the industry, the municipals, the consumers, and the regulatory agencies is extremely encouraging. I think the exchange and the atmosphere of cooperation have been extremely useful. We have tried during my tenure as chairman of this committee to bring the different viewpoints together on a number of different subject matters. I am hopeful that next year, we can have an additional hearing with the same representatives and that we will be able to discuss the progress made along the

lines which I think all of you discussed in terms of what is best for the people of New England.

So I want to thank all of you gentlemen for your appearance here and express my appreciation for your frankness and candor and responsiveness to the questions. There is certainly a great public interest in this issue. It is important that it be aired, that different groups that are affected by these decisions have an opportunity to express themselves.

I know that there are many others that are interested in these problems. I am sure that there are people here who would like to participate in this hearing. We are not able to take all of that testimony this morning but if there are those who would like to have a chance to express a view or an opinion on any of these questions, we would welcome that. They can either give us their name or write to us. We will keep the record open now for a couple of weeks. If they want to make any comment, we will, if suitable, include that in the complete record. Thank you very much.

(Whereupon, at 11:20 a.m., the hearing was concluded.)

PROCEDURES FOR HANDLING THE SHORTAGE OF

ELECTRIC POWER

THURSDAY, AUGUST 13, 1970

U. S. SENATE,

SUBCOMMITTEE ON ADMINISTRATIVE PRACTICES AND PROCEDURE OF THE COMMITTEE ON THE JUDICIARY, Washington, D.C. The subcommittee met, pursuant to notice, at 9:10 a.m., in room 3302, New Senate Office Building, Senator Edward H. Kennedy (chairman of the subcommittee) presiding.

Present: Senators Kennedy and Thurmond.

Also present: Thomas M. Šusman, assistant counsel; and Michael A. Pulliam, minority counsel.

OPENING STATEMENT OF SENATOR EDWARD M. KENNEDY

Senator KENNEDY. The subcommittee will come to order.

Almost 5 years have passed since the massive northeast blackout of November 1965 left over 30 million people in the northeastern United States without electricity for up to 12 hours and more. Three years have passed since the blackout in the Middle Atlantic States left 13 million people without power and convinced Americans that blackouts are definitely not freak occurrence.

Indeed, since the great northeast blackout the hazards of unreliable electric service have been further dramatized in scores of additional major power failures, many of them cascading failures, many of which two or more generating plants went off the line successively. During 1967, 1968, and 1969 over 240 power blackouts, affecting almost 20 million customers, were reported to the Federal Power Commission.

The investigations that followed the 1965 blackout showed numerous deficiencies in equipment and planning. The Nation's utilities were challenged both to remedy the deficiencies which contributed to that particular blackout, and to initiate immediate and long-range plans and procedures to provide more reliable electric power in the future. To date, the challenge has not been met.

Early last winter, industry spokesmen acknowledged that in some areas of the United States utilities were having problems or had insufficient reserve margins. But the president of a major industry group still observed that the notion of a "nationwide power crisis and imminent prospect of brownouts and perhaps even blackouts" was "sheer nonsense." During the months that followed 39 of the Nation's 181 largest utilities were seriously short of power. Less than half the reserves considered adequate to meet an emergency were available.

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This summer, as our air conditioners were turned on and we continued to live better electrically, the situation began to catch up with us again. Last month equipment in the New York area blew up and blew out. Subways slowed to a crawl. Lights were dimmed. Air conditioners were turned off. Customers were urged to cut back on the use of electricity. Voltage was reduced by as much as 80 percent.

In New England last month the situation was little better. For 5 consecutive days in 1 recent week, voltage was reduced as reserves dipped below one quarter of the recommended level and customers were urged to interrupt their service on a voluntary basis. As Federal Power Commission Chairman Nassikas, who is with us this morning, observed earlier this week, things do not look much better for next winter.

At this point, enough studies have been made, enough criticism has been advanced, enough blame has been placed. The clear facts are that we do have a serious power shortage today and there is a serious threat of power reductions or cutoffs in the near future.

In the face of these facts, the subcommittee's immediate interest is: What is being done now to prepare for these contingencies? As we analyze present procedures and develop new solutions, the public interest should be paramount. Consumers and interested citizens should be fully informed about what is being done at present. They should be given a chance to participate in formulating policies and making decisions which affect the adequacy and reliability of the electric power which they need, use, and pay for.

We know that despite the fact that the demand for power is increasing daily that use of electricity in this country doubles every 8 years, the industry, which is supposed to be under the general oversight of the FPC, is just not keeping pace with demand. As the Federal agency with responsibility for regulating the electric power industry, the Federal Power Commission should lead the way in overseeing plans and procedures for meeting power shortages. It has been given primary responsibility for the insuring of a safe, effective, reliable supply of power. And we in Congress are anxious to work together with the Commission to meet the immediate crisis as well as the long-range needs. And so we ask the Commission, "What are you doing? What can you do? What further authority do you need?"

Unfortunately, the present policy of the Federal Power Commission for dealing with the power crisis appears to be a "let industry do it" attitude as to planning, and a "leave it to the States" attitude as to regulations. This approach simply will not work. And further, it minimizes citizen involvement in an understanding of the entire

process.

Let us take New England as an example. Residential customers pay almost 30 percent more for electricity. The average plant size is much smaller than in the rest of the Nation. And power requirements are expected to grow more than fourfold in the next 20 years. The industry initiated negotiations for a regional power pool (NEPOOL) in 1966. But only this past May was any agreement formalized and even that was only temporary.

At best, many authorities see NEPOOL as an interim solution. Divided ownership, lack of compulsory authority over members, complexity of the organizational structure and contractual arrangements,

lack of coordinated engineering and construction facilities and absence of any assurance that regional interests will not be overruled by stockholder interests are all obstacles to effective planning and coordination on the part of the industry alone.

In some regions, reliability councils, organized to oversee long-range planning, still exclude smaller systems and have no authority beyond advising members and gathering information. So the industry alone simply is not in a position to represent all interests and assure adequate planning.

Under the present FPC procedures, Government regulation and oversight of power reliability has been left to State public utility commissions. This is a great mistake.

In our hearings by this subcommittee in Boston last Monday, the chairman of the Massachusetts Department of Public Utilities testified that State commissions cannot be relied on any more than industry councils. Chairman Cowin observed that "the entire regulatory process insofar as power supply is concerned has become virtually unworkable." When I questioned our chairman whether the FPC could realistically, or should in fact, rely on State utility commissions to police power reliability, he replied that he was flattered, but dismayed, by the confidence, "because if the Federal Power Commission is relying upon my department to police planning for power supply, we are in a very bad situation." Massachusetts, I might add, has administra tive authority and fiscal allocations that place it among the top utility commissions in the Nation. Yet its chairman recognizes fully that the job of assuring adequate and reliable electric power has become bigger than any one commission, or even the industry itself.

The first step to reform is public participation. On the industry level, recent studies of plant siting have concluded that by immediately notifying a fuller and more formal public accounting of major industry decision, coupled with an effort to enlist community participation in the decisions. This is really the most effective and most important way to initiate the kinds of initial efforts that the various utilities are embarked upon. At the Federal level, both the past chairman of the FPC in his response to my questionnaire and present members have confined that citizen input and involvement in Commission decisionmaking are sorely lacking.

In summary, let me suggest a few points that I believe should underline our approaches to this immediate problem:

First, the general public should be fully informed of load shedding and voltage reduction plans to be used in the event of power shortages. Second, consumers, State regulatory commissions, and other interested parties should participate in the development of those plans on a local and regional basis.

Third, some mechanism for thorough regional review of contingency plans and other decisions relating to allocation of power should be established.

Fourth, the Federal Power Commission should exercise its authority to play a thorough, vigorous, probing role in the development of those contingency plans.

We must, of course, continue our long-range planning. But if we cannot avert a power shortage, at least we can minimize its effect. We will explore this morning what procedures have been or should be adopted by the Federal Power Commission to this end.