Mr. O'CONNOR. It is a copy.

Mr. SADOWSKI. I think we would all be interested in hearing that read. Do you not think so, Mr. Chairman?

Mr. O'CONNOR. It is a long document; three pages.

Mr. CROSSER. Mr. Chairman, we have an afternoon session. It is now 12 o'clock.

Mr. SADOWSKI. Let us put it in the record.

Mr. CROSSER. I would like to move to adjourn, if it is necessary to do that.

Mr. SADOWSKI. Let us put it in the record at this point, if that is all right with you, Mr. Chairman.

Mr. HALE. Without objection the order may be put in the record. Will the witness identify the order?

Mr. O'CONNOR. This is a copy of a telegram dated February 11, 1948, which was sent to Panhandle Eastern Pipe Line Co. and Texas Eastern Transmission Corp., modifying certain orders issued with respect to those companies and telling them to make the deliveries. I have previously described.

Mr. HALE. Mr. Harris?

Mr. HARRIS. I was going to suggest, if it is a long instrument, it might be filed for the record and you could determine later whether it is advisable to make it a part of the record.

Mr. SADOWSKI. It is not too long. It is only three pages. (The telegram is as follows:)

"WASHINGTON, D. C., February 11, 1948. Record in current hearings in docket No. G-880 in the matter of Texas Eastern Transmission Corp. discloses extremely critical shortage of gas supply in Buffalo, N. Y. and other areas served by United Natural Gas Co. and its affiliates, and in the area in Ohio, Pennsylvania, New York, and West Virginia served by companies of Columbia Gas and Electric system. This shortage has seriously impaired service to residential consumers. By letter of February 11, 1948, Kentucky Natural Gas Corp., because of shortages of natural gas to supply domestic requirements, applied to the commission for an emergency allocation of natural gas to be made available until Tennessee Gas Transmission Co. completes certain, construction now under way to make additional natural gas available to Kentucky Natural. Under its order of October 10, 1947, in docket No. G-880 the Commission assigned to the Panhandle Eastern Pipe Line Co., system 19,000,000 cubic feet of gas per day, 10,500,000 cubic feet of which is being delivered to Kentucky Natural Gas Corp. Panhandle Eastern Pipe Line Co. has informed the Commission that it has in effect step 2 of its emergency service rules, under which full deliveries are being made from firm service consumers, including firm industrial consumers.

The Commission finds (1) that it is necessary in the public interest to alleviate the critical residential gas shortage conditions in the United Natural system by increasing Texas Eastern deliveries to United Natural; (2) that such increased deliveries by Texas Eastern to United Natural can be effected by a corresponding decrease in Texas eastern deliveries to Kentucky Natural provided there is an equal and coincident increase in Panhandles direct deliveries to Kentucky Natural; (3) that the increased deliveries requested by Kentucky Natural are necessary to maintain service to residential consumers; and (4) that emergency increased delivery of 15,000,000 cubic feet per day by Panhandle to Ohio Fuel heretofore ordered by the Commission on February 6, 1948 should be continued beyond February 13, 1948. The Commission orders that, for a period of 10 consecutive days commencing as early as practicable on February 12, 1948 and ending February 22, 1948 its order of November 25, 1947 in docket Nos. G-200 and G-207 is further modified as follows:

(1) Panhandle Eastern Pipe Line Company shall increase direct firm deliveries of natural gas to Kentucky Natural Gas Corporation by 10,500,000 cubic feet per day to replace the 10,500,000 cubic feet per day being delivered by Texas Eastern to Kentucky Natural for the account of Panhandle Eastern; (2) Panhandle Eastern shall deliver to Kentucky Natural an additional 2,500,000 cubic feet per day. During the period Kentucky Natural is receiving such additional delivery

of 2,500,000 cubic feet per day or any portion thereof from Panhandle, Kentucky Natural and its utility customers shall not deliver any gas for industrial use in excess of ten per cent of normal requirements; (3) Panhandle Eastern shall continue through February 22, 1948, delivery to Ohio Fuel in the amounts and under terms and conditions specified in the Commission's telegraphic orders of January 28 and 29, and February 2, 1948, provided that only 8,500,000 cubic feet per day shall be considered as being made available from Texas Eastern; (4) as long as the increased deliveries to Ohio Fuel, Kentucky Natural, and United Natural provided for in this order are maintained in whole or in part, Panhandle shall not reduce deliveries to Michigan Consoliated Gas Co. at Detroit below 125,000,000 cubic feet per day; (5) Panhandle is authorized from time to time to reduce such additional deliveries of 15,000,000 cubic feet per day to Ohio Fuel and 2,500,000 cubic feet per day to Kentucky Natural to such amounts as in its judgment may be necessary to prevent it being forced into step four. The Commission further orders that for a period of 10 consecutive days commencing as early as practicable on February 12, 1948, and ending February 22, 1948, its order of October 10, 1947, in docket No. G-880 is further modified as follows:

(a) After Panhandle Eastern has increased its deliveries to Kentucky Natural at the rate of 10,500,000 cubic feet per day as herein before provided, it shall notify Texas Eastern, and Texas Eastern shall promptly reduce its deliveries of natural gas for the account of Panhandle Eastern by 10,500,000 cubic feet per day by discontinuing present deliveries to Kentucky Natural; (b) upon discontinuance of such deliveries to Kentucky Natural, Texas Eastern shall increase deliveries of gas to United Natural Gas Co. by 10,500,000 cubic feet per day over and above amounts provided for in Commission's orders of October 10, 1947, and January 28, 1948. It is further ordered that if, notwithstanding the termination of such increased deliveries by Panhandle to Ohio Fuel of 15,000,000 cubic feet per day and 2,500,000 cubic feet per day to Kentucky Natural, Panhandle may in its judgment still be forced into step 4, then Panhandle shall forthwith so notify Texas Eastern, and upon such notification from Panhandle, Texas Eastern shall terminate the increased delivery of 10,500,000 cubic feet per day to United Natural and resume delivery of the same amount to Kentucky Natural, whereupon Panhandle shall reduce its deliveries to Kentucky Natural by the said 10,500,000 cubic feet per day until such condition is relieved.

By direction of the Commission.

LEON M. FUQUAY, Secretary, Federal Power Commission.

Mr. SADOWSKI. Last summer Michigan Consolidated turned over to Michigan Gas Storage some billion cubic feet of gas. Is that correct?

Mr. O'CONNOR. Yes, sir.

Mr. SADOWSKI. Why did Michigan Consolidated only get 30 percent of this? Would not the whole 100 percent have helped the Detroit situation at this time?

Mr. O'CONNOR. That was the amount agreed to in a stipulation which was entered into in Federal district court in Detroit-I think the name of the judge was Judge Koscinski-as a result of a suit brought by the Power Commission-I am talking law now, and do not know anything about it-to enjoin Panhandle from delivering what the Commission considered illegal amounts of gas to Michigan Consolidated and to enjoin Michigan Consolidated from taking illegally, amounts of gas to which it was not entitled under Panhandle's rate schedule.

Mr. SADOWSKI. That was surplus gas at that time?

Mr. O'CONNOR. It was not surplus gas. And if you will give me an opportunity I will give you a little history.

Mr. SADOWSKI. All right.

Mr. O'CONNOR. As those charts which Mr. Fournier handed up to the bench yesterday indicate, for a number of years Michigan Consolidated took a very small quantity of gas in the summer time. They did not sell any interruptible gas.

Consumers Power Co., which is the other large gas company in Michigan, entered into a contract with Panhandle and formed this Michigan Gas Storage Co. and they proposed to store in the Winterfield and Cranberry Lake fields in Michigan, in the summertime, large volumes of gas. A large part of the gas which they thought they were going to store represented the valley fill-in gas on this Detroit load. In other words, Detroit went down like this [indicating] and the Consumers Power Co. was going to go up like that [indicating] and fill up this valley.

In about May or June 1946, after about a year's negotiations, this Michigan Gas Storage proposition was put before the Commission in an application and we were asked to act on it promptly and immediately, because it was so urgent. It involved $20,000,000 and a lot of complicated matters. But we gave the company a temporary authorization inside of about 30 days to go ahead and to store gas.

But unfortunately in the summer of 1946 the Consumers Power Co. got hardly any gas for storage because at the time, in the summer of 1946, Michigan Consolidated Gas Co., which had not previously sold much of any interruptible gas, began to sell interruptible gas and fill up its valley. So both companies could not have the same gas, and there was not any other gas available.

Now, in the summer of 1947 the Consumers Power Co. or Michigan Gas Storage Co. anticipated even larger volumes of summer gas for storage and it was very important for them to get it because otherwise their storage fields would be wrecked permanently and of no use whatsoever, and this whole storage project would be gone.

But again Michigan Consolidated Gas Co. continued to sell large volumes of interruptible gas. There is a provision in Panhandle Eastern's pipe line rate schedule which says you cannot take on these interruptible loads without Panhandle's approval.

We had conferences with Panhandle, Michigan Storage, and Michigan Consolidated, and I think the State Public Service Commission of Michigan, for the purpose of trying to get Michigan Consolidated to stop selling boiler fuel gas in Detroit last summer, which might better go into the storage fields in northern Michigan. There was a legal question there as to whether they had the right to take it or not. But even if they had the legal right to take it there was the question as to whether it was good policy to sell gas for boiler use in Detroit in the summer when the gas could have been put in these storage fields in northern Michigan and used to meet these winter peak loads.

We conferred, conferred, conferred. We got nowhere. So finally the Commission took action in the Federal district court in Detroit. It ended up in a stipulation whereby Michigan Consolidated agreed to cut 20,000,000 feet a day off its load for a certain period of time, which would aggregate about 1,000,000,000 cubic feet. And that was all boiler fuel, or practically all.

And in turn, for that, the 1,000,000,000 feet went to this Consumers Power Co., which presumably put it in storage, and the Consumers Power Co. had to agree to return 30 percent of that to Michigan Consolidated this winter.

If the boiler fuel had not been sold in the summer of 1946, and had not been sold in the summer of 1947, the Consumers Power Co., at least, would have been a lot better off today than it is now, and

probably it might be in a position to help Michigan Consolidated Gas Co. over this hump, over this difficulty. At least as far as Detroit is concerned.

Mr. SADOWSKI. I do not understand it clearly. The billion cubic feet, was that all gas that was allocated to Michigan Consolidated? Mr. O'CONNOR. If Michigan Consolidated had continued to take 125,000,000 feet a day, every day throughout this period of the stipulation, they would have used 1,000,000,000 more than they actually did take after agreeing to cut their boiler fuel load off to the extent of 20,000,000 feet a day.

So they took 1,000,000,000 feet less for boiler fuel than if they had gone on taking the full contract quantity throughout the entire period. Mr. CROSSER. May I ask how long we are going to go on here, Mr. Chairman?

Mr. HALE. Mr. Olds is here prepared to testify. When we get through with Mr. O'Connor

Mr. CROSSER. The House is in session. I want to hear Mr. Olds myself. I want to observe the rules of the House, too.

I think we ought to adjourn and come back this afternoon.

Mr. HALE. Does the gentleman move that the committee do now adjourn?

Mr. CROSSER. Yes; I move that it adjourn until this afternoon. Mr. SADOWSKI. We have only one more witness, Mr. Crosser. Let us finish up.

Mr. HALE. As many of the committee as are in favor of adjournment forthwith

Mr. CROSSER. I make a point of order that we are not legally in session anyhow.

Mr. HALE. The committee in favor of adjournment will say aye; opposed, no.

(Thereupon, a voice vote was taken.)

Mr. HALE. The motion is lost.

Mr. CROSSER. I make the point that as the House is now in session proceedings here are not legal now.

Mr. HALE. Are ther any further questions of Mr. O'Connor? (No response.)

Mr. HALE. I have one more question, Mr. O'Connor. How much weather improvement, temperature improvement, is going to be necessary before you can restore normal service throughout these areas?

Mr. O'CONNOR. You mean normal industrial service?

Mr. HALE. Yes.

Mr. O'CONNOR. As far as Detroit is concerned, I understand when the oil can be hauled in that is way behind on delivery, that perhaps normal industrial service can resume. But with respect to these people in Ohio and Pennsylvania and those areas, as far as normal service, meaning full industrial use and everything else, I do not think you will have that situation occurring until about the close or end of April.

Mr. HALE. The end of April?

Mr. O'CONNOR. The 15th of April, at least.

Mr. HALE. Then Detroit, as far as the fuel oil situation is concerned, is that a matter of tank cars?

Mr. O'CONNOR. That is what I have understood.

Mr. HALE. That is a pretty gloomy outlook all around, is it not? Mr. O'CONNOR. Yes, sir.

Mr. SADOWSKI. And the outlook will keep on being much gloomier if you keep diverting this gas to other areas, instead of letting some of it get to Michigan. Every time Panhandle comes up here and makes a suggestion that they are willing to cooperate, and they want to find some gas, then immediately instead of working with them it seems that you find another place to dump it, either Buffalo or Kentucky, or some other area.

Mr. BENNETT of Michigan. Did you say you didn't have any authority under the present act to make these diversions, for instance, like this order you made last night to Buffalo?

Mr. O'CONNOR. I think we might have, but strictly speaking you have to go through a hearing and so forth, and so on, otherwise somebody can dash into court and say the order is no good, and so forth. Mr. BENNETT of Michigan. I wondered whether you had or did not have the authority to make these various diversions and allocations that you refer to.

Mr. O'CONNOR. Do we have that authority? I think we must have. Our lawyers must have told the Commission we have the authority, otherwise it would not be going through these motions.

Mr. BENNETT of Michigan. In answer to a question I asked you. I understood you to say that the Commission had no control over the diversion and distribution of gas from these various pipe-line contracts. I mean by that, to move from one area, giving it to another, or vice versa. I am not asking you a legal question, but as a matter of practice, you are going ahead and assuming that authority, at least, are you not?

Mr. O'CONNOR. To a limited extent.

Mr. Olds said he will answer that question.

Mr. HALE. Thank you very much, Mr. O'Connor. The committee is very much indebted to you.

Mr. O'CONNOR. Thank you.

Mr. HALE. The committee will be glad to hear the Honorable Leland Olds, a member of the Federal Power Commission.

STATEMENT OF HON. LELAND OLDS, COMMISSIONER, FEDERAL POWER COMMISSION, WASHINGTON, D. C.

Commissioner OLDS. My name is Leland Olds, Commissioner, Federal Power Commission.

I think I will pick up your question, if it is satisfactory to you, on the matter of authority.

The Commission has the authority under section 5 (a) of the Natural Gas Act, which is a broad section dealing with rates and service, to make sure that insofar as the companies subject to its jurisdiction are concerned, there shall be no discrimination, not only in rates but in service.

A rate schedule, as you gentlemen probably know, is not simply a matter of a series of rates, that is, the actual money to be paid for natural gas. It includes also rather broad conditions under which the gas is to be sold. It is necessary that that be the case in order that the rate may be applicable to a standard kind of a service as far as the customers of the utility are concerned.