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plished on December 5, 1941, a month ahead of the schedule submitted to Congress in connection with the regular appropriation request for 1942. The three generators at this project are scheduled to be in service in the summer of 1942, from 2 to 4 months earlier than shown on the schedule submitted to Congress in connection with the regular appropriation request for 1942.

The total estimated cost of Fontana Dam and Reservoir, $48,000,000, agrees with the estimate submitted in connection with the third supplementary power program. Closure of this dam is scheduled for the summer of 1944 and three generators, with a capacity of 67,000 kilowatts each, are scheduled to be in service in the spring of 1945.

The 1943 estimate includes $18,900,000 for continuation of construction of the South Holston and Watauga projects to provide for completion of these projects at the earliest possible date. Congress approved these projects December 15, 1941.

The total estimated cost of Watts Bar steam plant is increased from $14,500,000 to $18,200,000 to provide for an expansion of this plant. The expansion consists of the addition of a fourth 60,000-kilowatt steam electric-generating unit with necessary appurtenances. This unit being built as a part of the third supplementary power program will bring the plant capacity to 240,000 kilowatts. It is scheduled to be in service January 1, 1944.

The 1943 estimate includes $2,000,000 for an additional generating unit at the Sheffield steam plant for which Congress appropriated $2,000,000 for fiscal year 1942 on December 15, 1941. While the burden imposed by the national emergency upon the limited number of manufacturers who can produce this type of equipment may not permit completion of this unit before the end of calendar year 1944, all contracts must be awarded during 1942 and 1943, and the full amount estimated to complete this unit is requested in 1943 so that full advantage may be taken of the earliest possible delivery date for the equipment required.

Except for the South Holston and Watauga projects and the addition to the Sheffield steam plant, the 1943 estimates are based on revised schedules to comply with the requirements of the national emergency, to secure continuity in progress in the unified development of the Tennessee River, to achieve the best use of construction equipment, and to achieve maximum economy consistent with other requirements. The 1943 estimates for the South Holston and Watauga projects and the Sheffield steam-plant additions follow from the total estimates for these projects and appropriations made for them for 1942 by Congress in H. R. 6159. In the event that physical conditions do not permit full utilization of the funds made available for these projects in 1942, any unobligated balances will have to be carried forward to 1943 to permit compliance with the scheduled completion dates. The schedule upon which the estimates are based are portrayed graphically on plate 1, Investigations for future unified system projects.

The estimates for fiscal year 1943 as shown in the second major item of table 2 include $86,000 for office studies and field investigations for future projects. This work is essential to the evaluation of possible future additions to the Tennessee Valley Authority system of unified projects and will enable the Authority to respond quickly to additional demands for new power supply in the event the national defense emergency requires such increase. Expenditures made under this heading in prior years enabled the Authority to take prompt action in initiating construction of the supplemental defense power projects. Transmission and other electric plant.

The next item on table 2 presents the actual and estimated obligations for necessary expansion of facilities for delivery of power to the Authority's customers; for the interconnection of the Authority's existing system with the facilities purchased from utility companies in Alabama, Mississippi, and Tennessee, with new projects being built for defense power and with other utilities with which the Authority is interchanging power for defense s; and for the rehabilitation of purchased properties.

The 1943 estimate of $25,076,000 includes $4,963,000 for construction of switchyard at the new generating plants and additional units at completed plants to be under construction in that year, and $20,113,000 for necessary expansion of the transmission system and for miscellaneous improvements to other electric property. The facilities proposed for construction during that fiscal year are planned to meet increased power requirements in the area served by the Authority and to reinforce the present transmission system.

The estimate of $4,963,000 for switchyards includes $4,304,000 for construction of facilities required under the emergency national-defense programs at the Hiwassee projects, Fontana, South Holston, and Watauga Dams, and the Watts Bar and Sheffield steam plant and switchyard additions at downstream projects to accommodate the additional generators being installed under those programs.

The estimate of $20,113,000 for the expansion of the transmission and distribution system and miscellaneous electric-plant improvements includes $8,488,000 for so-called normal expansion, $10,620,000 for additions required in connection with the national-defense programs and $1,005,000 for the proration of engineering administrative, and general expense applicable to all programs. The major items included in the $8,488,000 required for normal system expansion are $4,491,000 to interconnect the Kentucky and the Fort Loudoun Dams with the transmission system, $2,715,000 for system expansion required by increased loads, and $995,000 for rehabilitation and integration of existing facilities. The facilities contemplated for normal system expansion are required to deliver energy from generating plants constructed under the normal program and to create an integrated reliable transmission system for delivery of all power and are, therefore, vitally essential for national-defense purposes even though these facilities have not been directly alined with the supplementary power programs.

The $10,620,000 required in connection with the defense programs provide for the construction of transmission facilities necessary to interconnect the additional generating capacity with the rest of the transmission system and to market the power. The location and termini of the lines required for the defense needs have not as yet been definitely determined, since the location of the loads to be served is to be established by the Office of Production Management. Some of the larger projects now being considered, however, are connections for the new Hiwassee projects and lines from Edmonton, Ky., to Watts Bar Dam; a substation at Edmonton; substation additions at Watts Bar and Alcoa; connections for the Fontana, South Holston, and Watauga generating plants; and connections for additional downstream generators.

It is contemplated that the proceeds of bond issues now authorized will be entirely obligated in 1942, and none of the work to be done in 1943 will be financed from this source. Obligations of municipalities and associations.

The estimate for 1943 includes $215,000 for the provision of facilities to be transferred, in return for mortgage liens, to municipalities and cooperatives for necessary extension of their systems. Of this amount, $185,000 represents transfers of distribution facilities owned by the Authority which, it is intended, will be disposed of to these agencies, and it is offset by an equal credit under “Transmission and other electric plant.”. The remaining $30,000 is for small construction jobs which the Authority will be in a better position to perform for these agencies than they will themselves. It is estimated that repayments on loans already outstanding will amount to $162,000 in 1943. Power Inventories.

It is estimated that power inventories will have to be increased by $66,000 in 1943, of which $55,000 is to provide a reserve coal supply for the third unit of the Watts Bar steam plant, which is scheduled to go on the line in the fall of 1942. Other power inventories, which were built up considerably in 1941, and will have to be further expanded in 1942 to keep pace with the rapid growth in the system, will have reached a sufficient level by the beginning of 1943 to require only a small increase in that year.

PLATE 1.- Proposed program of construction, Dec. 24, 1941

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Feb. 1, Mar. 1, July 1,

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July 1, 1944

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Aug. 1, Sept. 15, 1944.

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July 1, 1944

July 1, 1943
July 1, 1944
July 1, 1942

Feb. 1, Apr. 1, 1942.
Nov. 1, 1942
Jan. 1, 1944

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1 Storage project; no generating units at project.
NOTE.-Dams, unless otherwise indicated, are located on the Tennessee River.

PLATE 2.- Navigation improvements on the Tennessee River, 1934–44, Sept. 30, 1941

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Below Kentucky Dam
Kentucky Dam to mile 192.
Mile 192 to Pickwick Landing Dam
Pickwick Landing Dam to Florenee

Canal.
Florence Canal.
Wilson Dam to mile 273.
Mile 273 to Wheeler Dam
Wheeler Dam to mile 332
Mile 332 to Guntersville Dam
Guntersville Dam to Widows Bar.
Widows Bar to mile 415.
Mile 415 to Hales Bar Dam
Hales Bar Dam to mile 460.
Mile 460 to Chattanooga.
Chattanooga to Chickamauga Dam
Chickamauga Dam to mile 520.
Mile 520 to Watts Bar Dam.
Watts Bar Dam to Clinch River
Clinch River to mile 597..
Mile 597 to Fort Loudoun Dam
Fort Loudoun Dam to Knoxville

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Total.

647.7

1 Depths of 11 feet provide a 9-foot draft navigable channel, as authorized by the Tennessee Valley Authority Act, from Paducah to Knoxville. 2 Channel to be improved by dam construction. 3 Dredging underway or under contract. 4 Full depth by dam construction, full width by dredging. 5 Channel improvement by dam construction and by dredging.

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Table 3 presents the actual and estimated income and expense of navigation, flood-control, and power operations for the fiscal years 1941, 1942, and 1943. It will be noted that in 1491 power revenues met all expenses of this program, before depreciation, and left a surplus of $10,774,860, which was more than double the net expense of all the other operating expenses of the Authority. This program thus produced sufficient net cash income to meet all the operating expenses of the Authority, and in addition to reduce substantially the amount of appropriations required for investment in permanent assets. The estimates for 1943 indicate that in that year the surplus from this program, $19,892,000, will be nearly four times the net expense of all the other operating programs. The estimated net surplus nearly doubles from 1942 to 1943.

Navigation and flood-control operations Actual expense, fiscal year 1941.

$125, 806 Estimated expense, fiscal year 1942 Estimated expense, fiscal year 1943.

149, 000 152, 000

The estimate for 1943 for navigation and flood-control operations includes $110,000 for study and development of river transportation. These studies include engineering design of navigation channels and preparation of navigation charts for the Tennessee River, studies of potential terminal facilities and floating equipment, studies of common carriers on the river, and maintenance of navigation facilities. The increase in 1943 is accounted for by the necessity of preparing navigation charts on new reservoirs going into operation and by intensification of terminal studies in anticipation of the possible need of river-terminal facilities to expedite transportation of commodities essential to national defense.

The estimate for 1943 also includes $8,000 for furnishing power for operation of locks to the Corps of Engineers, United States Army, at the various dams owned by the Authority. The amount shown is that estimated to be required for operation of the Pickwick, Wilson, Wheeler, Guntersville, Hales Bar, Chickamauga, Watts Bar, and Fort Loudoun locks.

Proration of general and administrative expense is estimated at $34,000 for 1943. Power operations.

Table 3 shows that the estimated net income from power operations in 1943 is $21,244,000 as compared to an estimated net income for 1942 of $11,424,000 and an actual net income for 1941 of $11,868,648. The net income for 1941 was adequate to cover depreciation, the share of common expense charged to power operations, and a return on the investment in operating power facilities financed from appropriations of approximately 5 percent. The interest on bonds issued by the Authority is shown separately in table 3. The estimated return from the power program for 1942 will be slightly lower, due to the large allowance for a dry-year contingency, but the increase in net income of nearly 100 percent in 1943 will provide a substantially higher return in that year.

The number of individual customers now receiving Tennessee Valley Authority power is over 450,000. As shown by plates 3 and 4, power deliveries by the Authority have already exceeded the dependable power supply, and the expected demands of the area will exceed considerably all of the assured available energy from existing plants plus the assured energy to become available from the additional generating units now being installed or scheduled for installation in 1942 and 1943 plus the energy available from interconnecting systems.

In 1943, on the basis of presently authorized projects, the area served by the Authority will face a serious deficiency in power supply because of unprecedented requirements, of war production especially aluminum, ferrosilicon, and phosphorus. There is no way to meet this deficiency except by immediate authorization of the Douglas Dam and Reservoir on the French Broad River, recommended to Congress by the President on September 15, 1941, on the advice of the Office of Production Management, and by the Federal Power Commission, and the Tennessee Valley Authority, or by drastic curtailment of civilian and nondefense use of power in the entire Southeast. The two dams on the Watauga and South Fork of the Holston Rivers, authorized by Congress on December 15, 1941, for beginning construction in 1942, cannot be completed in time to meet the deficiencies in 1943.

Power operations-revenues Actual revenues, fiscal year 1941.

$21, 137, 371 Estimated revenues, fiscal year 1942.

26, 155, 125 Estimated revenues, fiscal year 1943.

36, 938, 000 The estimated total revenues show an increase, based on the estimated total power available, of 74 percent in 1943 over 1941. It is estimated that sales of energy will exceed 9,200,000,000 kilowatt-hours in 1943 at an average rate of approximately 4 mills per kilowatt-hour. The estimated revenues from sales of energy to municipalities and cooperatives increase 30 percent in 1943 over 1941 and the estimated revenues from commercial and industrial customers increase by 153 percent, due to heavy power requirements of defense industries located in the Authority's service area.

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