because of the Pay Act of 1945. That will make a total available for the remainder of the fiscal year of $2,555,333; is that correct? Mr. OLDS. Yes.

Mr. HENDRICKS. Your 1947 estimate is $3,370,000, so you are actually asking for an increase there of about $810,000 over the amount for this year; is that right?

Mr. OLDS. That is right. I might make one comment on that. That is, that as far as our supplemental appropriation is concerned, it is only on the basis of a half-year rate; in other words, if the rate of work were extended on an annual basis it would, in effect, double the amount that would be allowed us under that supplemental in order to carry on the same amount of work. We would not get the supplemental appropriation until about the end of the first half of the fiscal year. Mr. HENDRICKS. I do not get exactly clear what you mean by "doubling the amount." What do you mean by that?

Mr. OLDS. I mean we are attempting through the supplemental appropriation to establish the work of the Commission, to make possible the carrying on of the work of the Commission, on a full peacetime basis.

Mr. HENDRICKS. For the remaining half of the current fiscal year? Mr. OLDS. That is right. So to bring it up and make it comparable with what we will require in 1947, the amounts involved in the supplemental appropriation, being only for half a year, should be doubled in order to get a straight comparison of the total amount of our work as we estimate it.

Mr. HENDRICKS. I see what you are getting at.

Now, in regard to that $810,000 increase, am I correct in saying that last year we discussed with you the great amount of work required of you because of the power and other problems brought about by the war?

Mr. OLDS. That is correct.

REASON FOR INCREASE FOLLOWING REDUCTION IN WAR WORK

Mr. HENDRICKS. Now that the war is over, why do we need an increased appropriation? It seems to me that your work would be reduced in view of the fact that you had an additional load during the war.

Mr. OLDS. It actually works somewhat to the contrary, for this reason: Of course, we were working last year with a defense appropriation for a certain portion of the work, $110,000, a minor amount compared with the total, but to the extent, we were using our regular personnel for war work, we were deferring work of an essential nature to be performed in peacetime. In other words, we have today a very considerable backlog of work which we have not performed during the war years which the Commission, in pursuance to the wish of Congress that all functions that did not have to use manpower would be curtailed, curtailed or actually deferred. That work today constitutes a backlog.

RECLASSIFICATION OF ACCOUNTS OF ELECTRIC UTILITIES

For instance, take our reclassification of accounts work. When that was set up it was intended to be completed for the electric-power in

dustry in a 5-year period, and then it would be over with and would not be a recurring cost to the Government. Actually that work today is 3 years behind time as a result of the diversion of funds and manpower to the war work which under the Presidential directive and the Federal Power Act the Commission performs. So that during the next 2 fiscal years we plan, in terms of that work-load analyses to complete that reclassification of accounts work for the electric utilities. Mr. HENDRICKS. In the next 2 years?

Mr. OLDS. In the next two fiscal years.

Then we have as yet been unable to undertake any of the reclassification of accounts work for the natural gas industry. That will be undertaken at the end of that two fiscal years period and will be completed in two fiscal years.

Mr. HENDRICKS. In your estimates, Mr. Olds, could you give me the page and explain to me somewhat that portion of the work you are discussing now that you are trying to bring up to date?

Mr. OLDS. It is referred to briefly in the summary on page 18, and on page 32 it is discussed at greater length under the Bureau of Accounts, Finance, and Rates justification.

Mr. HENDRICKS. But you do not have a break-down of that amount? Mr. OLDS. We also show it on this work-load analysis, where it is combined, I think, with certain other accounting work; but there is a general heading there "Enforcement of uniform accounting." What we are talking about now is the largest item in that. That work-load analysis is set up on a basis of completing within 2 years the reclassification of accounts.

Mr. HENDRICKS. Suppose you call to my attention where you think the increases come for this particular work you are speaking of-the backlog you have that you want to complete within the two fiscal years. Mr. OLDS. It comes under item 3, the one I am particularly discussing now.

Mr. HENDRICKS. What figures there show that increase?

Mr. OLDS. In the existing 1946 appropriation, you would include the supplemental, would you not?

Mr. HENDRICKS. Yes.

Mr. OLDS. Assuming that the Congress should authorize finally the full recommendation of the President, as far as the supplemental appropriation is concerned, we expect to complete 31 work-load units in the field of reclassification of accounts in 1946.

Mr. HENDRICKS. That is under 1946 expenditures?

Mr. OLDS. That is right.

Mr. HENDRICKS. Thirty-one what?

Mr. OLDS. Work-load units, that is, handling of the reclassification of accounts of 31 electric utilities.

Mr. HENDRICKS. At a cost of $315,933?

Mr. OLDS. That is correct. Now, over to the right you will find, in order to complete this work in a 2-year period, the work-load unit we estimated should be completed in that same field in 1947, as against the

31.

Mr. HENDRICKS. 94.7 man-years, at a cost of $379,006?

Mr. OLDS. That is correct, to handle the work for 47 additional companies.

Mr. HENDRICKS. What is the urgency of doing that within the next 2 years, Mr. Olds?

Mr. OLDS. The urgency falls into several general categories. In the first place, getting the accounts of the electric utilities of the country on a uniform original cost basis is an essential part of assuring effective regulation-not only regulation by the Federal Power Commission, but also by the several State commissions. The accounts of a company are a large element today in the determination of a rate basis. The Supreme Court has upheld, as you may have known, within the last few years, in connection with Federal Power Commission cases, the prudent-investment theory of rate making, which, in general, renders rate making a much simpler process. That is the first importance.

The second importance is due to the fact and we have direct information on this from financial houses, financial papers in New York and elsewhere the reclassification of the accounts of our electric-utility industry on an original-cost basis is proving of great assistance to the financial world in connection with its underwriting of utility securities. As a matter of fact (and I should send you a copy), we have compiled for the period from 1937 to 1944 the statistics of the electric industry from those accounting figures, and it shows a great strengthening of the industry financially because of this reclassification of accounts with all inflation removed.

Mr. HENDRICKS. Would you say that $379,000 was a portion of that $810,000; is that a portion of the increase?

Mr. OLDS. That is correct. I think that $810,000 is based on the expectation finally our supplemental appropriation would be only $200,000 instead of $399,000. If that amount were reduced to $200,000, then we would have to reduce-in spite of the work load we think we ought to carry in 1946-we would have to reduce our work in proportion to the reduction the House of Representatives has made in our supplemental budget. So the difference would be somewhat larger than appears on this work-load sheet.

Mr. HENDRICKS. That may be true, but I am dealing with the figures you have now in your budget estimate.

Mr. OLDS. What I mean is that this figure for work load would have to be reduced by a certain amount if Congress approves less than the $399,000 recommended by the President. This table is set up on the basis of $399,000, which we consider our requirements.

Mr. HENDRICKS. I am speaking of the last column, $379,000, in your estimate for 1947, and your increased estimate for 1947 is $810,000. So that this increased work load or backlog that you are asking for there, of $379,000, is part of that $810,000. Is that right?

Mr. OLDS. That is correct; yes.

Mr. HENDRICKS. According to the 1947 estimate?

Mr. OLDS. Yes.

Mr. HENDRICKS. Now, then, could you point out, in addition to that, where the other increase is in this analysis you have here?

Mr. OLDS. Well, it comes to a certain extent in each one.

CERTIFICATES OF CONVENIENCE AND NECESSITY

Mr. HENDRICKS. Just point out the largest ones. How about No. 6 there-Certificates of Convenience and Necessity?

Mr. OLDS. As a comparison between 1947 and 1946, that will require an increase of just under $20,000. A much larger increase will be required to meet the work load in the field of power requirements and supply, where the large increase in the work that is going forward in the river basin programs of the United States Corps of Engineers and the Bureau of Reclamation is putting a very considerable burden on the Commission to keep its reports flowing in time to be of use.

Mr. HENDRICKS. Let us go back to column 1 of your figures. In 1940, you had six work-load units, 3.7 man-years, for $12,896.

Mr. OLDS. Yes, sir, for item 6 covering our natural gas pipe line certificate work.

Mr. HENDRICKS. In 1947, you want 130 work-load units, 48.7 manyears, for $201,781, which gives you a difference of about $180,000 as between 1940 and 1947.

Mr. OLDS. That is correct. That certificate work which is covered there, the work of issuing certificates of convenience and necessity to these major natural gas pipe-line companies, was not actually under way in 1940. It was not until 1942, in February, that Congress amended the Natural Gas Act, greatly expanding that certificate work. In 1940, certificates were required only where the gas pipe line was proposed to be built into a territory already controlled by another natural gas pipe line.

Mr. HENDRICKS. Where is your next item which could be included in that $810,000?

Mr. OLDS. I would suggest the field in which probably our greatest backlog of work comes, due to deferments or curtailments as a result of our war work, is found in item No. 1, covering the work of licensing hydroelectric projects, where we must not only license the work, but it means the handling of cost determinations; the handling of headwater benefits; the handling of provision for the amortization cost, so that when the Government recaptures at the end of the license period their net investment will be in accordance with the terms of the Federal Power Act. That work, to a very considerable extent, is in arrears because of deferments during the war period.

You will notice, in order to get up to date, our work-load units increase from 258 in 1946, which we expect to do if we get our full supplemental appropriation, to 450 work-load units in 1947, representing a difference of more than $150,000 in the cost of the work.

Mr. HENDRICKS. That is about $150,000 difference and 45 man years difference?

Mr. OLDS. That is correct.

Mr. HENDRICKS. Where is your next item?

Mr. OLDS. I might call your attention to the fact that in 1940 we had work-load units of 346 in that field, and you can see the way that decreased to 175 in 1945, and it would have been about 177 as far as our existing 1946 appropriation is concerned. That 1945 figure shows the extent to which we were falling behind on that work as a result of deferring all work that was not absolutely necessary of performance. And I think Commissioner Draper will tell you he feels that our curtailment in that field went further than was desirable, certainly. Mr. DRAPER. Yes. I was very much disturbed over it.

NUMBER OF NEW POSITIONS REQUESTED

Mr. HENDRICKS. I won't go into each one of these items, because I can analyze these and I want to save time; but in 1940 you had 783 man-years; in 1947, you want 908.4 man-years. That is just about 125 difference, if I am correct. How many new positions, if you can

estimate it, will that mean?

Mr. TURNER. We estimate it will probably run about 10 percent positions over the man-years. In normal times of turn-over, it figures around 10 percent. We have not figured out the positions yet.

Mr. HENDRICKS. The Securities and Exchange Commission estimated this morning it would be 25 percent; so that, if you estimate 10, your organization must be much more efficient.

Mr. TURNER. We keep pretty tight control over our positions and do not allow them to accumulate. In other words, if there is any change in the organization, we change the positions right away.

Mr. HENDRICKS. That number of man-years, 908 in 1947, compares to 783.3 in 1940-a difference of 125 over 1940?

Mr. OLDS. That difference is due in the main to the increased work which has been assigned the Commission by congressional action subsequent to 1940. As I have suggested, a very large increase in work was assigned us by the amendment of section 7 of the Natural Gas Act in February 1942. That involved the consideration of a number of economic factors involved in the natural gas industry. Today, we simply have not got enough manpower in the Bureau of Law or the Bureau of Accounts, Finance, and Rates to handle the work which is coming to us, piling in on us under that amendment to the Natural Gas Act. And there are also other elements in the picture as a result of new legislation by the Congress.

For instance, in the 1944 flood-control bill, you will recall there was an amendment which put the marketing of all power from reservoir projects constructed by the War Department in the hands of the Department of the Interior, but all rates were to be subject to approval by the Federal Power Commission. That is just one element in the extension of the work of the Commission under the Flood Control Act. We are now working very closely with the Federal Interagency River Basin Committee, and that is requiring a considerable additional burden of work in connection with the river basin program.

Mr. HENDRICKS. As we continue these flood-control projects, as we have done recently, and some power connected with them, will you be charged with the duty of setting the rates there?

Mr. OLDS. That is correct; we will have the duty of approving the

rates.

NUMBER OF POSITIONS REQUESTED IN DISTRICT OF COLUMBIA

Mr. HENDRICKS. For the District of Columbia, you have asked for 555 man-years in 1947, over 385 for 1946. What is the demand for such an increase-about 170 man-years increase?

Mr. OLDS. It is part of this general increase that is shown in terms of balancing the work load units in the two columns

Mr. HENDRICKS. Why is it allocated to the District of Columbiabecause your office is here, or what?

Mr. OLDS. Because both our main accounting and main engineer offices are here; yes, sir. To the extent we can do it, we are putting