Chapter 1: Summary of "The Law of the River"

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preference: e.g., to public bodies and States. The contracts were not to be longer than 50 years from the date at which energy is ready for delivery. The contracts were to be subject to readjustment at the end of 15 years and each 10 years thereafter as justified by competitive conditions at distributing points or competitive centers. Arbitration of disputes was provided for in. Section 5(a). Section 5(b) contained provisions dealing with renewal of the contracts. C.5.1 Implementation of Power Contract Authority Before negotiating the power contracts, the Secretary had to determine: the project costs (estimated at $206 million to be repaid in 50 years at 4 percent interest) ; the quantity of water available for power generation and the quantity of energy (estimated at 4.24 billion kilowatt-hours (kWh) , diminishing 8.76 million kWh annually due to increased Upper Basin use of water and silting at Hoover Dam); and the com- petitive value of energy in southern California as fixed by oil and gas (estimated at 1.63 mils per kWh) . On April 26, 1930, the Secretary executed two contracts for 64 percent of the firm energy which was enough to satisfy the revenue requirements of the Boulder Canyon Project Act; a lease of power privileges with the City of Los Angeles Department of Water and Power and the Southern California Edison Com- pany, Ltd., and a contract for the purchase of energy with The Metropolitan Water District of Southern California (MWD). By November 1931, the contracts for the sale of energy were executed under which the following alloca- tions were made in terms of 4,240,000,000 kWh of firm energy annually: Arizona 18 percent Nevada 18 percent MWD 36 percent Los Angeles 14.9 percent Pasadena 1.61 percent Glendale 1.88 percent Burbank _ , , _ _ ...58 percent So. Cal. Edison 7.2 percent So. Sierra Power Co. .9 percent L.A. Gas and Elec. Co. .9 percent— These percentages were later changed slightly when 90 million kWh were added to firm energy genera- tion estimates with the height of the dam increased. The California contractors were obligated for 100 percent of the firm energy but were required to yield 36 percent thereof to Arizona and Nevada when required by those States. Los Angeles and Southern California Edison Company were required to take all energy not contracted for by the States. By 1940 Nevada had contracted for its 18 percent allotment. Arizona contracted for its 18 percent allot- ment in 1945. Storage of water began in Lake Mead on February 1, 1935. Power. generation began September 11, 1936, although the 50 -year period covered by the power contracts began June 1, 1937 (for more details on Boulder Canyon Project power contracts see Chapter III) . C.6 Boulder Canyon Project Adjustment Act This Act of July 19, 1940, 54 Stat. 774, was prompted by a request from the power allottees for a review of the power rates. During the 7 years between execution of the power contracts and the delivery of energy several factors had developed. The competitive value of Boulder Dam energy had fallen because of improve- ments in the art generating power by steam, decreases in the cost of fuel and in the capital costs of steamplants. Further, the Bureau of Reclamation in the Reclamation Project Act of 1939 adopted the policy CHAPTER I 7