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, .;; , . , I I 'I Ii . ."1 '. ,." ,~~""#.'!'f:._ - ! ~ . . . the same characteristics they would have obtained from Lake Mead operating at elevation 1,123. The objectives of the criteria can be met by substituting capacity and energy for water in Lake Mead between elevations 1,123 and 1,083 by following the plan set out in the attached statement entitled "Operation of Lake Mead Below Elevation 1,123 by Reason of Resumption of Storage Operations at Lake Powell." The Bureau of Reclamation has reviewed all power replacement proposals that have materialized. The City of Los Angeles and the Southern California Edison Company have made proposals to sell or exchange power with the Bureau growing out of exploratory talks undertaken by the Bureau as far back as mid-February in anticipation of the possibility of a Hoover power replacement program. At that time, the B~reau of Reclamation naturally turned to the closest available suppliers. Four private utilities in the Upper Basin in combination with the Arizona Public Service Company in the Lower Basin, made a proposal, first submitted to the Upper Colorado River Commission, to furnish certain limited quantities of capacity and energy on an exchange basis. The Arizona Public Service Company also made a separate proposal whereby capacity and energy would be sold directly to the Bureau. Under the Upper Basin utilities' proposal as presented, the Bureau of Reclamation would have to take capacity in blocks of 50,000 kilowatts. Capacity in such large blocks could not be fully used under some circum- stances and in others would require certain complicated switching arrange- ments at the Hoover powerplant. These arrangements would have varying technical and economic disadvantages and would pose some very difficult problems of arrangement. Another aspect, which I am sure you realize but which is nevertheless of such importance as to be mentioned specifically, is that even an exchange of the nature proposed would not eliminate the cost burden to the Upper Basin Fund. The cost would be one of loss of revenlJes from power which must be paid back rather than sold, rather than one outlay of cash, but it would nonetheless affect the Basin Fund. Taking all of these factors into account, the Bureau of Reclamation determined that a direct purchase program with the Lower Basin utilities would be less costly, less complicated, and would provide needed fleXibility. A decision to resume storage at Lake Powell is not wi,thout hazards and risks. By mid-July, we w1l1 know with reasonable assurance what the actual runoff will be for this season. -460-