Mr. AULD. No, sir, we do not feel we can afford to put that cash into repayments in the early stages of this. I do not see any possibility that we could make repayments on principal before about 1962. Mr. BATES. 1970?

Mr. AULD. That is a recollection I would like to refresh from notes. Mr. BATES. When do you think you would get this whole program into operation so that the supplies would be filtering through?

Mr. AULD. I would say that by 1957 the bulk of our major projects will be under way.

Mr. BATES. Under way. But when will they be completed to a point where some of the water will be coming through the mains?

Mr. AULD. There will be increases in the water with every year's work almost.

Mr. BATES. Then if that is so, why should not the revenues accruing from the use of that water which you have already constructed, help to pay part of the bill?

(Diagram, Program for Financing Future Water System Improvements, submitted to the committee for their information.)

Mr. AULD. There will also be required funds to help defray part of the capital outlay. You will note that the blue columns here are a measure of our anticipated income.

You will note they increase as time goes on. Our expenses have been plotted beside those, and the bases of those blue lines is zero. When the expenses go below that, it is more than we have.

Mr. BATES. How do your rates compare with the border communities in Maryland and Virginia?

Mr. AULD. Our rates are about 50 percent retail of theirs. I think they charge a little more than $200 for a million gallons, and our retail rate is $96.

Mr. BATES. Have you given consideration to an increase in the water rates to carry this load?

Mr. AULD. We have considered it, yes, but we do not feel it is

necessary.

Mr. BATES. In other words, you want to hold off the day of reckoning and let somebody else to come after you pay the bill, is that it? Mr. AULD. No. I feel that today the prices are still uncertain. If we may look forward to Federal and District payment, the precise amount of those payments may also be in doubt.

My recommendation is that within 2 years, we make a very thorough rate investigation.

Mr. BATES. What you say to us is that your water rates here to the consuming public are only about half of what they pay in Maryland and Virginia; is that right?

Mr. AULD. Yes, sir.

Mr. BATES. Still, you believe, or at least it is shown here by this suggestion you are making, that these payments for major improvements should be delayed until 1970, so that future generations, who have a $260,000,000,000 Federal load to carry, should take care of it also and also assume this burden?

Mr. AULD. Well, sir, we look at it just the other way. These improvements are going to be good for a number of years, and they will benefit future generations.

Mr. BATES. How do you know at the end of 2000 that we will not have to embark on the same kind of a program as you are now-that you anticipated, say, 50 years ago?

Mr. AULD. The limits of the District of Columbia are fixed, and our assumption of population is such that we believe we will have saturation by 1990. We do not believe there will be more consumers. We think this will take care of the whole program for the probable water requirement.

Mr. BATES. That leads me to the question about the so-called metropolitan district. What outside district, outside of the District line, that you now furnish with water is there, and to what extent? What are the revenues from that water that they use?

Mr. AULD. Last year, we sold Maryland $350 worth of water; 5,800,000 gallons. They used to be dependent upon our system to a considerable extent, when they started perhaps 20 years ago to draw from us. Since then, they have independently developed their own supply, and the prospects are that those sources of theirs will be sufficient for their permanent needs.

We do not anticipate that Maryland will need to come to the District for water.

Mr. BATES. What they have done is embark on a program of major capital outlay, improving their great reservoir system, paying twice the amount of money that they would pay the District of Columbia, rather than go in like the District of Columbia; is that it?

Mr. AULD. It would seem that they made some such choice.

Mr. BATES. That is Maryland. What about the other outside areas? Mr. AULD. Yes, sir. Arlington County draws 100 percent of its supply from our system. And this plan contemplates the saturation of population which will ultimately occur in Arlington.

Mr. SMITH. What did Arlington County pay you last year?

Mr. AULD. Revenue from Arlington County for the 1946 fiscal year was $126,700.

Mr. BATES. Now, then, to follow that question along, Mr. Smith, I am trying to get down to the basic capital investment here, and what the return is on that capital investment, together with the maintenance cost, in order that Arlington County be provided with water.

What was your original capital investment to extend the mains over there?

Mr. AULD. The county brought their mains to our filter plant. They cross the Potomac River and they secure water at the source of filteration.

Mr. BATES. So you have not built any mains at all?

Mr. AULD. No, sir.

Mr. TALLE. At the same rate?

Mr. AULD. They, of course, get a wholesale rate. There is no distribution cost to us for the water they receive.

Mr. BATES. What do they pay?

Mr. AULD. $50 for 1,000,000 gallons.

Mr. BATES. Do you think they will build a reservoir of their own? Mr. AULD. They have, of course, a filtered water reservoir. That they have, and the tanks and the pumps, and a complete distribution system.

Mr. BATES. What percentage of your present distribution of water do you think it is? I think you gave a figure of something like 30,000,000,000 gallons. What percent of that does Arlington County take?

Mr. AULD. In the fiscal year 1946, out of a total water production of 56,459,000,000 gallons, Arlington County got 2,728,000,000. That is a relatively small percentage.

Mr. BATES. So you think the $50 is really a sufficient charge?
Mr. AULD. Yes, sir; we do.

Mr. BATES. For Arlington. You have given that very serious consideration?

Mr. AULD. The actual cost of producing that water is about $18 per 1,000,000 gallons.

Mr. BATES. Now, when you talk about producing water, what do you include in the cost?

Mr. AULD. That is not plant or depreciation or amortization.
Mr. BATES. Just maintenance; is it not?

Mr. AULD. That is right.

Mr. BATES. But here you have built these present reservoirs at a cost of probably many millions of dollars over a period of years since 1853, when we started, and do you not think that should be some part of the consideration in the question of the price of water that you give to the consumers?

Mr. AULD. It has been considered in the price to Arlington County. Mr. BATES. In other words, you think the difference between $18 and $50 is part of the capital investment?

Mr. Auld. Yes. There was a rational figure worked out on the basis of the proportion of the total plant devoted to that service.

Mr. BATES. IS Arlington County apt to grow in any substantial measure within the next 50 years that will require part of your new development to take care of its needs in any substantial way?

We

Mr. AULD. It is difficult to show a precise ratio by water, but I think I can do it by population, which would be very close to the same. estimate the average day's consumption in 1980 to be 217,000,000 gallons. Of this, Arlington would use an estimated 38,000,000 gallons, or 1712 percent.

Mr. BATES. Well, that is really not an important question, Mr. Chairman. That will do.

Senator CAIN. You may proceed.

Mr. AULD. I would like to emphasize that the bill you have under consideration is purely enabling in character and does not constitute a blank check. The loans in the successive years would be specifically authorized by the Congress after proper justification annually.

What we ask places no undue burden on any interest. It simply distributes the cost of an essential service in the proportion to which that

service is used. We suggest no rate increase at this time. The effect of this bill will be to permit a continuation and expansion of water service as needs require on a financially independent and self-supporting basis.

Mr. BATES. Are you through?

Mr. AULD. I am through with my statement.

Senator CAIN. Does that complete your testimony, Mr. Auld?

Mr. AULD. Yes, sir. I could go on for some time on the detailed features of the bill, if you care to go into it now.

Senator CAIN. Well, I should think not at this time. We might very well think it proper to call you back at a time when we are talking about that bill precisely.

Mr. SMITH. I would like to ask one question.

Senator CAIN. Mr. Smith.

Mr. SMITH. Have you any figures, comparative figures, that will show how the rates of this city to the consumer compare with the rates of cities under similar conditions?

Mr. AULD. Yes, sir; I have.

Mr. SMITH. Will you let us have those?

Mr. AULD. Water rates, I might say, are deceptive things to discuss, because you have to assume a given quantity or rate of use over some stated period in order to establish a comparison.

Because they usually go up or go down in unit cost, as the volume goes up.

But, in 1937, a board of survey compared our rates with those of the other cities. Across all of the rates of consumption, they found that we rested between the average of 40 American cities and the lowest of 40 American cities.

This curve will show it. The heavy line is our rate in contrast with an average.

Senator CAIN. I have a question that has just come to mind.

You were not the one, but somebody heretofore was to have provided information about compensating services. You were interested in having the Government now pay for the water it is using.

Mr. AULD. Yes, sir.

Senator CAIN. But we will become increasingly interested in what compensating services are given free of charge by the Federal Government to the District.

Mr. AULD. I would like to have an opportunity to put that in at a later time, if I may.

Senator CAIN. We would very much appreciate it.

Mr. BATES. I think we ought to make it clear, as basic information, as to how the original reservoir system and the main lines were constructed; that way back, say, in 1853, the United States Engineers

did it.

Did the Federal Government build your old original reservoir?
Mr. AULD. Yes, sir.

Mr. BATES. And paid for it all out of Federal funds; and then down. through the years up to what time and what year did the District. government come in and assume part of what we would call a capital

outlay in the expansion of that reservoir or perhaps the mains running into the District?

When did we first step into it as a community?

Mr. AULD. We came into it certainly quite legally in 1882.

Then we had the legal authority to distribute water.

Up to that time, I think the Federal Government paid practically all the costs of the system.

Mr. BATES. And charged the rates to the users? How did the Federal Government get reimbursed?

Mr. AULD. The Federal Government did not get direct reimbursement. The water fund was then in existence. The revenue from local users went into that fund, and that was employed for further extensions of the system, so I am evidently mistaken about 1882.

Mr. BATES. Now, you say about one-third of our entire distribution is free-1112 billion gallons?

Mr. AULD. Yes, sir.

Mr. BATES. That is, free to the Federal Government and the District government and private and religious institutions? Municipal, Federal, and religious, shall we say?

Mr. AULD. They are religious and charitable, both.

Mr. BATES. Charitable also comes in?

Mr. AULD. Yes, sir.

Senator CAIN. What percentage of the 11,500,000,000 would you be presently giving to the religious and charitable institutions?

Mr. AULD. The value of that was very small last year.

Mr. BATES. What part to the Federal Government?

Mr. AULD. The Federal Government received in the 1946 fiscal year 8,508,000,000 gallons.

The District government received 2,718,000,000.

And the free church and charitable water was 139,994,932 gallons. Mr. BATES. How did you arrive at the estimate of 8,500,000,000 for the Federal Government when we have no meter system in the buildings? How do you gage it or determine the supply going into these buildings?

Mr. AULD. The older institutions have meters. I think there are between seven and eight hundred meters in the Federal buildings in the District.

Mr. BATES. What purpose do they serve?

Mr. AULD. For the very purpose of ascertaining the quantity of water used.

Senator CAIN. That you are giving away.

Mr. AULD. The metering of Federal consumption is carried out by the Washington aqueduct, and is authorized annually in the appropriation bill-each year.

Mr. BATES. Well, you say about 8 or 10 percent is metered; is that the figure you gave?

Mr. AULD. NO. The metered consumption is reported here to be 8,362,000,000, and the estimated at only 145,000,000.

Mr. BATES. Well, now, do I understand by that that of the total of 8,500,000,000 going into the Federal buildings, that is practically all metered so that you know it is going in there?