high-voltage cables were installed from the unit transformers to the switchyard. Rated at 525,000 volts, when installed, these were the only known cables carrying this voltage in oil-filled pipes anywhere in the world. The total cost of the Grand Coulee third powerhouse will be more than $490 million. The first generator came on line in October 1975, to be followed by two others at 6-month intervals. The second three units are scheduled for completion in 1977 and 1978, bringing the full 3.9 million kilowatts generated by the third powerhouse into the Northwest grid. The same legislation that authorized the third powerhouse also reaffirmed that BPA revenues repay irrigation costs for Northwest reclamation projects, thereafter authorized, which are beyond the ability of the water users to repay and which cannot be repaid from other sources within their prescribed repayment period. This provision was especially significant as it was the first time in the region that such widespread understanding had been achieved between these interests, whose viewpoints necessarily are quite different. A new annual requirement for a Repayment Study, which gave explicit congressional authority covering the payout schedule for the Federal Columbia River Power System, was also contained in the third powerhouse authorization. The development of this new payout method—which met the Federal requirement of repaying each generating project within 50 years—has had a broad impact on the financial and repayment structure of all U.S. Government hydroelectric power operations in the Pacific Northwest. Lastly, congressional hearings on the Grand Coulee third powerhouse were conducted at about the same time that BPA was working on a proposed rate increase. One result of the project's authorization was that its favorable benefit-cost ratio (better than 3 to 1) minimized the BPA rate increase in 1965, which averaged a nominal 3 percent. The immediate problem which faced Charles F. Luce upon his appointment as BPA Administrator in 1961 was one of annual deficits. For three consecutive years, BPA had incurred a deficit in its annual operations which seriously impaired its ability to make adequate repayments to the U.S. Treasury. This situation was partially attributable to the failure of new generating projects to come on line as scheduled. Other factors were BPA's inability to find markets in the Pacific Northwest for large quantities of surplus secondary power, higher costs of projects resulting from increased construction costs, and the fact that the most economical hydro powersites already had been developed. Luce, in his first Annual Report, described the programs which could be most effective in reversing BPA's downhill financial trend. "There remain three major projects: 'birds in the bush,' so to speak—which are beyond the decision-making powers of Bonneville Power Administration, but which will have a profound effect on our future operations and financial condition. These are: "(1) The treaty with Canada for joint development of the Columbia River, which has been signed by the chief executives of both countries and ratification in Canada. "(2) The proposed Pacific Northwest-Pacific Southwest Intertie which requires, first, action by Congress on regional protective legislation to assure the consumers of each region first call on all Federal power generated on its streams and, second, a decision as to whether the lines will be constructed by the Federal Government, the public utilities, the private utilities, or a combination thereof. "(3) The proposed addition of electrical power generating facilities to the New Production Reactor at the Hanford Atomic Works in the State of Washington, which requires either Con-
