consin. In America's Dairyland, as well as in the other dairy areas of the United States, our high-quality milk could not be produced without adequate electric power to provide the "muscle" for efficient, sanitary handling of this important and highly-perishable commodity.

Not too long ago, electrically-powered bulk milk coolers dramatically improved the farm-to-market handling of milk, which previously went to market in cans and was handled over and over again before reaching the pasteurizing machines. And bulk milk cooling is only the beginning.

At a recent dairy school, dairy experts saw a wall-mounted "electrobrain" automatic washing device for rinsing, washing and sanitizing pipelines, thus bringing an even higher degree of push-button sanitation to the dairy farm. High standards of lighting are becoming commonplace in the dairy barns of our state. Larger vacuum pumps and motors for 2-inch vacuum lines used in mechanical milking operations are now being installed. Under-the-cow illumination for lighting the udders; liquid manure handling; refinements in pushbutton feed handling; electric fly killing and electrically-heated milking parlors are just a few examples of why the rural electric load grows and grows, doubling every eight to ten years.

Some critics claim that the rural electrification program has already accomplished its purpose, but not one dairy farmer in Wisconsin is satisfied that he has the last word in modern dairying. To stay competitive, to meet the high standards of quality milk production, he must adopt every new advance the dairy business finds. And that generally involves the use of more and more electric power.

Wisconsin's 30 rural electric cooperatives have been experiencing a tremendous growth in the use of electricity by their over 100,000 consumer members. Whereas in 1948, the average rural electric consumer in the state used 166 kilowatt hours of electricity a month, he was using a monthly average of 663 kilowatt hours in 1965.

In the early days of rural electrification, much of the electricity was used in the farm home to furnish light and power to operate household applicances. Today, the big demand for electricity is coming from larger and more varied farm uses. As our family farms increase in size, which is the national trend, they will require larger and larger supplies of electric energy.

In order to keep pace with these growing power needs of their consumermembers, the rural electric cooperatives are investing ever-increasing amounts of capital in improved facilities to insure that dependable, adequate and lowcost electricity will continue to be available in rural America. The investment banking firm of Kuhn, Loeb and Company of New York City has estimated that the rural electric systems will require $9.5 billion for this purpose in the next 15 years. That figure is double the amount of money loaned under the REA electric program during its first 30 years.

The need for heavy use of capital is not confined to the rural electric cooperatives. It is characteristic of the entire electric power industry. According to the Federal Power Commission's National Power Survey, issued in late 1964, the annual capital expenditures of all segments of the electric power industry represent over 10 percent of the total of such spending by all American industries. Its capital assets are more than 60 percent greater than those of its nearest rival.

Currently, the commercial power companies are spending nearly $5 billion a year for additional, expanded and improved facilities. Robert T. Person, Past President of the Edison Electric Institute, has estimated that the investorowned electric utilities will spend about $12 billion in 1980 alone, a figure which is 17 times as much as the 1980 capital requirements of the rural electrics.

It is obvious that the rural electric cooperatives will have to invest everincreasing amounts of capital in their systems in order to fulfill their utility responsibility in the rural areas they serve. It is equally obvious that the Federal government will not be able to provide all of the funds needed under the present REA 2 percent interest loan program.

Mr. Chairman, I believe that the supplemental financing proposal embodied in S. 3720 offers a sound and workable solution to this problem. Its provisions are fair to the rural electric and rural telephone systems and to the Nation's taxpayers as well. By retaining the 2 percent REA loan program for those cooperatives which must have it in order to serve sparsely settled rural areas, we will insure that the farmers and other rural residents in those areas will continue to have adequate utility service. And by establishing Rural Electric and

Rural Telephone Banks, we will enable the more financially mature cooperatives to obtain the growth capital they must have at interest rates which are geared to their ability to pay while still achieving the goals of the rural electrification and rural telephone programs.

The concept of banks for rural electric and rural telephone systems is founded on the long experience of the Farm Credit Administation in tapping the private money market for capital loan funds needed by farmers and farm-related enterprises. Behind this bill lies more than two years of expert study of ways and means of meeting the growth capital needs of the rural electric cooperatives without destroying the basic objectives of the existing rural electrification program and its outstanding record of service to rural America.

The proposed new approach contained in S. 3720 to supplement the present program with higher-interest loans will furnish the necessary bridge to what will eventually be banks owned and operated by their rural electric and telephone borrowers without any financial assistance from the Federal government. I feel that this proposal, made by the borrowers and beneficiaries of the REA program in order to become self-sufficient-while at the same time discharging their responsibilities to farmers and other rural consumers who cannot get utility service in any other way-is a sound, businesslike way of solving the problem presented by the growing capital needs of these rural systems.

Mr. Chairman and members of the Subcommittee, the rural electric cooperatives of Wisconsin join those throughout the land in asking you to approve this constructive legislation. It can well be the most outstanding law in its economic and social implications enacted during this session of the Congress.

Thank you.

STATEMENT OF ROBERT G. ASHEIM, ADMINISTRATIVE VICE PRESIDENT, BLACK HILLS POWER AND LIGHT COMPANY, RAPID CITY, S.D.

Black Hills Power and Light Company is an investor-owned electric utility serving the Black Hills area of South Dakota and Wyoming. The following testimony on behalf of the Company is to express opposition to the Federal Electric Bank Bills, S. 3337 and the draft bill proposed by the Department of Agriculture. At the outset, I want to remind you that Black Hills Power and Light Company has always cooperated with the REAs in an effort to solve controversial problems and provide for the orderly development of electric facilities.

For example, the REAS and Black Hills Power and Light Company developed jointly an agreement whereby two generating units were installed in our existing generating plants to guarantee low cost electric energy for REA consumers.

Recently a series of conferences by representatives of municipal electrics, REAS and investor-owned utilities held, at the request of South Dakota Governor Nils Boe, resolved territorial controversies. This compromise agreement, enacted into law by the South Dakota legislature, is beneficial to the citizens of our state and the entire electric industry.

This fine relationship can be greatly endangered by the enactment into law of the proposed Federal Electric Bank. The need for a new method of financing is completely unnecessary at a time when virtually all rural people in the nation have central station service.

The Federal Electric Bank proposal tends to change the concept of the REA program. It bypasses congressional authority and control and substitutes extremely vague guidelines with apparent unlimited authority granted to the REA Administrator-Governor.

Criteria for authorization of loans is not specified in this proposed legislation and if enacted, can jeopardize existing facilities of existing power suppliers, including municipal electrics, REAS, investor-owned utilities and others.

Because of its possible far-reaching effects on the total electric industry and other segments of the economy, further consideration of this proposal should be delayed until such time as studies and evaluations can be completed by all concerned.

STATEMENT OF WALT BERNOSKI, SECRETARY, IOWA UTILITY WORKERS CONFERENCE; AND PRESIDENT, I.B.E.W. LOCAL UNION 880, SIOUX CITY, IOWA

Mr. Chairman and Members of the Subcommittee on Agricultural Credit and Rural Electrification, my name is Walt Bernoski. I am the Secretary of the Iowa Utility Workers Conference representing approximately 6,000 electric and gas utility workers in the State of Iowa. I am also the President of Local Union 880 I.B.E.W., representing some 250 members.

70-671-66-30

I am willing and ready to testify in person against the proposed legislation which would create an R.E.A. bank, and I request that, if additional hearings are held by this Subcommittee, I be given the opportunity to so testify.

Today, with about 98 percent of all U.S. farms receiving central station electric service, the original need has been all but exhausted. The economic context, too, has radically changed; barely 8 percent of the total population now lives on farms or derives the bulk of its livelihood from agricultural products, compared to approximately 25 percent just 30 years ago. Yet R.E.A. goes on, and from its "home" in the Department of Agriculture, seeking new and expanding areas of activity. It has substantially accomplished its express goal of bringing the benefits of electrification to the nation's farms. It commands great economic and political power at the state and local level. Approximately 1,000 rural electric cooperatives are scattered throughout the country, with some 15,000 directors who are men of substance in their communities. The R.E.A. has a large constituency, some five million consumers of R.E.A.-subsidized power have a vested interest in its preservation and expansion. My observation of the tremendous number of R.E.A. personnel lobbying in the House hearings only proves the point that R.E.A. is out to get all the taxpayers' money 2% or interest free as is possible to obtain. The R.E.A. buttressed by all these factors, as well as by increasing acceptance of the Federal Government's economic role, seems by now to have achieved permanent status as an agency of government.

The R.E.A., for all practical purposes, has accomplished what it was established for. However, they are not satisfied to stay within their limits. The deviation of R.E.A. from the original purpose occurs in three main areas:

1. Serving customers in communities with more than 1500 population. 2. Serving large industries.

3. Building unnecessary generating plants and transmission lines. This deviation extends into two avenues that are detrimental to employees of investor-owned electric companies. They nullify a wage increase, negotiated with the investor-owned utilities, because of a greater tax payment to the government caused by its subsidizing an industry that should be self sufficient after 31 years of operation. Although by law certain public systems can be organized, it is very difficult to talk to people who head up the various types of public systems.

The wages, working conditions, tax exemptions, interest rates, etc., give these public systems an unfair and absolutely unjustified competitive position in the Electric business. To establish a bank of this nature would only open the door to an uncontrolled bureaucratic form of government. Let these public systems pay all the same taxes, the same interest rates, and operate under the same regulations as are placed on the investor-owned companies. And let them pay the same wages, establish the same pension provisions, vacations, insurance, and all the other items that I am allowed by law to negotiate. And the most important factor that is so dear to free independent employees and employers, the right to be allowed to express yourself and negotiate with each other with the protection of the N.L.R.B. Statistics prove that a majority of the public systems only give token recognition to union organizing efforts. Union organized employees pay a higher tax from their pay checks to help subsidize an industry that is in a very favorable competitive position because their administrators oppose union activity through subversive methods. In reality, the government through an R.E.A. Banking Bill is forcing the investor-owned utility employee to destroy his own employment. I am sure that this Banking Bill will eventually destroy a tax paying, free enterprise system that was built by industrious, hard working people in the years since Thomas Edison's inventive mind created the light bulb.

The drive to create a public power district system in the State of Iowa is under way and easy low interest, tax free money will speed this situation into being. There is no doubt in my mind, from my personal experience, that my job and the jobs of thousands of others of Local I.B.E.W. members are on the line for survival because of wasteful duplication of systems that have been adequate throughout all these years. Public systems are duplicating transmission lines in the State of Iowa that are unnecessary. In this connection, I call your attention to Exhibit "A" attached to my statement, which is a map from the Iowa State Commerce Commission showing the principal electric transmission lines and generating stations in the State of Iowa. In the western part of the State where my Local Union has jurisdiction, I have outlined in red the duplicating federal lines that are in existence now through part of our service area. The trend for Federal Bureau control is obvious. The pressures on small towns by so-called "friends of the small businessman" is also obvious.

The question that continuously implants itself in my mind when I think of this duplicating government activity is this: If the trend for establishment of all these bureaus and government-subsidized programs continues, where is the money going to come from? Why don't we establish a bank for bakeries, coal mines, transportation, dairies, packing plants, etc? When the bureaus are firmly entrenched in every facet of this Great Society, there will be no need of Senators or Congressmen. Just as public power districts restrict the working man from bargaining for a better standard of living, so the bureaus will restrict the authority of the Senate and Congress.

In President Johnson's speech at Lewiston, Maine, Saturday, August 20, 1966, he stated, "The best government helps people to help themselves."

After 31 years of taxpayers' help from all over the country, the majority of the R.E.C.'s have proven to us that they do not want to help themselves. As President Johnson stated, we union people want to help ourselves. In a lot of areas, even the 2% money is unnecessary and establishing an R.E.A. Bank is not helping us an iota. We are willing to help Americans where there is a need, but let's be practical and sound Americans. Investor-owned utility companies are building and investing borrowed money in expansion programs all over the nation, at the current interest rates. We want to help ourselves by asking this committee to oppose establishment of any R.E.A. Banking Bill.

Does this honorable committee believe that creating an unregulated bank for competition in an industry that helps pay their wages through taxation is what helping your country means? I am sure that each of you believes that to be a strong nation, our industries should be treated fairly and justly. This belief will not be attained if any bill is established as the law of the land where I have to pay a double cost per KWH. My fellow employees, friends, and relatives are very disturbed by the ever increasing tax deductions on the working man's check to support all the give-away programs. There is no need for G & Tor powerplant construction by public systems. An industrious Iowa is not suffering because of lack of generation capacity. Just give our industry under the free enterprise system a fair competitive chance, and I and many thousands of your constituents will not become wards of the government.

I would like to try to show you how, on the grassroots level, this unfair competition is working to the detriment of the investor-owned utility on which Local Union 880 I.B.E.W. is located. Attached to my statement as Exhibit "B" is a brochure for the "Missouri Basin Municipal Power Agency” which lists a Mr. Verrips of Sioux Center, Iowa as the General Manager. Note that on Page 5 of this brochure it calls for the establishment of an agency to construct and own transmission and generating facilities, and that the "municipal member will not have to invest any money." It invites inquiries.

Now, the company on which Local Union 880 I.B.E.W. is located has for many years served Alton, Iowa and Ida Grove, Iowa and, when the franchise to serve Alton, Iowa expired, Mr. Verrips appeared on the scene and told about the glories of low-cost, tax-subsidized government power. The company lost the election to renew its electric franchise at Alton. The people of Alton were not dissatisfied with the company's rates or service but were attracted by the promise of revenue which they were told they could realize for the town through the sale of tax-subsidized electricity. The company is now in the process of attempting to renew its electric franchise in Ida Grove, Iowa, and Mr. Verrips is again on the scene, and for what he has to say I refer you to my Exhibit "C," which is an article from the Ida Grove newspaper.-Note that he tells them, "They (Sioux Center, Iowa) can buy their power from NIPCO (Northwest Iowa Power Cooperative) at 2¢ per kilowatt-hour and deliver the electricity to the -consumer slightly less than the Ida Grove rate. By comparison, the investor-owned utility on which Local Union 880 I.B.E.W. is located pays more than onehalf cent per kilowatt-hour in taxes. No wonder, as the article further points out, Sioux Center can furnish electricity free to the city and return one month's bill to the consumer each year. There is no such thing as a free lunch, and I do not think the rest of us should have to pay taxes so that they can have free electricity in Sioux Center, Iowa. The locations of the Northwest Iowa Power Cooperative lines are shown in red on my Exhibit "A" with the designation U-16. You can see the effect of this unfair competition in my Exhibit "D" which I carries the headline from the Ida Grove newspaper: "Council Delays Franchise Vote; Discusses Municipal Utilities." These are classic examples of the unfair competition already under way which, if continued, can result in the death of the largest tax-paying industry in the country. My Exhibit "E" will give you

more information on the expansion of this Missouri Basin Public Power Agency patterned after Basin Electric which consists of an association of some 160 R.E.C.'s. You will note it is proposed to integrate these with federal thermo and hydro generating systems. Exhibit "E" is reproduced from page 5 of the Basin Electric Cooperative Report, Volume 3, No. 8, February 1966.

With the government looking for ways to increase its tax revenue to fight the Viet Nam War and to pursue its social welfare policies, it could well look to the tax potential of government subsidized electric systems. It is estimated that between 1954 and 1964 the government could have realized at least $3.6 billion if the electricity sold by governmental agencies had been sold by tax-paying, investor-owned utilities.

In addition to the tax revenue which the government has lost, we are discriminating against a large majority of our electric users by requiring them to subsidize through taxes, the users of power from government agencies. This economic discrimination is as great as any that exists today. This R.E.A. Bank Bill will perpetrate this tax squeeze and unjust discrimination.

And the last and most important factor that has a very serious meaning to this banking bill. Practically every time the President gives a talk, he speaks of inflation. He cautions industry to curtail industrial expansion and to expand only when it is completely necessary. He admonishes the housewife to buy only the necessary essentials for existence. The Federal Reserve Board raises interest rates from 5 to 6 percent. The government is paying 5%% for its money needs. The Treasury Department paid a record price to sell $3 billion in tax anticipation notes for the government needs.

Everywhere along the line it's a bigger and higher tax load for the wage earner in the country.

Why then are the R.E.A. people made such a special group, to not only get tax free, unregulated dollars, but interest rates tied to modern standards of operation way down to 2% ?

Thank you.

(The exhibits referred to above are on file with the committee.) STATEMENT OF A. O. BICKNELL, GENERAL MANAGER, TRICO ELECTRIC COOPERATIVE, TUCSON, ARIZ.

Mr. Chairman and Gentlemen of the Subcommittee:

My name is A. O. Bicknell, I am General Manager of Trico Electric Cooperative, Inc., 1144 West Miracle Mile, Tucson, Pima County, Arizona. Trico is a Rural Electrification Administration financed membership Corporation, furnishing electrical service to some 2,200 families in Pima, Pinal and Santa Cruz Counties, Arizona.

I also represent Arizona on the National Rural Electric Cooperative Association Board of Directors. In this capacity, I represent seven (7) Arizona Electric Cooperatives serving over 25,000 families in Arizona.

These seven Electric Cooperatives operate in a fast growing area. Demands for electricity is ever on the increase. Trico, as an example, serves the vast Papago Indian Reservation with electricity. There are some 8,000 Indians residing on this Reservation, of these, we presently serve about 600 families. We have just begun to scratch the surface in this area. As a contrast, we furnish electric power and energy to nine (9) Titan II Missile Complexes ringing Tucson. We serve the Kitt Peak National Observatory, which is one of the Nation's leading research complexes in Astronomy.

Electric Cooperatives in our state are faced with securing growth capital to meet their needs for future growth. Therefore, this statement is filed in support of the Cooper Bill, S. 3720 and I urge prompt and favorable consideration of this bill by the Subcommittee.

STATEMENT OF CARROLL H. BLANCHAR, PRESIDENT, PUBLIC SERVICE COMPANY OF INDIANA, PLAINFIELD, IND.

Mr. Chairman and members of the committee, my name is Carroll H. Blanchar, and I am President of Public Service Company of Indiana, Inc. I am appearing to oppose Senate Bill 3337.

Public Service Indiana is an electric public utility which serves more than 400,000 customers in 68 of the 92 counties in Indiana, including approximately