KWH (billions), 40 30 20 10 CHART II: ENERGY GENERATED AND PURCHASED BY REA BORROWERS 10 TABLE II.-Energy generated and purchased by REA borrowers, by type of supplier, fiscal years 1940-65 TABLE III.-Energy purchased by REA borrowers, by type of supplier, fiscal years 1940-65 1965 1964. 1963. 1962 1961 1960_ 1959 1958 1957 1956.. 1955 16, 216, 443 42, 285, 939 16, 157, 429 1954 1953. 12, 458, 470 6, 463, 035 hours Per- hours Per- hours Per- hours Per- 12.4 8, 335, 144 19.7 9,590, 467 1, 878, 455 1,372, 315 901, 308 8.4 2, 175, 757 20.2 905, 833 8.4 1951. 8, 974, 459 4, 883, 160 54. 4 722, 114 8.1 1,879, 243 812, 165 9.0 4, 077, 706 1949 5, 536, 447 3, 210, 255 798, 905 152, 179 4.9 132, 650 1, 229, 294 51.9 163, 558 6.9 352, 306 14.9 995, 948 44.5 107, 740 457, 379 20.5 286, 568 12.8 1944. 41.7 98,785 5.0 372, 538 18.7 294, 100 14.8 1943. 1, 679, 747 680, 388 40.5 350, 450 20.9 357, 701 21.3 211, 300 12.6 1942. 1,086, 221 1941. 735, 378 547, 543 365, 811 50.5 57, 710 5.3 275, 864 25.4 33, 686 3.0 171, 418 15.8 49.8 1940. 406, 530 215, 973 29, 535 53.2 17, 203 3.9 201, 009 27.3 15, 999 2.2 123, 024 16.8 3, 523 1 Excludes all resales of purchased energy between borrowers. Includes industrial and manufacturing corporations. TABLE IV.-Energy purchased by REA borrowers from major privately and publicly owned suppliers, fiscal year ended June 30, 1965 1Excludes 9,485,415,477 kilowatt-hours purchased from REA cooperative borrowers which in turn purchased this power. Excludes 2,387,061 kilowatt-hours purchased from other REA borrowers which in turn purchased this power. 3. HOW MUCH THEY HAVE ON HAND ASIDE FROM THE AMOUNT NECESSARY TO MEET EXPENSES REA publishes an "Annual Statistical Report" which includes condensed balance sheet and operating data for individual borrowers in both the electrification and telephone programs, the latest issue covering calendar year 1964. The condensed balance sheet data are found in lines 15 to 37, inclusive, in the 127,775, 242 .3 2, 123, 492, 048 5.0 1 5, 258, 628, 170 12.4 2 20,869, 881, 553 49.4 17,925, 610, 985 42. 4 8, 335, 143, 759 19.7 5, 113, 942, 618 12. 1 2, 161, 052, 867 5. 1 1, 450, 200, 018 3.4 865, 271, 723 2.1 report covering rural electrification borrowers, in lines 12-31, inclusive in the report covering rural telephone borrowers; operating data in lines 38 to 54, inclusive, for electification borrowers, in lines 32 to 54, inclusive. The latter lists revenues and expenses and net margins or income and patronage capital (line 54). The amounts reflected in this item are available for repayment of REA loans and for reinvestment with proper allocation, in the case of cooperative borrowers, under the capital credits or other patronage capital plan adopted or otherwise under the applicable state statutes, cooperative articles and bylaws. Copies of the 1964 Annual Statistical Report-Rural Electrification Borrowers are on file with the committee. The amount of funds each borrower has on hand and the amounts necessary to meet expenses are not separately identified in these reports. REA Bulletin 1-7 (Electric) and 300-5 (Telephone) recommends that borrowers' working capital and reserve funds (which are generated principally from operating revenues) not exceed certain levels. An over-all general fund ceiling of 20 percent of total plant is used for loan review purposes. A list of electrification borrowers with general funds in excess of 20 percent of plant, reported as of September 30, 1965, was supplied to the Agriculture Subcommittee of the House Committee on Appropriations and is reproduced at pages 164-166 of the hearings on the 1967 Agriculture Appropriations bill. The Amount Originally Borrowed, Amount Paid Back and Funds Used for Expanding These data for individual electrification borrowers are to be found in the 1964 Annual Statistical Report-Rural Electrification Borrowers on the following lines: Amount originally borrowed Loans approved as of 12/31/64, lines 2-5. Funds advanced, line 10. Amount paid back Interest due and paid as of 12/31/64, line 12. Principal due and paid as of 12/31/64, line 13. Advance payments (principal) as of 12/31/64, line 14. Funds used for expanding The amount of general funds (generated from revenues) reinvested in the enterprise can be determined roughly By listing total assets and other debits-line 25 By adding accumulated provision for depreciation and amortization— line 19 And deducting from the total funds advanced-line 10 Senator ELLENDER. May I say to my good friend that I understand they charge off a certain amount for depreciation and what-have-you and that much of that is used for replacement. So that we do not want to mix the chargeoffs with the extra profits, if any there be. Senator MILLER. That is so, but the Senator also knows that because of the increasing costs that just a mere writeoff in depreciation is not enough in most cases to give them the replacement money needed for the replacement of equipment. And, so, we are going to have to come up with something I do not know what kind of a guideline that Senator Talmadge can give the administrator on this, but, perhaps this could be worked out as to what is a fair amount of this surplus that is needed for replacement, because I think it would be unfortunate if one cooperative would say: "We are using a rule of thumb of 20 percent of our surplus funds for replacement," and another cooperative says "We are using 30 percent." I think that we will need some kind of a guideline to get this information down to a meaningful point. I have seen some of the reports that the administration has, and it will be pretty difficult from at least the published reports to get this information. They may have some information that can be developed along this line, but I do think that the point is well taken, except that we need to have it defined to have it meaningful to this committee. Senator ELLENDER. The chief purpose in trying to obtain this information for the use of the committee is to find out which of the many cooperatives are weak. I want to make it so that the cooperatives will go on and develop and not to try to hold back and be in the category of weak cooperatives just to get the 2-percent money. I do not say that they will do that, but it is my belief that we ought to develop the facts and to define what a weak cooperative is and why is it weak, and in that way we might be able to provide a yardstick so that it would be impossible for cooperatives just to simply drift down into being weak cooperatives and then to obtain the 2-percent money. I think that the only way to do that, in my opinion, is to get the facts of the present situation of these cooperatives, to find why they are weak. I think that it would be important to find that out so that we can be ready to put into the bill some kind of yardstick. I have never opposed the REA. I do not know that any member of this committee ever opposed the pricing of the money at 2 percent, to give electricity to the farmers. It is only when co-ops go into an expansion program, into large communities, and then sell electricity for manufacturing that, some of us have said, in cases of that kind, cooperatives should pay a little more interest. Senator COOPER. I am sure that during the course of the hearings all these facts will be developed. That is my desire also, as I know it is the desire of the committee. I can illustrate with average figures, however, the general problem undertaken by the cooperatives. To give you an example, cooperatives average 311⁄2 consumers per mile on their lines, with revenues of $516 per mile of line, compared to utilities having 30 or 40 customers and revenues of $7,000 or $8,000 per mile of line. I would like to review briefly, if I may, what the REA cooperatives have accomplished. I think it unparalleled. Since the Rural Electrification Act of 1936, over $5 billion has been advanced in loan funds to nearly 1,000 cooperatives and other borpowers, which have brought modern service to 5,500,000 consumers in 46 States. In my own State of Kentucky, in contrast to that small band of 8,000 farms who enjoyed electricity in 1936, 26 cooperatives now distribute power over 57,000 miles of line to 313,142 rural consumers. No Kentucky borrower is in default; they have paid nearly $100 million in principal and interest on their loans. It is this record of successful operation and financial integrity which should now enable the cooperatives to shift in part to private financing. And I think it does make feasible the carefully developed plan for supplemental financing contained in this proposal. |