Mr. Aandahl, did he ever suggest to you that it would be advisable to come out in the field and help you in determining these criteria? Mr. AANDAHL. Mr. Nelson and I have talked about it several times, and at my meeting with the REA generating and transmission groups over in the Department of Agriculture building on November 4, I believe was the date, I told the group that I would be very glad to have them set up such committee as they thought would be suitable to meet with the Department of Interior and to work over the problems that we have before us.

Senator KILGORE. Mr. Jenness, getting off a little from what you are testifying on, but based on the first day's testimony: of course, the United States Government, which is the people of the United States, have a stake invested in these multipurpose dams. And, of course, it is perfectly natural to try to liquidate that debt as soon as reasonably possible.

Do you know how much has been loaned by the United States Government to REA cooperatives for the building of their plants? That is brought up by our own testimony there, of the 35-year loans. Do you have any idea of the amount of the loan?

Mr. JENNESSs. The total loans now are around 3 billion as to distribution and generation.

Senator KILGORE. So we should also have an interest to recover the $3 billion loaned to the cooperatives and make sure the cooperatives remain in existence in the black at least long enough to pay back to the Government the money loaned for construction; isn't that right? Mr. JENNESS. That is right.

Senator KILGORE. So we have a double objective, to recapture not only the loans but the cost of plants and dams and so forth?

Mr. JENNESS. That is my point, Senator, the fact that the policy of one department of government is bearing directly on $3 billion of credit-not quite all of that, of course, because that is for the whole country. About one-third of the power is our concern with this matter in the Bureau policy.

Senator KILGORE. Based upon your experience also, let me ask you a question as to future bearing, not present bearing.

I note the Army engineers in civil functions build these flood control dams, which are multipurpose dams, but not connected in any way with reclamation in the west, or at least supposed not to be, and in the east apparently they think we need no reclamation. I think lots of times our agricultural souls are lost in the vast acreages.

Do you think it would be advisable to have an established policy covering the distribution of water-power sources? What do you think about that?

That gets you into the TVA picture, where those dams were built by the engineers to start out with. Here we have one agency of Government selling power in one instance, and the Reclamation Bureau in another instance.

Take the locks on the rivers. Most of the power produced in my State comes from the dams in the locks. A flow of water through the locks produces certain power which is sold to private facilities at the bus bar.

Mr. DAVIS. Senator, might I interject at that point purely an informational matter?

I am sure you will recall that the Flood Control Act provides really for the Interior Department to market the power that is produced at the flood control dams.

Senator KILGORE. So you market the power even from locks and things of that kind?

Mr. DAVIS. The point that I am making is that so far as I am aware-and this is, as I say, purely for information-I don't think the Army engineers are actually engaged in the sale of power from any of their dams.

Senator KILGORE. That would include locks and things of that kind also?

Mr. DAVIS. It includes, under the Flood Control Act, all the power that is generated at the dam.

Senator KILGORE. That comes under navigation, of course.

And

there is a considerable amount of power produced in the East from the various locks on rivers. A sizable block of power is produced there.

Mr. DAVIS. That power, so far as I know, is not under the control of the

Senator KILGORE. Incidentally, it is a rather peculiar situation. The heavy load of that power comes into lines during the winter months, which is also the period of greatest activity in the coalfields and also the greatest period of demand for power in the coal mines. So it is of tremendous help in supplying the mines with power, the getting in of that extra load of power from the dams.

Mr. TUDOR. Senator, I think I might illustrate by citing a few examples. For instance, in the Pacific Northwest, and also in the Missouri Valley, the dams are generating power and they are all put in the same pool and marketed by the Department of the Interior. In the case of the Northwest, it is the Bonneville Power Administration; in the Missouri Valley it is the Bureau of Reclamation.

And down in the Southwestern Power Administration, I believe all of those dams are Army.

Senator KILGORE. They have a few Reclamation dams down there. Mr. TUDOR. That are generating power?

Senator KILGORE. I do not know if they are generating power. Mr. TUDOR. That power is sold by the Southwest Power Administration, which is an agency of the Department of the Interior.

There is also the Southeast Power Administration.

There are some dams in the territory with which you are probably familiar, sir, which are navigation dams with locks. There are nine, I think, in the country, where the license has been granted by the Federal Power Commission in past years for the installation of power facilities owned and operated by private utilities. And it goes directly into their system.

Generally they are small. There is 1 of them in excess of 100,000 kilowatts of energy, 4 or 5 of those have been put into operation in the last 10 years.

Tennessee Valley Authority is something entirely different, and they generate and market their own power.

Senator KILGORE. It is a Government-owned corporation, which operates within itself.

Mr. TUDOR. I believe the Army engineers do not sell any power from any of their dams.

41455-54-pt. 1-20

Senator KILGORE. Thank you.

I did not want to interrupt, Mr. Jenness.

Mr. JENNESS. I think in your discussion you pointed out one thing being very desirable on the part of the administration. If there is a problem in this matter of Federal power, the Bureau and the other agencies could make certain studies to see if these things could be clarified and coordinated in a more efficient manner. I don't think they would lose the support of the Midwest farmers on their power policy.

But it seems that our rush here to get some criteria in effect as of January 1 has some significance to me, having worked in a lot of arrangements where we had to deal with power suppliers.

And so all these people have asked for, Senator and this is the thing I want to clarify; we are getting into a lot of discussion here that is not pertinent to the problem-but the thing I want to emphasize is that all these people have asked for is a postponement of this criteria. They haven't asked for a change in the power policy.

And all they have done in these meetings, some of them would get up and make all kinds of demands for marches down here to Washington, and refuse to pay their Bureau bills. That was proposed at one meeting. They said:

All of us quit paying our power bills and what can the Government do about it? See what I mean? A sitdown strike.

Those things were proposed. But the responsible people down there in the Missouri Basin have not officially gone on record, that I know of, against the policy, but they are united 100 percent against the criteria. Number two, in summing up my testimony here, it is our feeling in Kansas we still want to support the administration.

I might quote from one thing in my statement.

The manager of a system in Colorado told us in Omaha-and I think that is our real feeling on this whole matter of the criteria-as I got his words, he says on page 5:

I will sign a new contract tomorrow with the Bureau if their representatives will show me that we buy our power below cost. We want no subsidized power. Likewise, as a business man, I want no monopoly hijacking up my cost just because he thinks he has the authority to do it. Whether it be Government or a private power company, I want those prices fair and reasonable.

And, Senator, I think that about expresses our feeling around Kansas on this power situation.

Another speaker, the president of the Colorado Statewide, one of the finest men I have met in my work of rural electrification, was answering criticism that we were a bunch of rabble rousers trying to embarrass the administration. He said:

I believe firmly in a two-party system. I hate to see a group of willful men use the Republican Party and its fine record to destroy these rural electric cooperatives.

So we have come in here not with the idea of stirring up trouble, embarrassing the Department of the Interior, but we have come in here honestly and fairly making a reasonable request that this criteria be postponed, because, from our experience in the field, I am sure 1 year is not too much to study a basic change in the philosophy of the handling of Federal power.

That is all we are asking for, a hearing, and not to put these things in on the 1st day of January and then take Ancher Nelsen around and

put him on the spot to say, "Now, here, boys, let us get this thing going," and that sort of thing.

I want to express my appreciation. I have used a lot of time here. Senator KILGORE. I think it would be advisable that your entire statement be put in the record if you have no objection.

Mr. JENNESS. Thank you

Senator KILGORE. It is concise and has the approval of the Executive Committee.

(The document above referred to is as follows:)

STATEMENT OF JOE JENNESS, EXECUTIVE SECRETARY, KANSAS ELECTRIC COOPERATIVES, INC., TOPEKA, KANS.

BACKGROUND OF WITNESS

Completing fourth year as executive secretary of Kansas Electric Cooperatives, Inc., Topeka, Kans., a statewide association of 30 rural electric systems serving 65,000 consumers, whose electric service was financed through the Rural Flectrification Administration. From 1939 to 1950 a career employee of the Federal Government, assigned from 1944 to 1950 as a field representative of the Application and Loans Division, REA, working principally in the Missouri Basin States of Colorado, Kansas, and Wyoming.

Because of sparse population, lack of diversified needs for electric power, it was necessary that power costs be studied for their bearing on loan feasibility if I were to assist farmers to organize electric cooperatives which would qualify for REA loans. At one period when high power costs prevented REA capital from coming into Kansas I worked as consultant to a local power supply committee representing 14 systems, which obtained a substantial rate reduction from a private power supplier, during the period of rising labor and material costs.

In my present employment I aided Burns & McDonnell Engineering Co., Kansas City, Mo., over a 2-year period to secure field data necessary to make the first statewide study of Kansas rural power needs. The most desirable plans involve Interior power, both from Missouri Basin and SPA areas, and affect in their final stages every rural electric system and private power consumer in the State.

During the past year I have helped to organize the KEC Power Committee of 13 representing the 4 power supply areas in Kansas. They are working with private and Federal power suppliers to the end that Kansas rural systems may have adequate, low-cost power for load growth.

Suggested the idea of a Missouri Basin Task Force, now the Missouri Basin Electric Consumers Association; active on the Committee on Power for the Southwest, and an incorporator of the Southwest Power Cooperative, Oklahoma City, Okla.

I am not an electrical engineer nor do I appear here as a specialist in engineering phases of the power problem. My graduate studies were in the field of public administration and my experience and knowledge deal with the tremendous job of trying to make rural electrification function as a financially sound activity. 1. Why should Kansas be concerned with Interior Department power policy?

Kansas is within the Missouri Basin, is a member of the Missouri Basin InterAgency Committee, its Governor is a member of the Missouri River States Committee considering a basin compact. Our studies indicate that the key to lowcost power in the vast wheat areas of our State is Bureau power to be developed from the Pick-Sloan plan.

Rural electric cooperatives invested $10,000 in a 2-year engineered power study. A number of plans were studied and the best offered nearly 4 mills savings over present power costs through integration of Bureau power over private utility lines. This would provide the people in low density areas with a power cost comparable to that charged in higher-load areas. Problems of population and distances create the need for a public approach to the problem, similar to the need for national support of Federal aid for highways in the less populous areas. The Western Light & Telephone Co., of Great Bend, Kans. has constructed one of the largest transmission lines in the State from Smith Center, near the northern border to Medicine Lodge, near the southern border, and on to Dodge City. Designed for 115,000 volts it could be of great service to the people of Kansas once Federal power arrives at Grand Island, Nebr., where contracts

between the Bureau and Nebraska have been under negotiation. Only a few miles of transmission are required to enable this company to wheel Federal power to most of Kansas through its 5 interconnections with Kansas Power & Light and 2 interconnections with Central Kansas Power Co.

Our power suppliers have assured us in our meetings and conferences that if there are advantages to Kansas through Federal power they will cooperate with us in seeking its development. Under the new Criteria of Interior it has no value to us.

The new Criteria cut Kansas out of the Missouri Basin marketing area by the use of a political boundary, namely the Nebraska State line, rather than an engineering limitation on transmission distances, such as formerly used by the Bureau. Furthermore there are indications that southeast Kansas is now shut out of SPA territory under the new power policy terms.

2. Is Bureau power the only Federal power of concern to Kansas?

No. In southeast Kansas are five rural electric systems, in territory served by Kansas Gas & Electric, a subsidiary of Electric Bond & Share.

Six have a wholesale rate of 5.6 mills, lowest in the State, and identical to the rate charged by SPA. When the Congress authorized SPA to build transmission from Butler, Mo., to Burlington, Kans., so Vinita, Okla., this supplier with approval of the Kansas Corporation Commission dropped its rate about a third. This transmission line then was never built. So long as SPA functions at the present cost of power, it would appear these cooperatives will continue to have their present rate.

3. Since Kansas cannot sign Federal power contracts at this time, why should the cooperatives be concerned over Interior contract conditions?

If preference customers are to be compelled to estimate their needs for 20 years and the remaining power turned over to nonproference customers for an identical period, then, if Kansas should succeed in being recognized in the marketing area, the power will be gone.

On October 7, 1953, Interior representatives announced at a meeting in Pine Bluffs, Wyo., there is 100,000 kilowatts of power in the existing Bureau system not under contract. We could qualify now for 30,000 kilowatts. However, I was told if we submitted an application, it could not receive consideration because under the new criteria the State is not in the marketing area. The new policy is just the opposite of the old policy under which it would be feasible to include Kansas.

Twenty years is longer than the entire life of REA to date. An irrevocable contract for 20 years approaches a patent right, a vested interest, a monopoly on a public resource, and should definitely be the concern of this committee, for its effect on the bargaining rights of rural electric cooperatives.

These criteria favor the customer with steam generation, in the main, private utilities. Since the Interior criteria calls for a penalty for overestimating power requirements and since administration policy declares it is the responsibility of the customer to provide for his load growth, it is conceivable that preference customers may be forced to consider investment in steam sources to supplant power requirements. However, if the advantages of integration are tied up for 20 years with private utilities and integration is not available to justify steam investments, the right to generate is nullified and preference customers may be forced to buy from nonpreference customers. Hence these criteria are not in the public interest but serve to create a monopoly in restraint of free enterprise. 4. Why do you think application of the policy should be delayed rather than changed? Well, we in Kansas like our President and want to see his administration succeed. Since the power policy was issued with the approval of the Cabine and is therefore administration policy, we feel that pernaps the criteria, implementing the policy, were hastily conceived and not related to conditions in the field.

For example, 90 days is all that has been allowed present Bureau customers to submit an application for their needs for 20 years, under pain of having their present contracts canceled by use of the 3-year withdrawal clause and their present allocation of preference power thrown back into a pot for reallocation. This forces them to a decision before the Congress can convene.

Take Kansas for example. We met with our power suppliers in August and agreed to secure data on existing loads and growth for a 3-year period. The representatives of the private utilities told us that figures beyond 3 years can only be guesses. Yet Interior, in effect, says do it for 20 years. Four months later we have some spots still unreported. One system estimates load growth