Mr. SMITHEY. May we have the situation prior to the adoption of the criteria in order that it may appear clear in the record, the change? Mr. RADIN. Prior to this time the contracts with the private utilities contained a withdrawal clause so that power could be withdrawn upon notice from the private utilities to serve the increasing loads of the preference customers, the public agencies and rural cooperatives, as those loads grew.

Mr. SMITHEY. Was this power withdrawn upon the application of the preference customer or in the discretion of the Department of the Interior?

Mr. RADIN. Upon the application of the preference customer. Mr. SMITHEY. It was an automatic thing rather than a discretionary thing with the Department?

Mr. RADIN. That is right.

It was a part of the written contract so that the preference customers had that assurance that their future power requirements would be available from the Federal power as their future power requirements grew.

4. Amount of firm energy to be made available: Under the heading "Power Supply," paragraph 1 of the criteria states:

Determinations also anticipate the purchase of thermal generated energy from available sources in the area to supplement energy available in low water years to an amount not exceeding that which would be available under average water conditions.

We believe that the Bureau should determine the amount of firm energy it will sell by comparing the price for which such energy is sold, with the price for which it sells secondary energy, plus the cost of purchasing thermal generated energy to firm up secondary energy. If the Bureau's price for firm energy is greater than its price for secondary energy, plus the cost for thermal energy to firm up the secondary energy, then obviously it becomes a good business practice for the Bureau to purchase such firming energy.

Furthermore, the Government's failure to make available the maximum amount of firm energy redounds to the benefit of the nonpreference customers, and to the detriment of the preference customers. This results from the fact that practically all of the nonpreference customers have thermal generation of their own and can profitably buy secondary energy from the Government; whereas, many of the preference customers operate distribution systems only, and consequently do not have the generating facilities to firm up secondary energy which might be available from the Government.

In no case, however, do we advocate that the Federal Government overcontract for firm power, or make contracts with preference customers for firm power beyond the extent to which it can reasonably be expected to fulfill such contract requirements.

In view of the factors cited above, we recommend the following changes in the Missouri Basin Power Marketing Criteria, as amended December 11, 1953:

1. No long-term contracts between the Bureau of Reclamation and the nonpreference customers should be permitted.

2. A definition of a "short-term interim contract" should be written into the criteria, stating that such a contract should be for a maximum of 5 years.

3. A clause providing for the withdrawal, upon adequate notice, of power from nonpreference customers to meet the increasing needs of

the preference customers should be written into contracts with the nonpreference customers.

4. The Bureau should make available the maximum amount of firm energy, consistent with sound business principles.

Unless the amendments described above are made, the rights of the nonprofit public agencies and rural electric cooperatives, as accorded them under Federal law, will be jeopardized. We therefore urge your committee and the Congress to take such action as is necessary to correct what we consider to be serious deficiencies in the criteria. Thank you, sir.

The CHAIRMAN. You were present during Mr. Ellis' testimony? Mr. RADIN. Yes, sir.

The CHAIRMAN. Do you agree with that in general?

Mr. RADIN. His testimony?

The CHAIRMAN. Yes.

Mr. RADIN. Yes, sir; in general.

The CHAIRMAN. I notice that neither in your letter to the Secretary of the Interior nor in your statement do you refer to the Republican platform.

Mr. RADIN. Yes, sir.

The CHAIRMAN. You do not refer to it; do you?

Mr. RADIN. No, sir.

The CHAIRMAN. Why not?

Mr. RADIN. I am not sure I can tell you entirely, but I would say that the primary reason is that we are, by the nature of our organization, by our bylaws, a nonpolitical, nonpartisan organization, and we try to avoid matters of party politics insofar as it is humanly possible to do so.

The CHAIRMAN. I am delighted to have you use the word "nonpartisan," but as you know, the Senator from North Dakota is Republican. I think you will agree with me that during the campaign Mr. Eisenhower made certain definite promises to the farmers of this country that were read into the record by Mr. Ellis. Do you consider these promises have been kept or evaded?

Mr. RADIN. No, sir, I do not think those promises have been entirely kept.

The CHAIRMAN. Do you not think when a man runs for office or a great party comes out and says to the American people, "This is our platform," that that party should keep those pledges?

Mr. RADIN. Yes, sir, I think it applies to all parties.

The CHAIRMAN. And that just because a man is running for the Presidency and he says, "I am in favor of these co-ops and I am going to help them," and then does not do it, that it is in the same category as Wendell Willkie's definition of campaign oratory?

Mr. RADIN. Sir, I would like not to be drawn into political matters. The CHAIRMAN. You are testifying under oath, and I want to find out your reasoning. I want to find out who is responsible for this. Are you going to blame Mr. Aandahl and Mr. McKay, or are you going to blame President Eisenhower, the man who made the promises in behalf of the Republican Party of this country?

Mr. RADIN. I think certainly the responsibility for the operation of the executive branch of the Government rests with the President, the ultimate responsibility.

The CHAIRMAN. In other words, if the men he appoints do not carry out what was promised to the farmer, then he should get rid of those people and put in folks who will carry out what the party platform promised?

Mr. RADIN. He has that authority.

The CHAIRMAN. Thank you very much.

Mr. SMITHEY. Mr. Radin, do you anticipate that if the criteria remain in effect, it will result in the elimination of competition in the electric industry?

Mr. RADIN. I do not think this one act alone would result in the complete elimination, but this coupled with other actions going on in various other parts of the country could very well result in a trend toward that direction.

Mr. SMITHEY. By that you mean

Mr. RADIN. By that I mean mergers of certain private power companies which are being sanctioned and actions elsewhere which are to the detriment of the preference customers. The preference customers provide the only injection of competition into this industry, because it is a basically monopolistic industry. It is only the municipal utilities and the co-ops that inject any competition into this industry. Wherever their rights or ability to perform adequately are threatened, to that extent, then, we have a trend toward monopoly in the industry.

Mr. SMITHEY. Do you view this as a part of a larger effort to eliminate competition within the electric industry?

Mr. RADIN. I think the impetus behind this is a trend toward monopoly; yes.

Mr. SMITHEY. From what quarter do you think the impetus springs? Mr. RADIN. I think it obviously springs from the private power industry itself, which is not anxious to see any competition in the industry. It is basically a monopolistic industry to begin with. Mr. SMITHEY. I have no further questions.

The CHAIRMAN. Mr. Wise, have you any questions?

Mr. WISE. No, sir.

The CHAIRMAN. The meeting is adjourned, subject to the call of the Chair.

(Whereupon, at 11:40 a. m., the committee recessed, subject to

call.)