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and as such was closely associated with the rural electric cooperatives of North Carolina and most concerned about their problems.

I think we have unquestionable evidence that the people of North Carolina want to preserve and encourage the development of our rural electric cooperatives. In 1963, the General Assembly overwhelmingly rejected a proposal of our General Statutes Commission that they could be sold without a vote of the membership. This proposal and others were issues in practically every statewide race in 1964.

I'm happy to say that the 1965 General Assembly did much to resolve a basic problem. It adopted a fair law which protects the rights of existing power suppliers when annexed by towns, and it provides for the assignment of exclusive territories outside of towns. This was legislation agreed to by our power companies and cooperatives. It gives our state the opportunity to prevent wasteful duplication of power facilities. It assures every power supplier protection which it needs to make its investments and provide reliable service.

The legislation will serve the people of our state only if these power suppliers are able to obtain capital on reasonable terms. If they can't do this-whether they are stock corporations or electric cooperatives or towns-the areas they serve will suffer. The investment they have already made will be endangered, and what appears to be wise public policy against duplication of facilities becomes a wall against progress.

I am most impressed with the thoroughness and unselfishness with which the nation's rural electric cooperatives, through their national association, undertook to solve their financing problems. I am acquainted with the Kuhn-Loeb Study, and the resulting recommendations of the National Rural Electric Cooperative Association which have been incorporated into HR 14000 and HR 14048. These bills recognize that many systems serving thinly-settled rural areas will need 2 per cent financing for some time to come. They also provide that as these systems become more capable of paying interest rates reflecting the cost of money to the government, they shall do so. The most attractive feature is that they provide for eventual ownership and control of their own bank by the cooperatives, much as the Production Credit Associations have gained control of their own capital after initial, adequate investment by the Federal government.

I believe that your favorable consideration of these bills would not hurt any power company, and would be of great benefit to the development of our rural areas which are highly dependent upon electric cooperatives for service.


Congressman HAROLD COOLEY,
Chairman, House Agricultural Committee,
Washington, D.C.

Higginsville, Mo., May 25, 1966.

DEAR CONGRESSMAN COOLEY: The West-Central Electric Cooperative, with Headquarters at Higginsville, Missouri, submits to you the following statement on HR 14000-Rural Electric Supplemental Financing Plan.

The West-Central Electric Cooperative, along with all of the Rural Electrics across our country, have for many years continued to build electric facilities to serve the unserved. Our task is by no means complete. We are constantly faced with the problem of heavying up our facilities to adequately handle the larger growing loads and replacing facilities, especially poles, which is a far greater job than ordinary maintenance.

The need for a continued supply of capital for building and improvement is essential in order for us to survive.

For years we have heard the cry of our utility competitors about 2% moneyunfair competition-government infiltration of the power business. The American people and our Congress have long ignored to a great extent these voices for they could see very plainly what the Rural Electrification program has accomplished.

HR 14000, the Supplemental Financing Plan, is a joint effort by the Congress of the United States and the electric cooperatives to reduce the demand on Congress for REA appropriations. It is a way of financing our program without taking away the 2% money in total for there are many systems that must borrow their capital needs at 2% or otherwise go under.

HR 14000 would allow the Rural Electrics to obtain an increasing proportion of their financing on the open market at going interest rates. The bill further is patterned after the Farm Credit System which has been so successful.

Studies have been made by experts in the field which indicate that nearly $9.5 billion will be needed by the Rural Electrics in the next 15 years. The Rural Electrics realize full well that the Congress could not continue to provide sums of this proportion in the years to come, which explains almost in total the need for HR 14000.

We join together with all of the Rural Electrics in requesting your most vital support for the Supplemental Financing Plan.

Yours very truly,



Mr. Chairman and Members of the Committee: My name is L. C. Carpenter, Vice President of the Midcontinent Farmers Association with headquarters at Columbia, Missouri. Although I have clarified this matter previously before your committee, I wish to again state that the Midcontinent Farmers Association includes all the members presently belonging to the Missouri Farmers Association as well as other members in surrounding states.

I am happy to be able to appear here today in support of the supplemental financing proposals for REA now pending before your committee. May I state further that it is my personal privilege to own two farms on which REA supplies the electrical current.

If you will pardon the personal reference, I feel compelled to think back to those days prior to REA when there was no electrical power on our farm (although the huge power company had a line not too far distant). There were no milking machines, although we operated a dairy, no electric lights, no power water systems-virtually none of the labor-saving devices for the farmer and certainly none for the housewife who without electrical current was destined to a life of drudgery and inconvenience.

The REA electric programs established by the Rural Electrification Act of 1936 is regarded by farmers as one of the greatest pieces of legislation ever passed by the Congress to bring improved standards of living to millions of rural people to lessen the burdens of toil and labor, to bring the farm out of the backwoods and to the forefront, to help to improve productivity, and increase income and to make rural living a source of enjoyment by enabling farmers to enjoy the many electrical benefits that their city cousins have enjoyed for many years in the past.

This was not an easy task to accomplish as it took ingenuity, cooperation, boldness and imagination on the part of farmers to form their own local cooperative groups and to join hands with the federal government in making this great program the success that it is today. REA today serves nearly 51⁄2 million rural customers. Many of them are located in sparsely populated areas and some even in extremely remote areas where few people would have even dreamed 25 years ago that they could be privileged to enjoy electric current.

The Congress in its wisdom realized by the very nature of the project to supply electrical power for the rural areas, the REA cooperatives must have federal aid and special treatment if they were to be successful. Today the Missouri electrical cooperatives average 3 customers per mile with a monthly revenue of $388.00 from these 3 customers. Whereas, private utilities enjoy the privilege of 35 customers per mile of line with an average monthly revenue of $8,396.00 per mile. In terms of numbers of users in strictly rural areas, by virtue of the disappearance of the smaller family farms, this problem of customers per mile of line has worsened. However, in terms of power utilization, the volume output is higher.

Some people who are not informed on these matters have wondered why REA loan demands are far in excess of the amount of moneys which have been appropriated over the past several years. If you will pardon another personal reference, my wife and I had the distinct pleasure of being one of the first cooperators to have REA service extended to our farm home. We lived in a 6-room house without a single modern convenience. When we wired this house the first time, we had six drop cords, one in each room with one electrical outlet

installed in the kitchen (with no electrical equipment to use in the outlet). The out buildings were not even wired, including the milking barn. As I recall the minimum monthly billing was in the vicinity of $3.50 per month. Although I still own that farm, but admittedly am not personally living on it today, all of the buildings are wired. The tenants who occupy this farm today enjoy running water, refrigeration, forced air heat, electric washers and dryers, radios and televisions, mechanical milkers, milk coolers and virtually all of the modern electrical equipment that the average farmer and his wife would use. Rather than the $3.50 minimum, the power utilization has increased until it is 15 to 20 times the billing that it was when electricity was first installed. This fact itself is indicative of the need for the building of heavier distribution lines and for the generation of additional power to meet the continuing expansion to meet the ever growing demand for electrical power.

I would like to also call to the attention of the committee since the Grundy Electric Cooperative was one of the first in the nation, much of the original equipment has already been or will soon need to be replaced, including the poles themselves which at that time were not treated and in many instances not now large enough to carry the increasing number of wires needed to provide service. The original loans to the member cooperatives were made on a 35-year selfliquidating basis bearing 2% interest. In addition to these considerations, technical assistance was provided the local cooperatives, including advice and guidance in the management and operation to help to build a firm economie base. Over this 30-year period farmer-owned and managed REA cooperatives have successfully provided power to farmers and in some instances where circumstances required have generated current to supply the ultimate user, but the time has come when additional financing is needed.

The 1967 budget proposal recommended only $220 million, a cut from last year of $145 million. The House of Representatives has restored this amount for this year to $365 million, and yet this amount is grossly inadequate to meet the growing demand.

Let me pause here to make one fact crystal clear: Midcontinent Farmers Association wants to go on record here and now in strongly recommending that a substantial amount of 2% interest money appropriated annually by the federal government must be continued if a large number of cooperative associations are to be able to continue their operations and serve their patrons. On the other hand, we must be practical. With our unsettled conditions in Vietnam and else where, a tremendous strain is being placed on the federal budget. The govern ment's cost of money over the past few years has increased at a fantastic rate. In light of these circumstances, we strongly recommend the adoption of the proposed Supplemental Financing Plan for REA Cooperatives by the establishment of a Federal Electric Bank patterned somewhat after the original Farm Credit Act which provided for the Farm Credit Banks. Through this device rural electric cooperative associations can:

(1) Make a start toward their own self-help program without total dependence upon the Federal Treasury.

(2) In so doing they will be able to exercise more independence and greater control over their own business.

(3) Rural electric distribution cooperatives, generation and transmission associations which are financially able to pay a higher interest rate and continue to render adequate service would be required to secure their financing through the Electric Bank. We obviously would favor the provisions of H.R. 14000 which establishes the bank rate at 3%.

(4) It is of utmost importance that this Electric Bank be adequately capitalized. Again, we favor the provisions of H.R. 14000 which provides for a federal investment of $1 billion over a 15-year period compared to the other bill which limits government participation to $750 million over the same period.

(5) We favor the provision of both bills which establishes an Electric Bank Board. However, we do believe that the provisions of H.R. 14000 probably is more practical wherein the major control of the Electric Bank would revert to the borrowing cooperatives when over 51% of the government's investment has been retired.

(6) There are tremendous technological changes taking place almost hourly in the generation, transmission and distribution of electric power. REA must keep abreast of these changes, and, to do so, additional capital will be required. It is reliably estimated that over the next 15 years just to modernize and to build up the distribution facilities will require between $8 and $10 billion. According

to my information, this is almost twice as much money as the federal government has loaned the REA over the past 30 years.

Although I was unable to be here yesterday, I am sure that members of the National Rural Electric Cooperative Association, Norman Clapp, the REA Administrator, and others who are technicians in this field have provided you with facts and figures pertaining to this needed legislation.

Mr. Chairman, I would like to conclude my testimony by saying to you and the members of your committee that with the advent of REA, farming became a new way of life. Drudgery for both the homemaker and the farmer was largely eliminated, but if we are to continue this invaluable service at a cost that farmers can afford to pay and a quality of service to meet their growing needs, it is imperative that we have legislation of this nature providing for a supplemental financing plan for REA's which will assure their future and enable them to serve farmers with electrical current as they have so well demonstrated their ability to do over the past 30 years.

The CHAIRMAN. We also have statements which have been submitted by Mr. Abernethy, Mr. Abbitt, Mr. Stubblefield and Mr. Morrison, on behalf of their constituents, which will be made a part of the record at this point.

(The prepared statement of the Electric Power Associations of Mississippi, the Virginia Association of Electric Cooperatives, the Tennessee Valley Public Power Association, and the Association of Louisiana Electric Cooperatives, Inc., follow :)


In 1935 when Congress authorized the creation of the Rural Electrification Administration 11 percent of the nation's rural areas had central station electric service. In Mississippi less than 1 percent enjoyed the benefits of such service. Today, current statistics show 98 percent of the nation, and 96 percent of Mississippi's rural areas possess electricity. The latter achievement has been made possible by Mississippi's twenty-six electric power associations . . . all of them distribution systems.

To bring electric power to 96 percent of the state's rural areas takes a sizeable investment in plant facilities, in people, and in faith in the cooperative abilities of the state's population located in rural areas.

In terms of capital needed . . . in 1955, the total plant investment in Mississippi's twenty-six EPAs was over $96 million. Nothwithstanding the technological and social changes of the past fifteen years, the demand for low-cost electric service has increased. In 1962, the plant investment amounted to almost $144 million. Just three years later, in 1965, plant investment for the twenty-six EPAS in Mississippi represented almost $161 million. And, the demand is continuing. In this current year of 1966, these twenty-six electric power associations will need an additional $10,640,000 in capital.

Plant investment has increased in these proportions because supply must answer demand. In 1955, the total kilowatt hours supplied consumer-members by the twenty-six electric power associations of Mississippi was 562,908,300. Last year, in 1965, the total kilowatt hours had more than tripled to 2,050,697,348 kilowatt hours.

An indication of the use of electricity on Mississippi farms is shown by two sets of figures. In 1945, 50,219 farms in our state had service. In 1950, the total was 140,446. By 1955, it had increased to 203,000, and ten years later, in 1965 last year, the number of consumer-members of electric power associations in Mississippi was 284,382. Even with the population transition, with hundreds of electric services idled, the demand was up, and so was the total number of consumer-members as Mississippi's EPAS approached the goal of service to everyone in their certificated areas.

In order to serve these 284,000 consumer-members, the EPAs have had to construct 58,776 miles of line. The electric power associations possess an average of 5.68 consumers per mile of line in Mississippi. This is contrasted with the commercial power companies operating in Mississippi who have an average of 28 customers per mile of line, having built only 11,806 miles of distribution line to serve 328,970 customers.

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In financing, to date, the electric power associations of Mississippi have borrowed a total of $138,911,227.85 from REA. Of this sum, $39,540,490.27 has been repaid. In addition, $21,235,721.24 in interest charges have been met.

In making low-cost, dependable electricity available to rural areas in Mississippi, the twenty-six electric power associations have acted in accordance with the Public Utilities Act passed by the Mississippi Legislature in 1956 and all the related statutes of the Congress of the United States. They have harmed no one. They have been most beneficial to the economy of the entire state.

The electric power associations of Mississippi, after ten years of trying to build a generation and transmission system still do not possess generating facilities. They must purchase, under very unfair wholesale contracts, the electricity they distribute. Thirteen electric power associations in Mississippi buy power from the two commercial power companies operating in the State of Mississippi, having paid them in excess of $5 million in 1964 and $6,270,313.03 in 1965 for electric power needed to distribute to their consumer-members. These thirteen electric power associations operating outside the TVA area of Mississippi are the best customers of Mississippi's two commercial power companies. And, the yard-stick influence of the TVA area of Northeast Mississippi has helped to hold down electric rates for every Mississippian.

Power Company officials, in their testimony, may lead you to believe that the electric power associations in Mississippi have been harmful to their own enterprise. I cite the following statistics to show this is not the case:

In their own Form One reports to the Federal Power Commission, the two commercial companies operating in Mississippi provided the following statistics: Mississippi Power Company's report indicates an operatng revenue in 1956 of approximately $16 million, net profits of $2 million, and $110 million paid as dividends on common stock.

By 1960, the report shows operating revenues had increased to $25 million, net profits to approximately $30 million, and dividends on common stock stood at $2 million.

The last available figures, for the year 1964, show Mississippi Power Company operating revenues of $331⁄2 million, net profits of $410 million, and dividends on common stock of $3310 million.

In other words, over a 9-year period, the average net profits to revenue for Mississippi Power Company has been 15.4 percent, and the dividends paid on common stock were 10.4 percent of operating revenue.

Mississippi Power & Light Company, for the same 9-year period, had the following operating revenues, net profits, and dividends on common stock:

In 1956, MP&L's operating revenue was $29 million, net profits were $410 million, and dividends on common stock $2310 million. By 1960, operating revenue had increased to more than $39 million, net profits to nearly $6 million, and dividends on common stock to slightly more than $31⁄2 million.

In 1964, MP&L indicated operating revenues of more than $50 million, net profits in excess of $7 million, and a payment of more than $4 million in dividends on common stock.

In other words, over this 9-year period, Mississippi Power & Light Company had an average of net profits to revenue of 14.94 percent and an average of 8.8 percent on dividends on common stock as a percentage of operating revenue. While I have no figures for these two companies since 1964, figures for the first ten months of 1965 show that commercial utilities nationally are enjoying the highest profits yet, with revenues up 5.6 percent over 1964, net profits up 8.8 percent, and dividend payments in the first eleven months up 7.4 percent over 1964.

These figures would indicate that as the electric power associations of Mississippi have endeavored to meet the growing demand for service within the areas in which they serve, the commercial power companies of Mississippi have continued to enjoy a very attractive return on their investment.

Having factually shown that we are not harmful to the two commercial power companies, that we are not only good for but also vital to the whole economy of Mississippi, let us now realistically look to our future-the future of the rural areas of Mississippi-and to the means by which by state and national law these areas will continue to receive service. The twenty-six electric power associations in Mississippi must look to the future demands for service. Based on sound growth indicators, we know that in the next five years, $57,677,983 will be needed by the electric power associations for added plant investment. Projections based

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