(a) Armington: At the point of delivery at approximately 7200 volts, single phase, with one leg solidly grounded. (b) Ashuelot: At the point of delivery at approximately 12,500 volts, three (3) phase, four (4) wire, star, with solidly grounded neutral. (c) Morony: At the point of delivery at approximately 12,500 volts, three (3) phase, four (4) wire, star, with solidly grounded neutral. (d) Pendroy: At the point of delivery at approximately 12,500 volts, three (3) phase, four (4) wire, star, with solidly grounded neutral. (e) Valier: In the NE of Section 32, Township 30 North, Range 5 West, M.P.M. at approximately 7200 volts, three (3) phase, four (4) wire, star connected. (f) Brady: In the NW4 NW4 of Section 11, Township 26 North, Range 1 East, M.P.M. at approximately 7.2/12.5 KV, three (3) phase, four (4) wire, star with solidly grounded neutral. (g) Augusta: At the Consumer's substation located in the NE1⁄4NW1⁄4 of Section 14, Township 21 North, Range 6 West, M.P.M. at 7.2/12.5 KV, three (3) phase, four (4), wire, star, with solidly grounded neutral. (h) West Conrad: At the point of delivery at approximately 69,000 volts, three (3) phase. The Company reserves the option of metering at primary voltage at the point of delivery or metering at secondary voltage at the Consumer's substations and increasing the KW and KWH low voltage meter readings for estimated transmission losses. 5. Meter testing and correction.-The Company will at its expense test its metering equipment mentioned in the Agreement at least once every two (2) years and if requested to do so by the Consumer will make additional tests or inspection of such metering equipment, the expense of which will be paid by the Consumer unless such additional tests or inspection show the meter tested to be inaccurate. The Company will give reasonable notice of the time when any such test or inspection is to be made to the Consumer who may have representatives present at such tests or inspection. If the average error in registration of any meter is found to be more than two per cent (2%) fast or slow under conditions of normal operations, an adjustment shall be made correcting all measurements made by such inaccurate meter during the period in which the meter was registering incorrectly, if such period is known, or, if not know, the period immediately preceding the test of such inaccurate meter which is equal to one-half the time from the date of the last preceding test of such meter; provided, however, that the period for which such adjustments are to be made shall not exceed six (6) months. Whenever any bill or bills have been adjusted or corrected as provided above, Company shall refund to Consumer any amount found to have been collected in excess of the proper amount, or Company may require Consumer to pay the additional amount due, as the case may be. 6. Rate schedule.-All electric power and energy supplied hereunder shall be delivered and paid for in accordance with Amended Rate Schedule REA-50, a copy of which is attached hereto and made a part hereof. 7. Payment of bills.-Meters shall be read by a representative of the Company regularly on or about the same date of each calendar month, and bills for service furnished hereunder shall be rendered by the Company to Consumer monthly. Payment for all electric power and energy which shall be delivered under the provisions of this Agreement shall be made at the office of the Company at Great Falls, Montana, on or before the tenth day after the bill therefor shall have been mailed to Consumer. If default shall be made at any time by Consumer in paying any money which shall become due the Company hereunder, and if such default shall continue for a period of ten (10) days, then the Company shall have the right to discontinue the delivery of electric power and energy hereunder until all money due to it under the terms hereof shall have been paid. Provided, however, that the Company shall in every instance give the Consumer at least ten (10) days' written notice of its intention so to do, before discontinuing the delivery of electric power and energy. 8. Continuity of service.-The Company shall use all reasonable diligence in providing a constant and uninterrupted supply of electric power and energy: provided, however, that the Company shall not be liable to Consumer or others for failure or interruption of service due to the acts of God, governmental regula tions, court or commission orders, acts of the public enemy, strikes or labor difficulties, accidents, droughts, floods, freezeups, weather conditions, failure of equipment, or, without limitation by the foregoing or any other cause beyond the reasonable control of the Company. It is understood between the parties hereto that the Company shall have the right to interrupt its supply of electric power and energy for a reasonable period of time for the purpose of making repairs, alterations or replacements to its facilities when it considers such repairs, alterations or replacements necessary. 9. Liability for damage. The electric power and energy supplied under this Agreement is supplied upon the express condition that after it passes the points of delivery specified in Section 1, hereof, it becomes the property of the Consumer, and the Company shall not in any event be liable for any injury, loss or damage to any person or property whatsoever resulting directly or indirectly from the use, misuse or presence of the said electric power and energy on Consumer's premises or elsewhere, after it passes the points of delivery to Consumer, except where such loss or damage shall be shown to have been caused solely by the negligence of the Company. 10. Term of agreement.—This Agreement shall be and remain in effect from the date of its approval, as hereinafter provided, for a term of five (5) years and shall continue in effect thereafter unless and until terminated by either party giving to the other party notice of termination in writing not less than five (5) years before the effective date of such termination. 11. Subject to laws and regulations.-This Agreement is made subject to all present and future applicable laws and rules, regulations and orders of any regulatory body having jurisdiction. 12. Notices. All notices given by the Company to Consumer under this Agreement shall be mailed in a registered envelope with sufficient postage thereon, address to Sun River Electric Cooperative, Inc., Fairfield, Montana; and all notices given by Consumer to Company shall be mailed in a registered envelope with sufficient postage thereon, addressed to The Montana Power Company, Great Falls, Montana. Notice shall be deemed given when deposited in a post office in Montana, in a properly stamped, addressed and registered envelope. 13. Assignment of agreement.-This Agreement shall be binding upon and inure to the benefit of the successors, legal representatives or assigns of the respective parties hereto, but no assignment by the Consumer shall be binding upon the Company unless accepted in writing by the latter, except that the Consumer may assign to the United States Government. 14. Approval.-This Agreement shall become effective when signed by the parties hereto and approved by the Administrator of the Rural Electrification Administration of the United States of America. 15. Supersedes existing Agreement.-The existing Agreement dated May 3, 1950, as amended, by and between the parties hereto shall be terminated and superceded by this Agreement on the effective date of this Agreement. In witness whereof, the parties hereto have caused this Agreement to be executed in triplicate by their respective officers thereunto authorized, the day and year first above written. (Exhibit No. 3 is a letter from George W. O'Connor, Montana Power Co. which is identical to an exhibit attached to the statement of J. E. Corette, Montana Power Co. See p. 420.) Mr. GEORGE W. O'CONNOR, EXHIBIT No. 4 Vice President, Montana Power Co.. Butte, Mont. SUN RIVER ELECTRIC COOPERATIVE, INC., DEAR GEORGE: This will acknowledge receipt of your letter of May 6, 1966. While we do not wish to belabor the issue at the moment we do think that it should be pointed out that the apparent intent of your policy statement in the May 6, 1966 letter is somewhat contradictory to the position stated in Bill Talbott's letter of December 31, 1960. We find this quite confusing. These are the only two written statements of policy that we have seen and, of course, our power contract is quite vague on this matter and, as we both know, is certainly subject to interpretation of intent. However, it does appear that there may be sufficient cause to warrant further discussion if this could be accomplished within the next week or so. We would appreciate your views on this suggestion and hope to hear from you Manager, Sun River Electric Cooperative, Inc., DEAR ROD: I am the first to admit that there may be some small amount of discrepancy in the letter which Bill Talbott wrote in December of 1960 and the one which I wrote in May of 1966. I would point out that there is a difference in time of nearly six and one-half years and, certainly, this Company might have real good reason over that period to modify its position in this particular. However, though the statement wasn't written to you, you were appraised of our position in December of 1964 when I met with you. Bill Talbott then wrote you a letter in January of 1965, when he proposed to furnish you with all of your energy needs, to include the new points of delivery which you requested and to guarantee the continued supply of power and energy to you on all loads, pending determination of any dispute over these loads. I have talked to Bill Talbott; he will be in touch with you. We believe there is an advantage to you to continue your discussions with us concerning a new contract. Sincerely, GEO. W. O'Connor. Mr. POAGE. Now, the Chair is going to proceed with a little change of pace, maybe, if we can have agreement. I understand that we have, since I asked about those who had to leave that we have received a phone call advising that Mr. Alfred Gruhl of the Wisconsin Electric Power Co. has pressing requirements to leave, and says he doesn't require more than 3 minutes, and we will hear him now for 3 minutes. And if it meets with the approval of the members here, we are going to hear these next witnesses without questioning them. And we are going to try to ask each witness to confine himself to 3 or 4 or 5 minutes. Everybody has permission already to insert their statement in the record. I don't know how else we can get through with this. I don't hear any objection. We will be glad to hear from you, Mr. Gruhl. STATEMENT OF ALFRED GRUHL, PRESIDENT, WISCONSIN Mr. GRUHL. Mr. Chairman, I want to thank you for putting me on. It was my understanding that both Wisconsin Electric Power Co. and Wisconsin Michigan Power Co., who is represented here by Mr. McLean, could substantially reduce their presentation, and we will try to do this in possibly 3 minutes apiece. Mr. POAGE. We will be delighted to have you proceed jointly. Mr. GRUHL. I would like to present a statement for the record. It is already being distributed. As I indicated, we have substantially reduced our comments, essentially to those which represent some new areas that have not been mentioned. Mr. POAGE. Proceed, Mr. Gruhl. Mr. GRUHL. Thank you. My name is Alfred Gruhl. I am president of the Wisconsin Electric Power Co. I am appearing here today on behalf of Wisconsin Electric Power Co. in opposition to REA supplemental financing bills H.R. 14837 and H.R. 14000. Wisconsin Electric is a Wisconsin corporation and operates an extensive electric utility in 15 counties in southeastern Wisconsin including the Metropolitan Milwaukee area. Its principal offices are located at 231 West Michigan Street, Milwaukee, Wis. Included is the area represented by your colleague, Representative Stalbaum. Wisconsin Electric serves a population of about 1,750,000 in some 96 incorporated cities and villages and in 126 unincorporated towns. Its operating territory contains over 4,000 square miles. The company has over 560,000 electric customers, approximately 4,000 employees, and some 48,000 stockholders of whom over half reside in the State of Wisconsin. Incidentally, there are no REA's in the Wisconsin electric service area. We oppose these bills on the ground that they are a poorly disguised vehicle for the dismembering and eventual takeover of most investor-owned electric utilities. The means by which this apparently is to be accomplished is first by continuing the availability of Government funds at less than cost, second, by increasing tremendously the funds available, and third, by surrendering most of the congressional controls and safeguards over the uses to which these funds can be put. Together with a continuation of the present substantial and unjustified tax discrimination the odds will be so stacked against most private utilities that they will find it hard to avoid being taken over. We oppose these bills on the ground that the purported need therefor is practically nonexistent in some areas. That the need for which REA was created no longer exists is evidenced by the preamble of bill H.R. 14837. There is no mention of the need to bring electricity to the rural areas. Instead this bill speaks only of capital needs. With 99 percent or 98 percent of farms now served just what can their needs be? A recent statement by Secretary of Agriculture Orville Freeman may provide a clue. Less than 3 weeks ago in an address to the Busi ness Council at Hot Springs, Va., on May 14 he announced a rural industrialization program. In his address he said in part, and I quote: Rural America has so much to offer business and industry. It has the tangibles: clean air, abundant pure water, relatively low land costs, building costs, utility costs, and service costs. If this description of today's rural area is correct there is absolutely no need for further subsidies. They have it made. If subsidized electricity is to be one of the lures which attracts industry from the metropolitan areas I am sure that the complacency with which the whole subsidy picture has been tolerated in the past will suddenly change. I would like to suggest that when we are talking about subsidizing expansion and development in some areas as opposed to others we are treading on dangerous ground, both socially and politically. I would like to take the members of this committee on a personally conducted tour of first the farms, homes, and factories in REA country near us, and then a trip through our metropolitan areas, including its core. They can then make up their minds as to which areas, if any, should be supported at the expense of the other. We also oppose these bills on the ground that they would constitute an unwarranted delegation of congressional responsibility. In my over 30 years of experience with utility financing I have never seen a financing program, even in outline form, that is as loosely devised and devoid of controls and restrictions as the type of financing contemplated by this bill. It in effect asks Congress to surrender controls to the Secretary of Agriculture and, in effect, sign a blank check. To summarize, this is definitely a Federal public power bill. Although disguised as a continuation of the original farm program, the long-range objective will be a substantial encroachment of or takeover of investor-owned electric systems. This program ironically will be financed and subsidized by the U.S. taxpayers, including our electric service customers who last year paid some $18 million in Federal income taxes through their electric service bills. We respectfully request this committee not to report out these bills. Thank you, Mr. Chairman. Mr. POAGE. Thank you very much. Mr. McLean, did you have a statement? How long are you going to talk? Mr. MCLEAN. I will try to keep it to 32 minutes, sir. Mr. POAGE. All right. We will time you. STATEMENT OF JOHN H. McLEAN, ASSISTANT VICE PRESIDENT, WISCONSIN MICHIGAN POWER CO. Mr. McLEAN. My name is John McLean, I am an assistant vice president of Wisconsin, Mich., Power Co. with offices in Appleton, Wis. I have worked for this company for 13 years. My present responsibilities include all aspects of sales, including sales of electricity throughout our extensive rural areas. Our company, a part of the Wisconsin Electric Power Co. system, provides electric service over an area of approximately 86,000 square miles in east-central and northern Wisconsin and in the Upper Penin |