Images de page
PDF
ePub

Mr. LEWIS. The school board at Helena gets about one-half million now, and they will get 1 million a year in round figures, when that second unit goes on the tax roll.

If I might, I would just like to make this point here. When the loan for the Bailey plant was approved-this is the Carl Bailey plant of 125,000 kilowatts at Augusta which went into operation in June of 1966, we had offered to the distribution cooperatives whom we were then serving-14 of them in the State-a rate of 6.02 mills per kilowatt-hour on the basis of a 20-year contract. We were then of the opinion, and we are still of the opinion, that the cooperatives cannot realize a rate lower than this through their generation and transmission co-operative. The only figures that we have are for the year 1965. They then had their plant at Ozark in operation. The distribution cooperative customers of the Arkansas Electric Cooperative Corp., the super generation and transmission cooperative, paid 6.34 mills per kilowatt-hour for the service that they received from that generation and transmission co-op in 1965. We are offering them 6.02 per kilowatt-hour. And two different distribution cooperatives, after making studies of all available sources of power supply, have signed 20-year power supply contracts with Arkansas Power & Light Co. Incidentally, both are located, all or in part, in your district, Mr. Gathings. The Mississippi County Electric Cooperative at Blytheville signed a 20-year contract with the Arkansas Power & Light and the Arkansas-Missouri Power Co. in 1966.

Mr. GATHINGS. What rate did they get?

Mr. LEWIS. 6.02 mills.

The other one is the Farmers Electric Cooperative, headquartered at Newport, and they signed a contract back in, I believe it was, 1964 for 20 years. Their manager has told me within the last 6 months that they have again looked at their power supply picture, and he is satisfied that they made the right decision in buying the power from us at 6.02 mills instead of going into the generation and transmission plan.

Mr. GATHINGS. Back to the questioning and the colloquy earlier when Mr. Purcell was asking some questions with regard to the rate in his particular area in Texas and, also, the comments made by the chairman and Mr. Price, would you have offered these cooperatives this particular rate of 6.02 per kilowatt-hour had it not been for the building of these two plants in Arkansas by the Arkansas Electric Cooperative?

Mr. LEWIS. Let me say this: Our rates to the rural electric cooperatives at that time provided for a maximum term of contract of 10 years. If they want to sign for a 5-year term of contract, guaranteeing the use of our facilities for only 5 years, the rate is 5 percent higher than the basic 10-year rate. For a 15-year term of contract, the rate is 5 percent lower than the 10-year rate, and for a 20-year term of contract, the rate is 10 percent lower.

At the time that loan was approved, we had in effect 10-year power supply contracts with, I believe, 13 of the 14-the big majority of the cooperatives that we served. What we did was to provide for longer terms of contract assuring us of a longer period of time to amortize our investment in the facilities, so that we did not change

the rates we simply made longer terms of contract of guaranteed supply available to the cooperatives, and we have done the same thing with the municipalities that we serve. We have seven municipalities with electric systems who buy their wholesale power supply from the Arkansas Power & Light Co. We have studied that and have made longer term contracts available to them.

We now have, I believe, three or four of these municipalities who have signed 20-year term contracts.

This is where the lower rates came in, by virtue of signing up for a longer period of service, giving that assurance of the use of our facilities.

Mr. GATHINGS. Thank you, that is all.

The CHAIRMAN. May I ask you, Mr. Lewis, this question: Just as a matter of information, did you make these contracts, these longer term contracts at cheaper rates, at about the time that the generation plants were built by the REA's?

Mr. LEWIS. Yes, sir, they were subsequent to the building of or the starting of the Fitzhugh plant and prior to the approval of the loan for the Bailey plant-that is when we first offered a 20-year term of contract; that is correct.

The CHAIRMAN. The fact is that whether it was coincidental or otherwise, it did occur, just after the first one of the generating plants was built, and no matter why they did it, it was done at that time. Now, let me ask you this question: Do you generate all of your power?

Mr. LEWIS. No, sir, we do not.

The CHAIRMAN. Who do you buy it from?

Mr. LEWIS. We have interconnections with utilities surrounding us. We are part of the Middle South Utilities System. There are four operating companies in the system. We, in effect, plan and install our generating capacity as a system, which means that we sometimes buy power from the other companies in the system.

We have arrangements with neighboring companies which permit us to buy economy energy from them; companies in Oklahoma, for instance. When they can generate in off-peak periods cheaper than we can generate, we buy from them.

The CHAIRMAN. Let me put it this way, then-maybe I will understand it: Do you have enough generating capacity to supply your normal needs?

Mr. LEWIS. Either through ownership, through contracts, or other normal utility arrangements, yes, sir, we do.

The CHAIRMAN. I want to get more specific than that.

Do you own and control enough generating plants to produce without buying from your neighbors?

Mr. LEWIS. No, sir, we do not at this time, and I would have to say that this would be, in our case, not a very wise way to operate our utility. Our customers have never lacked for an adequate power supply, and that includes the cooperatives as well as everybody else.

The CHAIRMAN. No, that is not what I was getting at. I am trying to get at what percentage of the power that you use do you produce? What percentage of it?

Mr. LEWIS. Are you talking about power or energy?

If you are talking about capacity, the capability—

The CHAIRMAN. I presume that energy is what I am talking about. How many kilowatt-hours do you produce in your own plants and how many do you buy?

Mr. LEWIS. I do not have that figure in total, but I can tell you that in a recent period in which we made a little check we had purchased from other sources than our generation about 30 percent of the kilowatt-hours that we used during that period of time.

The CHAIRMAN. That is what I am trying to get at.

Mr. LEWIS. In every case, we purchased energy because this was cheaper than we could have generated it in our own plants.

The CHAIRMAN. You used this 30 percent, you say, which you purchased, because it was cheaper. Do you mean that you had the ability to produce it and would have produced it in your own plant had you been able to produce it cheaper?

Mr. LEWIS. This is true in this particular period. It was a wintertime period, not a summer peak period.

The CHAIRMAN. What I am trying to get at is this: I just want to ask you a question, if it is not a trade secret. I am really trying to find out whether you had enough generating capacity to supply your customers, or whether you, normally, regularly, with malice aforethought had to buy a substantial amount of your power. You tell me that you purchased 30 percent of it.

Mr. LEWIS. That is of the energy.

The CHAIRMAN. You did it because it was cheaper to buy it. That is a logical reason. I find no fault with anybody buying as cheap power as he can.

What I am trying to find out is what your total installed generating capacity is.

Mr. LEWIS. It is in the order of 1,200,000 kilowatts at the present time.

The CHAIRMAN. And what is your normal load?

Mr. LEWIS. Our load last year was about 1,600,000.

The CHAIRMAN. That would mean that you are buying 400,000 that you could not produce, would it not?

Mr. LEWIS. Well, I do not like the way that that is put, sir.

The CHAIRMAN. How do you want me to put it? I will put it that

way.

Mr. LEWIS. It is not a question of whether we could build the generation. There is no reason that we could not build it.

The CHAIRMAN. I did not ask whether you could build it.

Mr. LEWIS. No, sir, we have not. Let me tell you one other thing about that.

We are a part of a group that has an interchange arrangement with the Tennessee Valley Authority. That is called the South Central Electric Co. Group. There are 11 companies involved. We have peak loads in the summertime in the area of these 11 companies, running all the way from down in Louisiana, the Louisiana coast, up into Kansas, southern Missouri, Oklahoma, Arkansas, and into Mississippi. The Tennessee Valley Authority has a wintertime load. Our engineers studied this and found that there was a tremendous gap between their total capacity and what they needed in the summertime

in the Tennessee Valley Authority. The exact reverse is true in the area of these 11 companies. We have our maximum requirements in the summer; we have idle capacity in the wintertime. So we entered into an agreement, which was approved by the Federal Power Commission, under which, in the summer, when we need it, the Tennessee Valley Authority pumps power into our area. It is a barter deal. We return it to them in the wintertime, and this accounts for part of this difference between load and capacity that I mentioned before.

We have built transmission facilities to move this power; 500,000volt lines.

We have 345 miles of them in Arkansas, and about 1,150 in the whole system, and this is just as good as building generating plants sitting right there, and that is why I said to Mr. Gathings, that you cannot say right now that you have to have a 500,000-kilowatt plant sitting in northeast Arkansas sometime in the future. You may find a better way to do this through transmission from another source. The CHAIRMAN. That remark intrigues me, because you just built a 500,000-kilowatt plant in Helena.

Mr. LEWIS. Yes, sir, we are doing that.

The CHAIRMAN. You must have decided that there was a need for 500,000 kilowatts at Helena.

Mr. LEWIS. No, sir, it was needed on the system, not at Helena. The CHAIRMAN. You felt that Helena was the best place to put it? Mr. LEWIS. Fuel supply was the determining factor.

The CHAIRMAN. So that you did decide at least, you thought strongly enough of it to put up the money for that.

Mr. LEWIS. It is about $42 million.

The CHAIRMAN. You knew how much your needs were going to be and where the need was-you came to that conclusion.

Mr. LEWIS. At that time, yes, sir, we were close at hand-we made the decision. You have a 4-year planning period from the time that you make the decision until you can get a plant in operation.

The CHAIRMAN. But you did make that decision.

Now, you say that nobody can make a similar decision in northeast Arkansas.

Mr. LEWIS. No, sir; what I said is that I do not think that anybody right now can say that in the future, some date, you will have to have a 500,000-kilowatt plant in northeast Arkansas.

The CHAIRMAN. You said that in the future you would have to have a 500,000-kilowatt plant-did you not make that decision?

Mr. LEWIS. We made that decision based on a lot of different things; yes, sir.

The CHAIRMAN. I recognize it had to be based upon a lot of things, but it is possible to make those decisions, is it not?

Mr. LEWIS. It is possible to make the kind of a study that you need to make that decision, yes, sir.

The CHAIRMAN. And other people could make the same kind of study, could they not, and make the same kind of decision?

Mr. LEWIS. If they are competent; yes, sir.

The CHAIRMAN. Of course, I am not going to question anybody's competency. That is all right for you to do but you feel that the co-ops should not be trusted to make such important decisions. That is all. Thank you.

Mr. GATHINGS. Now, the 500,000-kilowatt facility at Helena will give you more than that-that is to say, you would have more power generated by yourselves, that you would not have to go out and get 30 percent from elsewhere, would you?

Mr. LEWIS. No, sir. That is correct. We will generate more power when we get that unit on-line, because it will be more efficient than any unit we now have on our system. We have a gas supply contract which provides us with a lower cost of fuel for that unit than for any of our existing plants. The combination of these factors will, of course, cause us to generate a larger part of our energy in that unit than we have been up to now.

Mr. GATHINGS. The 500,000-kilowatt future requirements in northeast Arkansas, can you tell us more about that?

Mr. LEWIS. Mr. Gathings, all I can say that I have seen nothing in the way of any kind of an engineering study or system planning that would support that statement.

Mr. GATHINGS. You are building a 500,000-kilowatt plant at Helena, but you are connected to a grid system in which there are 10 other power companies involved; is that right?

Mr. LEWIS. Well, it will go into the system of the Arkansas Power & Light Co. We are interconnected with many other power companies; yes.

Mr. GATHINGS. But you are looking at the overall area, from Oklahoma across the Mississippi and as far down as Louisiana.

Mr. LEWIS. Actually, the installation of the capacity on our system in Arkansas is the result of the decisions made by the operating committee of the middle South system which is composed of representatives of the Arkansas Power & Light Co., the Louisiana Power & Light Co., the Mississippi Power & Light Co., and the New Orleans Public Service. They studied our particular middle South system. The took into account what we have contracts to buy on a firm basis, what our projections of loads are, where the present generation is located on the system, what are our present and planned transmission capabilities for moving this power from one area to another, and then they decided how much we needed to build, and where it ought to go.

Mr. GATHINGS. Thank you. That is all.

The CHAIRMAN. Are there any further questions of Mr. Lewis?
We will ask the panel to come back tomorrow.

Mr. JONES of North Carolina. I would like to ask one question.
The CHAIRMAN. Yes, proceed.

Mr. JONES of North Carolina. Before you adjust your rates to your private consumers, you have to go before some ratemaking body in your State?

Mr. LEWIS. The Arkansas Public Service Commission has jurisdiction.

Mr. JONES of North Carolina. Then, I assume further that you have to show cause to justify a rate increase on your cost per kilowatt-hour; is that right?

Mr. LEWIS. Well, no, sir. I think you have several kinds of costs involved. You have cost per kilowatt, so far as the capacity factor is involved; you also have cost per kilowatt-hour on the energy rate.

« PrécédentContinuer »