The Midwest Electric Membership Corporation, Grant, Nebraska. Mountain View Electric Association, Inc., Limon, Colorado. Niobrara Electric Association, Inc., Lusk, Wyoming. Northwest Rural Public Power District, Hay Springs, Nebraska. Panhandle Rural Electric Membership Association, Alliance, Nebraska. Roosevelt Public Power District, Mitchell, Nebraska. Rural Electric Company, Inc., Pine Bluffs, Wyoming. Sheridan Johnson Rural Electrification Association, Sheridan, Wyoming. Shoshone River Power, Inc., Cody, Wyoming. Union Rural Electric Association, Inc., Brighton, Colorado. Washakie Rural Electric Company, Worland, Wyoming. Wheatbelt Public Power District, Sidney, Nebraska. Wheatland Rural Electric Association, Inc., Wheatland, Wyoming. Wyrulec Company, Lingle, Wyoming. Y-W Electric Association, Inc., Akron, Colorado. Upper Missouri G &T Electric Cooperative, Sidney, Montana Burke Divide Electric Cooperative, Columbus, North Dakota. Lower Yellowstone Rural Electric Association, Sidney, Montana. McKenzie Electric Cooperative, Inc., Watford City, North Dakota. Sheridan County Electric Cooperative, Inc., Medicine Lake, Montana. Williams Electric Cooperative, Inc., Williston, North Dakota. Other Member G & T Cooperatives Central Iowa Power Cooperative, Cedar Rapids, Iowa. Corn Belt Power Cooperative, Humboldt, Iowa. Individual Distribution Cooperatives Cam-Wal Electric Cooperative, Inc., Selby, South Dakota. Cherry-Todd Electric Cooperative, Inc., Mission, South Dakota. FEM Electric Cooperative, Ipswich, South Dakota. Grand Electric Cooperative, Bison, South Dakota. KEM Electric Cooperative, Linton, North Dakota. Minnesota Valley Cooperative Light & Power Association, Montevideo, Moreau Grand Electric Cooperative, Timber Lake, South Dakota. Renville Sibley Cooperative Power Association, Danube, Minnesota. RESOLUTION PASSED AT THE BASIN ELECTRIC POWER COOPERATIVE FIFTH ANNUAL MEETING, NOVEMBER 1965 1. Financing proposals Studies made by the National Rural Electric Cooperative Association concerning supplemental financing for rural electric cooperatives have been given serious study by Missouri Basin rural electric cooperatives. A majority of the members of Basin Electric Power Cooperative have taken clear positions in regard to supplemental financing as did the rural electric cooperatives of NRECA Region VI and the statewide associations of North Dakota, South Dakota, Montana, Wyoming. The following is the position of the members of Basin Electric Power Cooperative: We believe that in this sparsely settled region there continues to be an essential need for 2 percent, 35 year loans from the Rural Electrification Administration in order to carry out the program of rural electrification. We ascribe to the position that the cooperatives ought to produce for their rural members the lowest cost power it is possible to generate and deliver. One-cent electricity for our member-owners should continue to be the goal of rural electric cooperatives. Any supplemental financing program which is proposed to Congress as a change to the present loan program must meet the following criteria: 1. Such supplemental financing must afford an opportunity to achieve truly low-cost power for rural electric members and result in the lowest possible retail rates. 2. Such supplemental financing must make it possible for the rural electric cooperatives and their members to share the economy which results from large scale generation and transmission and the modern technology of producing and transmitting such power. 3. Such supplemental financing must preserve the right of rural electrics to own and control their own generation and transmission cooperatives and provide adequate financing of these cooperatives. We are resolved that the recommendations presented in the NRECA Financing Study Report for intermediate financing and a bank for rural electric systems do not meet the above criteria or laid in the achievement of our common objectives. We are further resolved that additional studies be made of other methods of financing rural electric systems such as public power districts, tax exempt bonds, revolving fund at 2 percent, or methods of supplementary financing of debts as now available to other electric utilities. We are resolved also that the member systems of NRECA should have greater opportunity to participate in the continuation of the studies and the development of the conclusions from them. Until such time as these additional studies have been made and proposals and legislation drafted that meet all the above criteria, we are resolved to oppose any changes in the present REA loan program and urge our friends in Congress and the Administration to continue their wholehearted support of this great program in its present form, and to support an electric loan fund authorization of $675 million to meet both backlog and current needs of fiscal year 1967. STATEMENT OF POSITION OF BASIN ELECTRIC POWER COOPERATIVE, FEBRUARY 25, 1966 After serious consideration of proposals for future financing of rural electric cooperatives the Basin Electric Power Cooperative Board of Directors adopts the following position: At the National Rural Electric Cooperative Association annual meeting in Las Vegas, February 14-17, we were told by NRECA and Administration spokesmen that 75% of the nation's rural electric cooperatives require 2% REA loan funds. Further, we were told that both the NRECA and the Administration supported 2% loan funds for all generation and transmission cooperatives needing such financing. The Basin Electric Board of Directors is in agreement with these positions. At this crucial point in the REA program, twenty United States Senators have urged President Johnson to take the necessary steps 1. to restore the full amount of loan funds authorized by Congress for fiscal year 1966 2. to initiate a deficiency appropriation of $262 million in order to reduce the present backlog of loan applications 3. to approve an increase in the fiscal year of 1967 budget to a level that will meet the requirements of the program. We fully support these senators and will work to prevent jeopardizing the position they have taken. We comment these senators, as well as other senators and congressmen who have taken substantially the same position, for their efforts to provide rural electrification with the low cost financing it requires. We believe that these statements by NRECA, the Administration, and senators and congressmen demonstrates the need for continuation of 2% REA loan funds in substantial amounts and that any program of supplemental financing for REA borrowers must include sufficient 2% loan funds for all systems requiring such financing. We also believe that these REA loan funds should be used for the benefit of the rural consumers who own the electric cooperatives and not to benefit private power companies. We believe that REA financing would best be managed under a single interest rate which would apply to all REA loans. Because more than one interest rate has been suggested as the basis for a revised REA loan program, we believe that all REA borrowers must proceed with extreme caution in approaching any revisions to the present program so as not to lose the basic program by which rural electrification has been carried out successfully in the past. Should changes in the financing include dual interest rates for the REA loan program, we believe that legislation should carefully define the criteria that will determine a system's eligibility for one level of interest rate or another. We believe this must be done in order to assure a fair and workable program for all the rural electric cooperatives. Further, we believe that the criteria itself will help to determine the amounts of loan funds at various interest rates which would be available, and, therefore, is of central importance when changes in the REA Act are suggested. We will continue to work with our national Association to obtain and perpetuate the objectives described above. Mr. POAGE. Thank you very much, Mr. Jones. And now I want to recognize our colleague, Mr. Redlin. I come from the Dakotas, as you described them-North Dakota and South Dakota are often talked about as the Dakotas-so we have many common interests and concerns, as Congressman Reifel knows. And, incidentally, you gentlemen are some of the greatest customers of western North Dakota lignite coals that exist in the whole Nation, and we are happy that you chose our area to develop the basin generating plant. We in North Dakota, too, happen to be one of those areas that has a density of 1.3 per mile. An even more serious problem perhaps than exists on the average in South Dakota. In fact, my own farm in the northwest corner of the State is involved in a very similar situation. I share your concern that this legislation may cause some eroding of the zeal for protecting 2-percent money. I certainly share that concern completely. Now, I notice, too, however, that you do say in your joint testimony that suitable amendments ought to be adopted to protect the continuation of low cost 2-percent money. And I note, too, that you say you support the idea of supplemental financing, Mr. Jones, and your colleague. Now, would you be able to suggest an amendment to either of the bills, whichever one you might be most interested in, that might do that job, and you would be willing to work on that and submit it to the committee? Mr. JONES. Mr. Chairman, Congressman Redlin, I certainly agree that we will be willing to work with anyone, with the committee. I think your question was directly whether we would be willing to work with members of the committee. We certainly would be willing to lend what assistance we can. We think, perhaps by way of suggestion, that the bill, or whatever bill the committee may see fit to bring out, if they are coming out with a supplemental bill, acting upon it, it should specifically cover the fact and recognize the fact that there is a section of the present act providing for 2-percent interest, and that what may be enacted now will not have the effect upon us. May I say here-let me point out just one thing. I think in the minds of farmers, Congressman Redlin, there is a feeling that it is awfully difficult today to get past the budgetmaking people. And lending substance to this, perhaps, is the fact that the Administrator, Mr. Clapp, appeared before the committees of the Congress not long ago and testified for appropriations for the 1967 fiscal year. And Ĭ believe the testimony indicates a need, and estimated by his office, of $510 million. And yet the request was for only $220 million of 2percent money, and that with funds made available by a supplemental program would be sufficient to supply the needs. Well, this is an indication of what will occur, that the existence of the supplemental bank may indeed depress the requests for the 2-percent money, to the point where our cooperatives and I would like to speak for any and all cooperatives over the Nation-I am sure that there are those in every State that need 2 percent. Our study has indicated this, that there are co-ops in every State that are going to continue to need 2-percent money. I am concerned that we may be able to get through to the Congress the need for that 2 percent. I emphasize the fact that the Congress has been so gracious in the consent for the 2-percent program over the years. Mr. REDLIN. You would prefer, Mr. Jones, to see a strengthened program as it exists today with a more adequate budget-which you consider inadequate at this point? Mr. JONES. I think that would be ideal, sir. Mr. REDLIN. Would you prefer that? Mr. REDLIN. Thank you, Mr. Chairman. Mr. CALLAN. Just one quick question. If the budget for $365 million was actually passed, and the demand is already $500 million, estimated $600 million to $700 million, we are not in very good shape right now, are we? Mr. JONES. That is true. The indications are that more money yet is needed. I think the NREC's estimate and I just use that as reasonably accurate as we can get is something like $612 million. There is a need for this. Mr. CALLAN. The fact we need about twice as much money as we have now would indicate things couldn't get too much worse, could they, if you passed this bill? Mr. JONES. Well, except, sir, the possibility of it becoming of the supplemental bill becoming a substitute of financing with the dwindling amount of 2 percent. Mr. CALLAN. You think it might eventually phase out? That is what some people would like to have it do. You understand that. Mr. JONES. I certainly do understand that. And I would like to emphasize before this committee that it is our hope that this does not happen. We think that we are a long ways from being at the position where we can do without 2-percent funds in the midwestern river, the Missouri Basin, the Plain States, and I think in other places. Mr. CALLAN. I agree with you, because I come from Nebraska, and we have similar situations out there. Mr. POAGE. Mr. Olson? Mr. OLSON. Mr. Jones, much has been said in the hearings about the position of G. & T.'s. And the witness appearing previous to your testimony, Mr. Connley, said "We now have a condition where Basin Electric has a surplus along with the bureau, and are looking for customers." I think you ought to amplify on this. Does Basin Electric have a surplus of generating capacity? Did the Federal Government borrow you 2 percent to overbuild facilities? Mr. JONES. Mr. Chairman, and Mr. Olson, your question, I think, is specifically whether the Federal Government loaned us funds to overbuild facilities, and do we have a surplus? I need tell you this, I think, in answering this question, sir. We started late out in the Missouri Basin, and the REA cooperatives, we really didn't become feasible until the development of the Missouri River came along, and the dams that were going to be built, and were being built in connection with that facility. Almost from the beginning we became customers of the Bureau of Reclamation. Most of us who are members of the Basin Electric, for instance, some approximately 100 distribution co-ops, have not had a history or historically, I would say, the companies had never served it, they newer served these cooperatives. In the very beginning, yes, a bit. But very early we became customers of the Bureau of Reclamation. And as fast as those facilities were built on the river we bled off the power that was being developed on the river. We used it up, the customers of the Bureau of Reclamation. We came to a point in 1961 and 1962, and the Bureau of Reclamation in the Department of the Interior came to us as a group and said, "Look, the power is sold off the river, all the power that we are going to have in the foreseeable future. You need to do something to take care of the power which we can't supply you. We do not have utility responsibility to you." So we began to look around. We came to REA. And we built the Basin plant to supply our additional needs over and above what the hydro system could provide for us. The plant was built. And in some cases REA is loaning funds for plants that will be loaded over a 10-year period, Congressman Olson. In the case of Basin Electric, we will be completely loaded with our own members needs in just 3 years. This is considered no surplus. In the very first years, in these 1, 2, 3 years, there is a bit of power that can be sold to others. And in any sense of the word, as I see it, this is not an oversupply at all, it was just the nature of this power supply situation. Mr. OLSON. In other words, no one, no utility could afford to be any closer to available power? Mr. JONES. No one could afford to take the risks of being any closer than we were. As a matter of fact, they were most eager for us to get on the line. We were a couple of months late getting on the line. And they were pressing us daily to be on the line, because they were meeting our-I mean by "they" the Bureau of Reclamation-were meeting our member needs. But we came on soon enough to meet the situation. But it was most fortunate that we were able to build and supply this need as was done, sir. Mr. OLSON. Thank you. Mr. POAGE. I thank you very much, Mr. Jones. Was there anything further, Mr. Reifel? |