Class A stock has been retired. However, since there is no requirement of retirement of the Class A stock, this section is unimportant.

Section 413 provides that the authority provided in Title IV (concerning the bank) shall be cumulative, not to limit authority provided elsewhere in the act. Thus, the Administrator-Governor can continue also to make 2% loans.

Titles V and VI concern the telephone loan account and the telephone bank. It need only be noted that the telephone bank would involve less Federal subscription ($300 million vs. $750 million) and the loan authority would be more restricted. Section 610(b) (4) provides that in States where there is no agency or regulatory body legally authorized to issue certificates of convenience and necessity to an applicant, no loan shall be made unless the Governor of the telephone bank shall determine (and set forth his reasons therefor in writing) that "no duplication of lines, facilities, or systems providing reasonably adequate service will result therefrom."

Section 3 of the bill would repeal subsection 3 (f) of the RE Act, which requires that repayment of section 4 and 5 loans shall go into the Treasury as miscellaneous receipts.

Section 4 of the bill would establish the electric and telephone bank as subject to certain provisions of the Government Corporation Control Act of 1945. Section 5 of the bill would provide that the Act shall take effect July 1, 1966. REA loans-By purpose, 1935-65

STATEMENT OF R. K. HANSON, MANAGER, SUN RIVER ELECTRIC COOPERATIVE, FAIRFIELD, MONTANA

In testimony presented to the House Committee on Agriculture in opposition to H.R. 14000, and H.R. 14837 by Mr. J. E. Corette, President of the Montana Power Company, there is a statement on pages 3 and 4 pertaining to the "Company's Position Regarding Rural Electric Cooperatives" in which Mr. Corette alleges that REA Administrator Clapp had erroneously reported to the House Appropriations Subcommittee "that The Montana Power Company has demonstrated a policy of denying additional power to the cooperatives for loads the Company felt it should serve". He also alluded that Montana Power's policy is one of offering long-term power contracts which would guarantee to provide all of the power needs of the electric cooperatives.

To support this statement he attached, as Exhibit No. 1, a copy of a letter sent to all of the rural electric co-operatives in the Company's service area, which supposedly restated their policy. This letter, written on May 6, 1966 is not only in contradiction to the only other written statement of policy which we have received from the Montana Power Company but also in contradiction with the terms and conditions of their existing and proposed wholesale power contracts with the rural electrics.

We are attaching hereto the following:

Exhibit No. 1, Montana Power Company letter of Dec. 31, 1960

Exhibit No. 2, Montana Power Company proposed power contract

Exhibit No. 3, Montana Power Company letter of May 6, 1966 (also contained in Mr. Corette's statement)

Exhibit No. 4, Sun River Electric Cooperative reply to May 6, 1966 letter dated May 12, 1966

Exhibit No. 5, Montana Power Company reply to Sun River Electric letter dated May 13, 1966

As a result of the May 1966 correspondence a meeting was held on May 18, 1966 at which Vice President W. W. Talbott and Division Manager, H. K. Dickinson of the Montana Power Company and Manager R. K. Hanson of the Sun River Electric Cooperative were present. Mr. Talbott agreed to clarify the Company's position on the guarantee of power needs and other questions raised by the Cooperative pertaining to rates and terminology and inform them as to such position by no later than June 6, 1966.

To date no such information has been forthcoming. We are of the opinion that the Montana Power Company's May 6, 1966 letter was written with the specific intention of creating an instrument for submission to the House Committee on Agriculture and not as a bona fide intent of future policy. As of this date we certainly have not seen any evidence from the Company to indicate otherwise. Their proposed power contracts definitely do not include any language which spells out such assurance and the past experience of the rural electric cooperatives most certainly do not indicate such assurance.

EXHIBIT No. 1

Mr. R. K. HANSON,

Manager, Sun River Electric Cooperative, Inc.,
Fairfield, Mont.

THE MONTANA POWER CO.. Butte, Mont., December 31, 1960.

DEAR ROD: Pursuant to our discussion in Butte Friday afternoon, I wish to inform you of The Montana Power Company's position in connection with electric service for the proposed Minuteman Missile sites and to specify for your information the sites that are involved.

Throughout the years, we have taken the firm position that we would not wholesale power to any customer for the purpose of enabling that customer to enter into competition with us for service to a customer or load which we are ready and willing to serve. We have invoked this policy from time to time over a period of many years.

This policy has been applied in the past in connection with our wholesale service to REA cooperatives and is involved at the present time in the question of wholesale supply to the Sun River Electric Cooperative to serve certain Minuteman Missile sites.

It is our position that our wholesale rate to REA Cooperatives was developed and is being offered to assist the Cooperatives in carrying out the purpose for which the Montana REA Act was adopted, which is the furnishing of electric energy to persons in rural areas in which electrical current and service is not otherwise available.

Certain of the missile sites are clearly in REA territory and in areas where we do not have service available. We are prepared to supply wholesale power to the Sun River Electric Cooperative to enable it to serve such missile sites. However, we must advise you that we will not supply wholesale power to enable you to serve missile sites which we are ready and willing to serve.

We realize this creates a controversial situation but one which we do not feel can be avoided in the light of our basic policy.

The missile sites you have been awarded which we consider to be in areas where we have facilities and which we are ready and willing to serve are:

If you desire to give consideration to any of these sites and feel that there is any basis for further negotiation, we will be glad to discuss the matter further with you at any time.

1965, by and between the Montana Power Company, a corporation having its principal office and place of business at 40 East Broadway, Butte, Montana (hereinafter called the Company), and Sun River Electric Cooperative, Inc., a rural electric cooperative, organized and existing under and by virtue of the laws of the State of Montana, with post office address at Fairfield, Montana (hereinafter called the Consumer).

In consideration of the mutual promises and the terms and conditions hereinafter set forth, the parties hereto agree as follows:

1. Sale and purchase of electric power and energy.-The Company agrees to sell and deliver to Consumer, and Consumer agrees to purchase and receive from Company, in accordance with the terms and conditions hereinafter set forth, all of the electric power and energy which Consumer may require during the term of this agreement.

It is understood and agreed that on or before December 1, each year during the term hereof, the parties hereto shall by mutual agreement estimate the maximum number of kilowatts the Company shall be required to deliver at each of the specified points of delivery during the next three (3) calendar years in order that adequate provision can be made for load growth. The estimated maximum amount of power the Company will be required to deliver to the Consumer at each point of delivery up to December 31, 1968, is set forth in Exhibit A-1 attached hereto.

The present points of delivery and service specifications are as follows:

(a) Armington: Electric power and energy in the form of alternating current, single phase, sixty (60) cycles, at a nominal voltage of 50,000 volts at the present point of connection of Consumer's line to the Company's 50 KV transmission line at Station No. 388 in the SW14 SW4 of Section 6, Township 18 North, Range 7 East, M.P.M., Cascade County, Montana (which point is approximately 12 miles east of Armington).

(b) Ashuelot: Electric power and energy in the form of alternating current, three (3) phase, sixty (60) cycles, at a nominal voltage of 69,000 volts at the present point of connection of Consumer's line to the Company's 69 KV transmission line in the SW4SW4 of Section 11, Township 21 North, Range 2 West. M.P.M., Cascade County, Montana.

(c) Morony: Electric power and energy in the form of alternating current, three (3) phase, three (3) wire, sixty (60) cycles, at a nominal voltage of 13,800 volts at the point where the Consumer's facilities connect to the Company's 13.8 KV main bus at the Morony hydroelectric power plant located in Section 14, Township 21 North, Range 5 East, M.P.M., Cascade County, Montana. It is understood and agreed that Consumer has installed and owns certain high interrupting capacity protective fuses, disconnecting switches and associated equipment to disconnect Consumer's system from Company's Morony bus in case of faults or short circuits. Such equipment shall be retained in place and will be operated by the Company as at present.

(d) Pendroy: Electric power and energy in the form of alternating current, three (3) phase, sixty (60) cycles, at the nominal voltage of 69,000 volts at the present point of connection of Consumer's line to the Company's 69 KV transmission line at or near the southeast corner of Section 26, Township 27 North, Range 4 West, M.P.M., Teton County, Montana. It is understood that approximately 700 KW of load will be transferred from this point of delivery to the West Conrad point of delivery when it is installed in the summer of 1966.

(e) Valier: Electric power and energy in the form of alternating current, three (3) phase, four (4) wire, star, sixty (60) cycles, at approximately 14,400/ 24,000 volts at the point of connection of Consumer's substation to the Company's 24 KV transmission line in the SW4 of Section 34, Township 30 North, Range 5 West, M.P.M., Pondera County, Montana. It is understood that this point of delivery will be discontinued in the summer of 1966 and the load transferred to the West Conrad point of delivery.

(f) Brady: Electric power and energy in the form of alternating current, three (3) phase, sixty (60) cycles, at a nominal voltage of 69,000 volts at the point of connection of Consumer's line to the Company's 69 KV transmission line at Stanton No. 820 located in the SESE of Section 13, Township 26 North, Range 2 West, Pondera County, Montana.

(g) Augusta: Electric power and energy in the form of alternating current, three (3) phase, sixty (60) cycles, at a nominal voltage of 69,000 volts at the point of connection of the Company's 69 KV transmission line approximately one and one-half (1-2) miles north of Fairfield, Teton County, Montana. The Consumer will construct a 69 KV transmission line from said point of delivery to its substation to be constructed in the NE NW4 of Section 14, Township 21 North, Range 6 West, M.P.M., Teton County, Montana.

(h) West Conrad: Electric power and energy in the form of alternating current, three (3) phase, sixty (60) cycles, at the nominal voltage of 69,000 volts at the point of connection of Consumer's line to the Company's 69 KV transmission line approximately at the east section line of Section 5, Township 27 North, Range 3 West, M.P.M., Pondera County, Montana. It is understood that this point of delivery will be installed and placed in operation in the summer of 1966 at a date to be mutually agreed upon.

The Company will use due diligence to maintain, under normal conditions and in accordance with generally accepted operating practices, the voltage at the point of delivery within a range of seven percent (7%) above and seven percent (7%) below a voltage as mutually agreed upon the Consumer and the Company in order to take full advantage of the flexibility of the taps in the consumer's transformers and the characteristics of the Company's transmission system. In view of the fact that a hazard would exist if the Cooperative should connect one of its distribution units to another of its distribution units served by a different substation and thereby possibly energize by virtue of a feed-back a de-energized section of the Company's transmission line, the Cooperative agrees as a safety measure that it will not interconnect its distribution units served from separate substations without first receiving permission from the Company. 2. Changed or additional points of delivery.-If either of the parties to this Agreement desires to receive or deliver electric power and energy at a point or points of delivery other than those specified herein, it shall give reasonable notice to the other party of the desired change or addition, and the same shall be thereupon subject to the mutual agreement of both parties.

3. Substations. The cost of furnishing, installing, operating and maintaining the substations, transformers and all equipment pertaining thereto necessary to receive the electric power and energy delivered hereunder at the above specified points of delivery shall be borne by the Consumer. The Consumer shall install circuit breakers or fuses of sufficient interrupting capacity to clear any faults or short circuits occurring on the Consumer's side of any of the above specified points of delivery.

4. Metering. The cost of furnishing, installing, testing and maintaining the metering equipment to measure the electric power and energy delivered to Consumer at the above points of delivery shall be borne by the Company. The Consumer shall provide a location suitable to the Company for the Company's metering equipment, which shall be accessible to the Company at all reasonable times.

The electric power and energy delivered hereunder shall be metered on the secondary side of Consumer's transformers at its substation for each of the respective points of delivery, as follows: