There is an indication there that there is a footnote. The footnote says: Does not include Rural Electrification Administration expenditures which, as of June 30, 1954, totaled over $2,900 million. By implication, that certainly causes one to believe that the Federal Government has provided or would provide funds for the Rural Electrification Administration for water resources. So far as we know, the REA has never been interested in any development of water resources. Mr. LIPSCOMB. Well, they did not include you in the water resources report? Mr. NICHOLSON. I say "by implication." Mr. LIPSCOMB. Well, that is what you read into it, but they left you out. Mr. NICHOLSON. Of course, we are being left out, but by implication we are left in. I mean that is the type of thing I had reference to all through the report innuendoes, implications, that bring us into the Federal power picture and one of the things we resent, if I may submit that as one of our problems, is the misinterpretation of our position in the picture. We consider ourselves private enterprise; we consider ourselves in relation to the Rural Electrification Administration as borrowers and they as lenders. The relationship is banker to lender, and the propaganda that is carried on and definitely made of national scope in this Hoover report is the same type of propaganda that we have been hearing for years and which implies that we are a part of it. Now, in our conferences with the power companies, they have told us many times that, "We do not feel that you fellows are necessarily a part of this private-power program. We think you are the best customers we have," but by implication, they include us right in there and when the mud begins to fly, we get spattered, too. Mr. LIPSCOMB. But you are just testifying here about this report, because you believe you are reading something in the report. Mr. NICHOLSON. I believe the report is designed to do pretty much that. Mr. LIPSCOMB. But you have no comment to make on the specific recommendations made by the report? Mr. NICHOLSON. I have specific comments to make on the recommendations, especially about the preference clause. The recommendations there, as the distinguished chairman of the subcommittee has pointed out, would be probably the most damaging thing that could happen to our cooperatives, contained in this report. Mr. LIPSCOMB. That is good enough. Then, that is the way I should think you would want to testify, as to what you believe with respect to what is in the Hoover Commission report. We did not quite complete the record, but you left some indication that you wanted to comment on some of the Hoover Commission members, Herbert Brownell, James A. Farley, Arthur Flemming, Styles Bridges, John L. McClellan-I mean any of those people you want to make any comments on? Mr. NICHOLSON. We have no personal comments to make. Mr. LIPSCOMB. Storey, Brown, Chet Holifield, Joseph Kennedy, Mitchell, Hollister. Mr. NICHOLSON. We feel that all those people are perhaps very capable in their particular line of work. We raise only the question that in the rural-electrification program, we have almost a thousand cooperatives. Mr. JONES. Would the gentleman yield? Mr. LIPSCOMB. Yes, sir. Mr. JONES. Would you like to include in that group, Mr. Lipscomb, the members of the task force? Mr. LIPSCOMB. The task force did not vote. Mr. JONES. The task force made the report to the full committee and was appointed by the Chairman, Mr. Hoover. Mr. LIPSCOMB. The task force made a study the same as a clerk in our office would make a study on a particular issue, and the Hoover Commission did not embrace the recommendations of the task force. Mr. JONES. If we are to conclude that the task force report is of no concern to us and that the recommendation made by the task force become no part of the basis which the Hoover Commission itself acted upon, I am quite sure we would not have had a dissenting opinion. Now, for the record, I want shown-and I hope the staff will prepare them-public utterances made by the members of the task force on the question of power-to become part of the record. (Note: The requested material will be found in the appendix to this volume.) Mr. NICHOLSON. To further clarify our thinking on it, we feel that the rural electrification program, so far as the cooperatives are concerned, is rather a large segment of our population, now comprising certain people who have developed certain talent along this line. We have over 10,000 directors, all of whom are farmers and businessmen, who are interested and familiar with our program. We raise the question as to why in the formation and the composition of the original task force or the Hoover Commission itself, that some of these people might not have been selected and allowed to present their views and perhaps opposition to the apparent predetermined views of the committee. Mr. LIPSCOMB. But you have no comment on the members of the Hoover Commission? Mr. NICHOLSON. No. Mr. LIPSCOMB. Your quarrel is specifically with the lending agencies report and not the water-resources report, basically, except for the preference clause that you have mentioned yourself? Mr. NICHOLSON. I think our quarrel is specifically with the preference clause in this particular report; yes, sir. Mr. JONES. Any further questions? Mr. LIPSCOMB. No, sir. Mr. JONES. Thank you very much, sir. STATEMENT OF JOSEPH E. NICHOLSON, PRESIDENT, PENNSYLVANIA RURAL My name is Joseph E. Nicholson. I am manager of the Jefferson Electric Cooperative, Brookville, Pa., and president of the Pennsylvania Rural Electric Association. I am also president of the Brookville Lions Club and a member of the board of directors of the Brookville Chamber of Commerce and a member of the executive committee of the Brookville Chapter of the American Red Cross. As president of the Pennsylvania Rural Electric Association, I wish to express to this subcommittee my appreciation for this opportunity to appear in opposition to some of the recommendations made in the report to the Congress by the Commission on Organization of the Executive Branch of the Government on Water Resources and Power. Members of our association have read this report with alarm and consternation. We feel that this report is biased, unilateral, and designed to present the personal predilections of task force members who are dedicated to the destruction of Federal efforts to control, conserve, and protect the water resources of this country. The Pennsylvania Rural Electric Association was organized in 1939 by the 13 rural electric cooperatives in Pennsylvania. To provide adequate service to our ever-expanding membership we have borrowed, as of June 1955, a total of $35,342,200 from the Rural Electrification Administration. We have already repaid $10,339,803.53 and of this amount $1,083,282.89 was paid in advance of the date due. We have paid $4,015,456.40 in interest and $5,241,064.24 was applied to principal. With these funds we have constructed or will construct 17,275 miles of line to provide central station service to 71,520 members. In 1954 we purchased a total of 218,238,209 kilowatt-hours of electric energy from wholesale suppliers at a cost of 9.4 mills per kilowatt-hour. The primary purpose of our association is to provide a measure of protection for our members against the constant maneuvers of the private power companies who use every means at their command to discount our importance, question our right to exist, and plan our ultimate demise. The attitude of the commercial power companies and their efforts to discourage rural electrification in Pennsylvania has always been very confusing to our members. In 1936 when the first rural electric cooperative was organized in Pennsylvania a power-company official made the following remarks to a group attending a rural electrification training course at the Pennsylvania State University: "While the number of electrified farms in Pennsylvania represents less than 25 percent of the total number of census-listed farms of the State, a more accurate picture of progress can be shown by considering only the farms in sections of the State where land can be tilled at a subsistence level; excluding farms in forest areas and bleak sections of some of our counties. On this basis, therefore, of the farms where electric service is, or will be, economically possible under any sort of a plan for line construction, it is estimated that more than 50 percent of the rural population in Pennsylvania already have electric service." This attitude of reluctance to accept a responsibility for complete rural electrification is also reflected in their activities to discourage the development of hydroelectric facilities in Pennsylvania by the Federal Government. The advertising and propaganda campaigns conducted by the private utilities against Federal power projects has affected our rural electric co-ops by implication and innuendo. By association the rural electric cooperatives are identified as a part of the Federal power programs and accused of all the many horrible activities attributed by the Power Trust to this great program. This is particularly confusing to our members who consider our cooperative a part of the private enterprise system so jealously guarded by those who would destroy this program. The language used in the advertising and propaganda is in many cases the same as that used in the Hoover Commission Report on Water Resources and Power. For this reason we conclude that the subject report is unilateral and has been used to provide a method of taking sides in a political controversy. We feel that our position in this matter is confusing as a result of these purely political activities and that the task force in attempting to destroy the national water and power programs has strengthened the position of the commercial companies in their campaign to curtail the expansion of rural electric cooperatives. In spite of the fact that Pennsylvania rural electric cooperatives are located almost on top of some of the largest coal deposits in the world our wholesale rate for power exceeds the national average. It has long been our contention that multipurpose hydroelectric dams would establish a "yardstick" in this matter of rates and we cannot understand why the possibilities have not been seriously explored. Aside from the apparent need for flood control and water conservation there is a great need for hydroelectric development to sustain our economic progress. The power potential of the rivers in Pennsylvania is presently wasted as indicated by the following data from the Federal Power Commission report as of May 1950 compiled in accordance with section 4-A of the Federal Power Act: With only a little more than 17 percent of our power potential developed and with undeveloped rivers in Ohio, New York, and West Virginia our members wonder why this tremendous source of energy and potential power is being ignored. We have been told many times that the reason hydroelectric development in Pennsylvania is discouraged is a fear that the consumption of coal would be reduced and thereby damage the revenue of the railroads and basic industries. Operation of the coal mines in Pennsylvania is important to our economy and full employment for coal miners is most desirable. Our association is most interested in this problem because we number many coal miners among our members. It is our opinion, however that the consumption of coal and the resulting improved employment would better be served by the construction of multipurpose hydroelectric dams. We base this opinion on the fact that hydroelectric power is used largely for peaking purposes and steam generation is required for firm power along with the hydroelectric developed power. It is also a matter of record that where low-cost power is available the consumption of power increases enormously. This increases the consumption of coal and improves the standard of living enjoyed by both the users of power and the coal miners. An outstanding example of this can be found in the experience of the TVA in the development of the Tennessee Valley. We conclude that a better reason for the discouragement of hydroelectric development in Pennsylvania and the Northeast is to provide protection for one of the highest rates in the country. There is another very real reason why the commercial power companies are most active in preventing the development of Federal hydroelectric power and that is the so-called preference provision in the present law that is so viciously attacked in the Hoover Commission Report on Water Resources and Power. There have been arguments before about giving the rural electric cooperatives preference in the marketing of Federal power. One of these arguments is that there are so few of these systems, why bother with them at all. They are small and unimportant. But how small and unimportant are we when one considers that we offer the only possible form of competition to the large private utilities-a competition that would become really effective should we be able to secure one source of low-cost power and thus obtain our independence. Competition, so far as the rural electric cooperatives are concerned is not competition for their customers. We do not want to take their customers, but we would like to provide the competitive effect of even a little lower cost powerlower cost to the consumer. With lower cost wholesale power the rural electric cooperatives could pass on the benefits to their consumers in lower retail rates. This would have a healthy effect on rates in the whole area. If our systems are so small and so insignificant, why is our preference in the marketing of Federal power attacked? In our opinion it is because the large private companies fear our competitive influence. The recommendations of the Hoover Commission Report on Water Resources and Power would insure the elimination of this little competitive influence and provide protection for the utilities against any form of competition, from us or anyone else. The large utilities would continue to control the wholesale power supply and rate so that the retail rates of the rural electric cooperatives could not provide competition for them. It is our conclusion that a major contributing factor in the fight against Federal development of hydroelectric power in Pennsylvania is the preference provision enjoyed by the rural electric cooperatives. We most certainly cannot accept the argument that the interests of the coal industry is being protected because we have heard no objection to the expenditure of millions of dollars of Federal funds to construct atomic generation facilities within the State, and also no objections are being raised so far as we know, to the construction of big “inch” pipelines into the State to transmit huge quantities of natural gas from Texas. We submit that this is unfair and inconsistent and certainly contributes to the general confusion. Our members are further confused by the recommendations of the task-force members who early in their report express grave concern for the expanding Federal development of water resources that they consider undesirable. Their report recommends that this function be subordinated to State, local, and private decision. We submit that there is ample evidence that such a plan is extremely difficult in application and we suspect that members of the task force are aware of this fact. As an example, we refer to the INCODEL plan that is described in a report of the Interstate Commission on the Delaware River Basin, entitled "Report on the Utilization of the Waters of the Delaware River Basin." This plan contemplated the erection of a storage reservoir on the west branch of the Delaware River at Cannonsville, N. Y.; a diversion dam on the main river near Barryville, N. Y.; a storage reservoir in New York on the lower Neversink River at Basher Kill, extending from Godeffroy to Phillipsport, N. Y.; a transmission tunnel from the upper part of the Godeffroy Reservoir to New York's existing main supply tunnels in Brooklyn. The estimated costs for this project were set at $564,154,800 to be financed by the issuance of revenue bonds. In June 1951 a committee was appointed by the Governor of Pennsylvania to examine the INCODEL plan to determine whether Pennsylvania, under its terms would be in a more favorable position that that occupied under that decree of the Supreme Court of the United States relating to the use of the waters of the Delaware River by the States of New York, New Jersey, and Pennsylvania. The Governor's committee found very little that was favorable, so far as the State of Pennsylvania was concerned, in the plan and did not recommend its adoption. However, enabling legislation was passed by Delaware, New York, and New Jersey to authorize the four States to enter into the INCODEL plan. We do not raise the question of relative merits of the INCODEL plan as opposed to other similar plans but we do submit that such plans have failed largely because of the difficulty of establishing an area of agreement between States or sections of differing interests. In the committee's report to the Governor of Pennsylvania relative to their findings concerning the proposed INCODEL plan the usual effort was made to discourage the possibility of any hydroelectric development of any importance. Reporting on power, the committee observed: "There is a market for power in and near the Delaware River Basin. The amount of hydroelectric power that may be generated in connection with the dams and reservoirs comprised in the INCODEL plan, however, is very small compared to the demand. Hydroelectric power is essentially a secondary matter in the Delaware River Basin. "In our opinion, care should be taken that no power dams are built in the Delaware River Basin which would adversely affect other uses of the river, of which water supply is most important." The failure of the INCODEL plan prevented the development of the Delaware River and our members wonder why such a resource along with the other great resources in Pennsylvania should continue to be neglected. Mr. JONES. Our next witness is Mr. Wenner. Mr. NICHOLSON. Mr. William Wenner. Mr. JONES. Mr. William Wenner, manager of the Northwestern Rural Electric Cooperative, at Cambridge Springs. Have a seat, Mr. Wenner. |