capacity which might exist from time to time in Central's and Northwest's 161 kilovolt transmission facilities, and the transmission facilities made available by SPA. Central's plan contemplated that the individual cooperatives would continue to own and operate their respective facilities involved in the plan, with the new agency limited to purchasing and marketing functions. This plan also contemplated that individual arrangements would be made by the cooperatives and companies with respect to use of the cooperatives' 69 kilovolt transmission facilities.

Following several meetings during October and November, in connection with Central's possible alternative plan, the cooperative decided to defer any action thereon until every effort had been made to determine whether individual arrangements could be made with the companies upon the basis of the original plan.

During December, the Empire District Electric Co. and Missouri Public Service Co. submitted an outline of a proposed contract to KAMO, including a rate schedule. At about the same time Kansas City Power & Light submitted to Western Farmers a draft of contract, together with a rate schedule and reference to exhibits to be worked out through negotiation.

Copies of the Empire Missouri Public Service outline of a proposed contract and the Oklahoma companies' draft of contract were made available to REA; and REA representatives met with representatives of KAMO and Western in Oklahoma City during the week of January 10 for discussions of these proposals. Detailed evaluation of these proposals are now being made by KAMO and Western, respectively. Further meetings were scheduled for the week of January 24, 1955, including a meeting with representatives of the Oklahoma companies. Northwest is proceeding with a detailed evaluation of the Kansas City Power & Light proposal; and Central and Sho-Me are proceeding with revised analyses of financial and cost data previously submitted by the companies, in the light of new conditions resulting from changes in the hydro situation.

3. Conclusions

Efforts are still continuing toward developing a long-range solution in the area which will not be dependent on a continued use of SPA's continuing fund. The problems presented in concluding final arrangements in a situation involving many diverse and complicated facets have been increased by the hydro developments outlined above with respect to obtaining adequate amounts of hydroelectric power and energy at satisfactory rates. In addition, although detailed evaluations of the companies' proposals are still to be completed, it appears that serious problems remain as to rates and compensation, as well as protective features sought by the companies with respect to certain types of loads. In the light of facts presently available, it does not appear that a long-range solution can be found within the period anticipated at the time the 1955 Interior Department appropriation was made by the Congress.

Chairman HAYDEN. There are three Senators here representing these cooperatives, and I will call first on the senior Senator from Oklahoma.

STATEMENT OF HON. ROBERT S. KERR, A UNITED STATES SENATOR FROM THE STATE OF OKLAHOMA

CONTINUATION OF INTERIM CONTRACTS

Senator KERR. Thank you, Mr. Chairman, and members of the committee.

As you have said, the 2 Senators from Missouri joined my colleague and me in transmitting to the chairman of this committee on January 7, 1955, a letter setting forth 7 reasons why we felt that it was necessary for the Appropriations Committee to make available $780,000 as a supplemental to an appropriation of $1,140,000 for the purpose of continuing in effect interim contracts covering the purchase and wheeling of electrical energy between the Southwestern Power Admin

istration and certain generating and transmitting cooperatives in Oklahoma and Missouri.

In that letter, Mr. Chairman, we set forth facts that are well known to you and this committee pertaining to the cutoff date of March 1, 1955, as it related to this item in the regular appropriations bill for the Department of Interior for the fiscal year ending June 30, 1955.

We are advised that the House committee considered this item and heard testimony from the Department of Interior and the managers of the G. and T.'s affected, and have recommended $400,000 instead of the total amount of $780.000 requested.

We are advised by the managers of the G. and T.'s of Missouri and Oklahoma, who are affected by this appropriation, that due to the fact that before the appropriation can be made available to them, thus shortening the period of 3 months, that they will make an effort to cooperate with the Congress in getting along on the $400,000 item contained in the House recommendations.

I am also happy to report that since writing to you in January, the water situation in the reservoirs operated by the Southwestern Power Administration has greatly improved and there is every indication that it will continue to do so.

AMOUNT REQUESTED

Therefore, if the Senate committee will make available in your bill the $400,000 as did the House, it would appear that the G. and T.'s can weather the storm until the matter can be fully reviewed and placed in the regular appropriation for the fiscal year beginning July 1, 1955. We, therefore, urge that the Senate follow the recommendation of the House in this matter.

This statement is for myself and my colleague, Senator Monroney, who is here, and I would like for him to say a word, if he cares to, Mr. Chairman.

Chairman HAYDEN. Senator Monroney?

STATEMENT OF HON. A. S. MIKE MONRONEY, A UNITED STATES SENATOR FROM THE STATE OF OKLAHOMA

NECESSITY FOR FUNDS

Senator MONRONEY. Thank you, Mr. Chairman and members of the committee. I am glad to join my colleague in this request for this $400,000, which is absolutely necessary if we are to maintain an adequate sale from our REA G. and T.'s to Southwest Power. The reason for this overrun of the funds is largely because of the drought. As my colleague said, that is somewhat being corrected.

When we wrote the letter, it seemed absolutely obligatory that we appropriate $755,000 to last until July 1, but we have had some rains, and the water situation has somewhat improved. By a tight squeeze, I believe Southwest Power can get along on the $100,000 worth of power bought from these G. and T.'s. If this is not allowed, it will mean that many of the REA's, who are purchasers of this power through Southwestern Power Administration, will have to either cut down on their power deliveries to the farmers on their lines, or will

have to buy emergency power supplies from the private utilities at rates that are not included in normal contracts.

Progress is not being made fast enough on these negotiations for contracts for sale of power to the private utilities, and I do not believe that that is because of the lack of effort on the part of the REA G. and T.'s, who appear to me to be trying faithfully to carry out the mandate of Congress.

Chairman HAYDEN. Senator Symington?

STATEMENT OF HON. STUART SYMINGTON, A UNITED STATES SENATOR FROM THE STATE OF MISSOURI

NECESSITY FOR FUNDS

Senator SYMINGTON. Mr. Chairman and members of the committee, I appreciate this opportunity to appear before this committee in support of a request for funds to be appropriated to Southwestern Power Administration to enable that agency to enter into interim contracts to purchase power during the last 4 months of this fiscal year from 3 generation and transmission cooperatives.

Senator Hennings joins me in this statement.

The three cooperatives involved are Central Electric Power Cooperative, Jefferson City, Mo.; Northwest Electric Power Cooperative, Cameron, Mo.; and Western Farmers Electric Cooperative, Anadarko, Okla.

These cooperatives have been depending upon appropriations of the Congress to enable Southwestern Power Administration to enter into short-term, interim contracts to purchase power from them.

Last year the Congress provided funds for the first 8 months of this fiscal year. These funds expired as of February 28.

No funds will be available to the SPA to continue interim contracts with these cooperatives until this request has been acted upon.

During the past 3 years, the SPA area has experienced a severe drought which has materially reduced the availability of power from the Government's hydroelectric projects.

Although there has been some rain in the area this past winter, it has not been in sufficient quantity to fill the storage reservoirs at the hydroelectric projects.

It is important that the Government conserve the water stored in the reservoirs at this time in order to be in a position to aid and assist the power supply of the area during the summer months when demand for electric power is at its greatest.

One of the ways to safeguard this supply of power is to pass this appropriation request so that current needs for power can be obtained out of the steam generating plants of the cooperatives rather than using water at the hydroplants.

We have been informed by representatives of the cooperatives that because a portion of the 4-month period of this fiscal year has already elapsed and still more time will be required to enact this legislation, the need for funds will not be quite as great as if funds had been available for the entire 4-month period. It is now believed that the $400,000 recommended by the House Appropriations Committee will be adequate for the remaining period of this fiscal year.

IMPORTANCE OF REQUEST

It is of utmost importance to the financial welfare of these cooperatives that this request be granted and funds made available as soon as possible. Every day that passes without this appropriation costs these cooperatives several thousand dollars in loss of revenue in power sales to the Government.

The power purchased from these generation and transmission cooperatives will in turn be sold to other rural electric cooperatives, municipalities, and private utilities so that this appropriation will cost the Government little or nothing.

Thank you, Mr. Chairman.

JUSTIFICATION FOR REQUEST

Chairman HAYDEN. The first witness from the Department will be Secretary Aandahl.

Do you have a statement, sir?

Secretary AANDAHL. No, Mr. Chairman, I do not have a prepared statement. I merely want to observe that the $400,000 that was approved by the House will be sufficient for reasonably satisfactory contracts for the interim period.

When I make that statement, I do want to call to your attention and these interim contracts go beyond what we have immediate need to purchase, and also our wheeling charges that we pay under the interim contracts are somewhat larger than we would normally pay. But this is done for the purpose of being helpful to the cooperatives during the period that permanent replacement contracts are being worked out.

Chairman HAYDEN. Could you tell the committee why the Department did not seek a supplemental estimate to continue in force the interim contracts?

Secretary AANDAHL. At the time that we submitted our original budget request, it was expected that the replacement contracts would be completed prior to March 1. If we do not have a supplemental appropriation, we can continue to supply the cooperatives with the power they need under the ordinary marketing arrangements in the SPA area.

However, we would not be able to supply them with a source of income that would assist them in their financially distressed condition. From a business point of view, for SPA, we cannot justify a request for a supplemental appropriation.

From the standpoint of giving aid to the cooperatives during this period of financial distress, such an appropriation can be justified.

PROGRESS IN CONTRACT NEGOTIATION

Chairman HAYDEN. What progress is being made in negotiating the necessary contracts to rid Congress of the necessity for making this. kind of appropriation?

Secretary AANDAHL. The primary problem in those contracts is the integration contract that needs to be worked out between the cooperatives and the utility in the area. A great deal of time has been devoted to the negotiation of a contract of that type. Interior has had only a very secondary part in the negotiation of those contracts. REA itself

has been working very closely with the cooperatives, trying to get a satisfactory integration contract between the cooperatives and the utilities.

Now, at the time that such a contract is completed, it will have to be predicated on a hydro contract between the cooperative and SPA. We have made good progress in the negotiation of a contract for the sale of hydro to the cooperative.

On February 18, we ended a 3-day conference in my office, which was then the last of probably half a dozen or more conferences that we have had during the past 2 years, and at that time we had a contract in the advanced stages of negotiation that seemed to be reasonably satisfactory to all parties concerned.

I might say that Mr. Martz of Northwestern and Mr. Porter of Kansas City Power & Light were in my office on Friday and Saturday of last week, and we spent just a little more time on some final considerations for this contract.

Chairman HAYDEN. Is it your belief that these negotiations can be completed and the contracts signed between now and the 30th of June if everybody goes at it with a will to get the results?

Secretary AANDAHL. I think that the really knotty problems that we have been working with have been resolved to the degree that it is possible to resolve them. There will be some circumstances that will not be fully satisfactory in these contracts, but I think they have been resolved about as far as they can be, and I do not see any reason why those contracts cannot be signed before the 30th of June.

Chairman HAYDEN. The motive that inspired the committee report that was made last year and placed a limit of February for this money was that if they had a whole year to do the job in they would take the year. On the other hand, if Congress limited the money to February, they would get the job done by that time.

Now we are faced with the same situation. We appropriate $400,000 in the hope that this work can be done and suitable contracts entered into between your organization and the REA's and the private power companies.

PAYMENTS UNDER INTERIM CONTRACTS

Secretary AANDAHL. We must be aware of the fact that in this interim period, and probably for some time after the replacement contracts are completed, there will be a time when the facilities that have been constructed by the G. and T.'s in the area will not be fully loaded. And until such time as those transmission lines are fully loaded so that there is a revenue received from their use, there is going to be a bill to be paid that will be difficult to handle. And under the interim contracts, we are taking SPA money to pay that bill.

I do not hesitate to say that it is to the advantage of those who will later pick up that bill to have it carried as long as possible by SPA. And that does not encourage too prompt action on these contracts.

ANTICIPATED SOLUTION OF PROBLEM

Chairman HAYDEN. It has been my hope for a long, long time that there could be a complete understanding between the private power companies and the cooperatives in that area.

Obviously, it is to the advantage of everybody to do it. The hydropower that is generated there fluctuates. The power companies