Senator WILEY. Can you spend it all?

Mr. ELLIS. Yes, sir.

(The statements referred to above submitted on behalf of Robert Kabat, J. Riley Fulmer, Jr., William C. Henner, Maxwell D. Rhodes, Van Wormer, Robert N. Donovan, Gordon Margeson, Donald L. Smith, and Maurice S. Whitlock, follow :)

STATEMENT OF CLYDE T. ELLIS, EXECUTIVE MANAGER, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION

Mr. Chairman and gentlemen of the committee, my name is Clyde T. Ellis. I am executive manager of the National Rural Electric Cooperative Association, which is the service organization of the rural electric systems of the United States. Nine hundred and nine farmers' electric cooperatives and rural power districts are members of their service organization, with a consumer membership of approximately 3,150,000 farm families in 42 States and Alaska.

STRUGGLE IN ST. LAWRENCE AREA

The rural electrification program since its inception has had to overcome formidable obstacles in the St. Lawrence area. For the purpose of this discussion, we have defined the St. Lawrence area as including New England, New York, New Jersey, and Pennsylvania, because our people believe that development of St. Lawrence hydroelectric potential can appreciably increase wholesale power supplies available to them, and reduce wholesale power costs in most of this

area.

There are 28 rural electric cooperatives in the St. Lawrence area. According to returns from the annual survey conducted by this association, these 28 systems were serving about 75,000 farms and rural establishments on January 1, but they state that, within their system areas, there are still some 25,000 potential consumers whom they desire to serve. In other words, they have achieved only about 75 percent area coverage. REA estimates that, nationally, approximately 85 percent of the farms and rural establishments were served on January 1. I hasten to point out that most of the St. Lawrence area as a whole is and has always been above the national average in percent of farms electrified, but the areas served by our rural electrical systems are below the national average31.2 percent of our systems in the St. Lawrence area report they do not have adequate power in sight for future load growth. This is higher than the national average-31.2 percent of these systems also report restrictions on the use of power they do buy, and this is above the national average.

REA statistics indicate our systems in this area paid an average wholesale power cost of 12.1 mills per kilowat-hour last year, and this 12.1 mills compares with an approximate 8.3-mill national average. This national average of 8.3 mills is a drop of 3 mills from the 1950 figure. At the same time, the rates in the St. Lawrence area as far as we have been able to determine, did not decrease one iota except for the State of New York. In many other sections of our country, the individual household consumer pays, at retail, no more than the rural electric systems in the St. Lawrence area have to pay wholesale. This makes the cost very high by the time the co-ops get it delivered out over their relatively thinly settled territory.

AN ABEA OF NO RESERVE

The whole St. Lawrence area has been, and is, confronted with a critical shortage of electric power. During World War II, a WPB survey showed that the greatest power deficit in the United States existed in New York State and the second greatest in New England. For this reason, an informal embargo was placed on industrial expansion in the area. The situation has constantly worsened since then. FPC figures indicate that there is now only an 8.2 percent gross margin of electric power capacity in this region compared to 15 percent which is usually considered as the minimum magin for safety and which was available at the start of the last war.

I would like to emphasize that this 8.2 percent gross margin currently indicated for the area is in no sense an 8.2-percent reserve. This is true for two reasons. First, the term "gross margin" simply means the difference between ⚫ generating capacity of the area and the peak load. It does not take into

consideration the necessity for performing periodic routine maintenance on generating units, nor does it anticipate the possibility of emergency breakdown of key generation or transmission facilities within an integrated area. With these facts in mind, and with an even lower gross margin of 7.3 percent predicted in the St. Lawrence area for the coming winter of 1952-53, there seems little doubt that there will be no reserve capacity available to meet load growth in the area for quite some time. Indeed, in the event that some unforeseen emergency should disable or destroy a single large generating station in the area, the present loads could probably not be carried.

The second reason that this 8.2 percent gross reserve is not indicative of a power reserve in the area is that no electric utility system ever connects more load than it feels reasonably able to supply. This means that even in computing a figure for gross margin, no factor is included to account for large unconnected potential industrial loads that wish service, but which cannot locate substantial blocks of available power anywhere in the area.

FARM PRODUCTION GOALS HIGHEST EVER

In the face of this sort of power situation, the farmers in the St. Lawrence area, along with all the farmers of the Nation, are attempting to achieve agricultural production goals 6 percent higher than the 1951 near-record level, and a full 50 percent higher than the 1935-39 average.

In attempting to reach these levels and maintain them for the substantial period of years during which it now appears we shall have to maintain a constant state of preparedness, the American farmer is contending with a constantly dwindling labor supply. Farm hands drained to the Armed Forces and those leaving to take jobs in industry not only reduce the farm labor force, but increase the nonfood producing population.

The only way to break this ever-tightening circle, is through the intensified application of additional mechanization and electrification; in the fields, in the barns, and in the farm house. Kilowatt-hours must be substituted for manhours if food and fiber production goals are to be met. The Federal Government realizes that electricity is the key to increased farm production, and this association and its members have been asked by the United States Department of Agriculture to take part in a national program to promote increased power use in agricultural production. We are happy to take part in such a program, but are not sure where all the additional power is to come from.

I believe you can see from these facts and figures that our power situation is very difficult in the St. Lawrence area. There is always the constant danger that our systems may run completely out of power or power at prices they can afford, for they have to depend on sources that are generally unfriendly— indeed some of the very sources that in the past tried to kill many of them off. The St. Lawrence project could provide the United States with 6.3 billion kilowatt-hours of energy each year from half of the installed capacity of 1,881,000 kilowatts. This means that the St. Lawrence project powerhouse would operate at an unusually high use factor for a hydro station. The high use factor would be due to the unusually constant flow of the St. Lawrence which is 115 times more constant than the Tennessee and 35 times more so than the Columbia. The net result would be high energy output per dollar of investment. Stated slightly differently, it means abundant low-cost electric energy.

The 940,500 kilowatts of capacity scheduled for allocation to the United States from the project is approximately 35 percent of the 2.7 million kilowatts of additional capacity which it is estimated will be required in the New York-New England area by 1960. Competent transmission engineers have estimated that this power could be transmitted a distance of 300 miles for 1 mill per kilowatthour based on a 100 percent load factor. We believe the St. Lawrence energy will help both the supply and the cost to us even in Pennsylvania and New Jersey.

It is our opinion that if the cooperatives in the St. Lawrence area could obtain a share of this low-cost energy, they would achieve area coverage and still operate in the black. With present rates, some of them are now in the red; and they probably could never serve the sparsely settled areas.

MUST HAVE POWER AT OUR LOAD CENTERS

Perhaps I should say a word about getting our power delivered to the load centers. All electric distribution systems are necessarily designed with load centers into which the power must be fed. Our generation and transmission co-ops and the Federal Government make a practice of selling their power delivered to our distribution co-op load centers. Private companies deliver it to our load centers in some cases, but in a large percent of the cases the private companies require us to build our own lines from our load centers to selected points on their transmission system in order to pick up the power.

We are paying the Federal Government an average of 5 mills per kilowatt-hour for wholesale power in other sections of the country, delivered at our load centers. We are paying the private companies in the St. Lawrence area 12.1 mills, much of it not delivered to our load centers.

MARKETING PROVISIONS OF THIS BILL

I must emphasize that our people do not like the provision for marketing the power to the State of New York and the New England States. But they had much rather have it with that provision in than not to have it at all.

The bill now under consideration would at least provide them with a possible alternative source of wholesale power. This they do not have today, because there is no Federal hydroelectric power in the area, and because the rural electrics are too isolated to generate their own power economically.

The rural electric co-ops of the area would like to see something like section 5 of the Flood Control Act of 1944 written in, both as to the proviso for self-liqui dating transmission lines where necessary and as to the power being sold first to public bodies and cooperatives, then to others. Experience shows that the latter provision in practice does not provide an actual preference, but is desirable, if not necessary, in order for the rural electrics to be able to purchase any of the power with the attendant low costs.

At the present time, under provisions of section 5 of the Flood Control Act of 1944, including the much-talked-of "preference clause," commercial utility companies are purchasing three times as much of the power generated at Federal multipurpose reservoir projects as are the rural electric systems. The rural electrics do not want to monopolize the benefits from these projects. merely want to be allowed their rightful share.

OTHER REASONS OUR PEOPLE FAVOR ST. LAWRENCE

They

The St. Lawrence area is the largest area in the country that has had no Federal power development. Farmers in the New England area are particularly becoming concerned about their market. When the textile and other mills close down, milk sales decrease; the whole economy is affected.

Our people in this area, like all people throughout the country, are also interested in the fact that, should war come again, the St. Lawrence developinent would supply power and navigation requirements that might not be obtainable from any other source. The farmers are interested in the fact that, by 1960, 40 million tons of iron ore may have to be imported each year to maintain annual steel production at 130 million tons, which has been set as our goal to meet defense needs. This means low-cost transportation facilities must be available to deliver ore to blast furnaces and converters in the Great Lakes region.

Our people also know that great amounts of energy will be required for the expanding aluminum, magnesium, titanium, and other electrometallurgical and electrochemical industries. TVA, together with Bonneville, Grand Coulee, and Hoover Dams, gave us the extra power for World War II expansion. The St. Lawrence can provide a big portion of the power needed to carry out our present preparedness program.

Therefore, in consideration of the facts I have outlined, and on behalf of the rural electric systems in the St. Lawrence area and in the whole country, I urge this committee to help us get the St. Lawrence seaway and power project under construction as early as possible.

Mr. Chairman, in closing, may I request that this statement and the attached short resolutions of our people endorsing the St. Lawrence be made a part of the record.

RESOLUTIONS ADOPTED UNANIMOUSLY AT NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION NINTH ANNUAL MEETNG, CLEVELAND, OHIO, FEBRUARY 1, 1951

ST. LAWRENCE SEAWAY

Whereas the necessity for full farm and industrial production is essential to national defense; and

Whereas over 2,000,000 horsepower of electric energy is available to Canada and the United States by development of the St. Lawrence waterway: Now, therefore, be it

Resolved, That National Rural Electric Cooperative Association urge Congress to immediately implement the development of this power potential in line with the statement of Federal power policy of this association.

GENERATION, TRANSMISSION, AND INTEGRATION

Whereas the 1950 annual meeting of the members of National Rural Electric Cooperative Association unanimously passed the following resolution.

"Whereas the United States, in its numerous great rivers and river basins, is possessed of the assets and resources that will, upon maximum development, retain, enrich our soil, provide navigation in many instances, and retard disastrous floods, provide unlimited recreation for the people of the country and insure adequate electrical power supply to meet the long-range demand of all individuals and industries alike, resulting in such a combination of facilities for progress that America can achieve its highest potential standard of progress and prosperity; and

"Whereas it is to the personal interest of all of the more than 12 million farm people now served by rural power cooperatives that the development of all of these phases of the river and river basin resources be expedited with emphasis on the pressing need of the power cooperatives for additional dependable, low-cost power sources, without which the rural power cooperatives cannot attain their maximum service; and

"Whereas it is recognized that much work has been done and progress made in planning the development of this resource by the Department of the Interior, Corps of Engineers, and other assisting agencies in this Government, and progress has been made toward the consummation of some of this planning, which clearly shows the wisdom of the undertaking by the achievements already attained; and

"Whereas the projects under plan and which should be planned are so numerous that no attempt should be made to enumerate them here, yet each and all are of the greatest importance to the area of their location and taken in the aggregate of the highest national interest: Now, therefore, be it

"Resolved, That we urge the development of all of the country's potential hydroelectric power as rapidly as practicable; and be it further

Resolved, That the Congress of the United States is petitioned to provide funds and loan authorizations for river basin and water power developments and for the generation of electricity in connection therewith; and be it further

Resolved, That the Congress of the United States is petitioned to provide funds and loan authorizations for the construction of transmission lines to distribute the electric power so generated to cooperatives and muncipal consumers, at their load centers, and to integrate various generation projects; and be it further

Resolved, That the Congress of the United States is petitioned to provide funds and loan authorizations for the construction of steam and Diesel generating capacity where necessary to firm up hydro generation and to improve the efficiency of such generation; and be it further

Resolved, That the Congress of the United States is petitioned to continue the established power policy of the United States, thus providing for development of potential hydro power and the sale and delivery to load centers of the consumer of this power wholesale, over self-liquidating transmission lines-first to public bodies and cooperatives and then to private companies in that orderand, to the accomplishment of this end, it should provide adequate appropriations for construction and administration"; and

Whereas the 1951 annual meeting of members of National Rural Electric Cooperative Association being duly assembled; and

Whereas the defense of our Nation in the present emergency makes vastly more compelling the objective set forth in this resolution: Now, therefore, be it Resolved, That we do reaffirm our previous action and urge that vigorous steps be taken to expedite the program which we have requested.

FEBRUARY 25, 1952.

CLYDE T. ELLIS,

Executive Manager, National Rural Electric Cooperative
Association, Washington, D. C.:

Regret unable to attend hearing on St. Lawrence seaway and power project. Board of directors of this co-op wholeheartedly support Federal development of this project. At board meeting January 8, 1952, it passed following resolution: "Whereas it is the duty of the board of directors of the Oneida Madison Electric Cooperative to insure a sufficient supply of wholesale power at the lowest possible rate: Be it and it is hereby

Resolved as follows: We strongly urge the development of the St. Lawrence seaway and power project and the transmission of the resultant hydro power to the load centers of the cooperative so that the farmers and rural people served by these co-ops can receive this power on an equal basis at an equitable cost." Service of commercial supplier poor. Voltage spread at substation from 110 to 125 volts, indicating low voltage and too great a spread. Also experience frequent outages due to failure of transmission lines. Wholesale cost very high. Average 11.8 mills per kilowatt-hour during 1951. High cost makes it impossible for farmer to fully utilize electricity for increased production.

ROBERT KABAT,

Manager, Oneida Madison Electric Cooperative, Bouckville, N. Y.

J. RILEY FULMER, JR., MANAGER, CLEARFIELD ELECTRIC COOPERATIVE, INC., CLEARFIELD, PA., AND CHAIRMAN OF THE WHOLESALE POWER RATE COMMITTEE OF THE PENNSYLVANIA RURAL ELECTRIC COOPERATIVE ASSOCIATION IN SUPPORT OF THE ST. LAWRENCE SEAWAY AND POWER PROJECT

Mr. Chairman and gentlemen of the committee, this statement is made in behalf of the approximately 3,300 rural families served by the Clearfield Electric Cooperative, Inc., of Clearfield, Pa.

We, as a power-distribution cooperative, financed by the Rural Electrification Administration, are endeavoring to bring to the farms and rural families an adequate, dependable supply of power at a cost that the economy of the area will permit its purchase by these people,

As a result of the substitution of kilowatt-hour for man-hour farm labor, which is so critical at this time, our purchase of wholesale power increased by 20 percent in 1951 over the year 1950. We can state that, according to our conservative estimates, the year 1960 will show an increase over 1950 approaching 400 percent, if it is available and we can buy it at reasonable rates. This may appear to be a large increase however, the rapid rate at which farmers are utilizing electricity to increase their output of food and fiber cannot be underestimated.

We bring up this matter of kilowatt-hour usage to demonstrate the great demand that will be needed by not just us alone but also by the area as a whole in the next 10 years. Yet, in spite of this need for power, neither the private power companies nor the Federal Government has done anything to keep pace with this ever-growing need.

Our cooperative, as well as the entire area, will be faced with a large power shortage within the next few years. Even the private power companies are not encouraging the addition of additional loads by the people of our area at a time when availability of farm manpower is at its most critical point. We too will have to begin within the next 2 years to discourage our farmers in the use of power unless we get a more adequate source of power.

The wholesale rate paid by our cooperative was 9.9 mills in 1950 and 10 mills in 1951. In view of the abundance of cheap coal and undeveloped water power in the northeastern United States, it seems rather rediculous that we should pay approximately 1.4 mills higher than the national average of 8.6 mills for power delivered under similar circumstances. The savings to our cooperative alone would amount to approximately $200,000 from this date through 1960. Based on the TVA rate of 5.5 mills, our savings as compared above would be $600,000 from now through 1960. It is hard for our farmers to see the low rates of 5, 6, and 7 mills prevalent in many sections of our country, then have to pay such rates in Pennsylvania.