The policy of our national association is determined by elected voting delegates from individual cooperatives and power districts at an annual meeting usually attended by over 4,000 members. Our members have unanimously endorsed resolutions in support of the full development of the St. Lawrence seaway and power project through joint construction by the Governments of the United States and Canada. The latest declaration of this position is contained in the following resolution adopted at our latest annual meeting held in San Francisco, Calif., January 29, 1953:

Whereas the NRECA, at its tenth annual meeting in 1952, did request the Congress of the United States to enact legislation for the development of the St. Lawrence seaway, in cooperation with the Canadian Government, and in accordance with the NRECA's statement of policy on the development of such resources; and

Whereas the Congress has not enacted such legislation, and the Canadian Government now proposes to construct and operate the seaway by itself, and the Power Authority of the State of New York is requesting the right to construct and operate the power facilities on the American side: Now, therefore, be it

Resolved, That we do hereby reaffirm our position in support of the joint construction and operation of the St. Lawrence seaway by the Governments of the United States and Canada, and of the construction and operation of the power facilities on the American side in accordance with the established policy of NRECA relating to such public power developments as set forth in the attached statement of NRECA on Federal power policy.

We are shocked by the decision of the Federal Power Commission examiner on May 12, 1953, in recommending a license to the Power Authority of the State of New York to develop the St. Lawrence power project without stipulating that cooperatives and public bodies shall be granted the usual so-called preference in the marketing of the power.

I pause here to note that the so-called preference of which we speak is not in fact a real preference. The rural electric cooperatives are purchasing less than 6 percent of all federally generated power, the public bodies about 37 percent, and the commercial power companies over 20 percent. This is what is happening under the preference clause. Without it, the cooperatives would be able to purchase little, if any. The commercial companies usually enjoy a preference position to begin with because of their ability to build the necessarily large and often long transmission lines to the Federal generators. It's worse than that; the commercial companies usually extend their lines to supply construction power and therefore are already on the spot, ready to haul the new power away.

We believe the Federal Power Commission examiner's recommendation disregarded the public interest and long-standing Federal power policy. Because of this we believe it most important that the Congress make clear to the Federal Power Commission its policy in such matters. We believe this can be done by either of two methods amending House Joint Resolution 104. Because of the urgency of the situation, we particularly hope the Congress will see fit to adopt the second method of amendment which we mention below. This will definitely make known the will of Congress to the Federal Power Commission in reaching a final decision on the license to develop the St. Lawrence power project.

House Joint Resolution 104 provides in section 3 (b) that the power project shall be constructed by the State of New York or an entity duly designated by it, or other licensee of the Federal Power Commis

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sion in conjunction with an appropriate agency in Canada. This section also provides that the power project shall be constructed as nearly as possible concurrently with the navigation works authorized by the bill. We believe this section is insufficient because it does not assure that the benefits of this power project, constructed with public funds, will accrue to the people; nor is there any assurance that a proportionate share of the potential hydro power developed will be distributed to adjoining States. Also, this section does not ensure an equitable allocation of costs, which can only be done if the navigation, power, and support works are constructed as one project. It is our belief that this committee could readily correct these deficiencies by constructive amendments to House Joint Resolution 104.

The first method of amendment could specify that the project be constructed and operated by the Federal Government and the power be sold at wholesale according to long-established Federal policy which gives preference in the marketing of the power to cooperatives and public bodies. Such provisions are contained in sections 4 and 16 of the Roosevelt resolution, House Joint Resolution 195. We strongly urge the adoption of these provisions.

If this method is not desired by the Congress at this time, then we suggest a second method. In view of the recent recommendation of the Federal Power Commission examiner, this second method would seem imperative. It would provide that any license issued by the Federal Power Commission for construction of the power project include a provision specifying preference in the marketing of to cooperatives and public bodies, and also requiring that a reasonable share of the power be distributed to adjoining States. It is our hope that the facts which we shall attempt to detail will aid the committee to thoroughly study this matter and consider amending the bill by either of the above two methods.

power

There are 14 electric cooperatives and 1 power company in 5 States, New York, Vermont, New Hampshire, Pennsylvania, and New Jersey, which are affected by this bill. These cooperatives serve 49,706 consumer members over 13,035 miles of line. The size of these cooperatives varies considerably, but on the whole they are very small electric systems. Because of this fact, it would be impossible for them to build their own transmission system to receive their share of any St. Lawrence power at the bus bar. Therefore, their only assurance that they will get an equitable share of this potential hydro power, at a price they can afford, is if they are granted preference in the marketing of this power.

These cooperatives purchase all of their wholesale power from the commercial power companies in their areas. They are paying some of the highest rates in the country for this wholesale power. The national average wholesale price paid for power by REA cooperatives for the 12 months preceding June 30, 1952, was 8 mills. But in New England the electric cooperatives paid 12.1 mills, in New York 11.2 mills, in Pennsylvania 11 mills, and in New Jersey 13.7 mills. These cooperatives look to the St. Lawrence for lower-cost wholesale power. They have no assurance that this power will be cheaper if their same private suppliers determine the rate the co-ops must pay for any of it. With the inclusion of preference this vital decision will not be made by these suppliers.

In the area which these cooperatives serve, as of July 1, 1952, 6 percent of the farms did not have central-station electricity. This 6 percent is below the national average, but this figure represents farms that are difficult to build to and in the most sparsely populated areas. The principal hope for many of these unserved farms to obtain -central-station electricity is for the cooperatives to be able to obtain low-cost wholesale power so it will be economically feasible for these cooperatives to serve them.

Many of these cooperatives have expressed concern about the dependability of the wholesale power transmission service which they are receiving from their power-company suppliers. Some of the co-ops have reported frequent transmission failures. Such wholesale power-supply failures make even the best maintained and operated cooperative distribution system ineffective. This, of course, imposes a real hardship on the thousands of dairy and other farms. which these cooperatives serve. These cooperatives feel that if they are granted the same preference as is usually provided in the marketing of federally generated power, additional transmission lines will be constructed which will improve the dependability of the service in the whole St. Lawrence area. They will be constructed either by the Government, the interested States, or by the commercial power companies.

Also, many of these cooperatives have expressed concern over the quality of the transmission service which they are receiving. There have been complaints of wide voltage spreads and serious voltage drops due to overloaded transmission lines. Some of them have even expressed concern about whether their wholesale suppliers will have sufficient capacity to satisfy their growing needs for electricity in the years to come. According to the latest figures released by the Federal Power Commission, electric-energy production from all sources for the decade 1941-51 increased only 77 percent, or an average of 7.7 percent annually, in the New England and Middle Atlantic States. But the average annual kilowatt-hour load growth of the cooperatives is 14.1 percent which is greater than the growth in electric-energy production in the area. This relatively slow rate of growth in the Northeast, of 77 percent in electric-energy production for the decade 1941-51, is even more obvious when one compares it with the rate of growth of 128 percent for the country as a whole during the same decade. Preference will insure these cooperatives of a sufficient supply of wholesale power to take care of their constantly growing needs.

It is our belief that preference to the cooperatives and public bodies in the marketing of St. Lawrence power, which would reduce their wholesale power costs, would be immediately reflected by reductions in their retail rates. Such reductions, because of the competitive stimulus, cannot help but bring down the high retail rates of all consumers in the St. Lawrence area. Such reductions become even more important when one considers the fact that the dairy farmers in this area are suffering a serious decline in income. They are suffering this decline in a period when their production costs are constantly rising. Cheaper electricity can go far to encourage more efficient production and alleviate the economic squeeze these farmers find themselves in.

An even more important reason for requiring the marketing of St. Lawrence power in accordance with the long-established Federal power policy is to provide a yardstick in this high-rate area. Unless the Federal Government builds and operates the United States half of the St. Lawrence power project-in which case the power would be marketed wholesale under the general Federal laws-or unless the Congress and/or the Federal Power Commission requires a preference clause in any license granted the New York Power Authority, there will be no yardstick and the rural people, as well as the urban, of the New York-New Jersey-Pennsylvania-New England area will continue to suffer from the exorbitant prices of an almost absolute Power Trust monopoly.

In view of these facts, we strongly urge this committee to amend House Joint Resolution 104 so as to require preference in the marketing of power for cooperatives and public bodies and also a disposition of a proportionate share of the power to adjoining States. Again, we wish to emphasize that we feel this action is even more essential because of the recommendation of the Federal Power Commission examiner that the application of the Power Authority of the State of New York for a license to construct and operate the St. Lawrence power project be approved.

(Statement of NRECA on Federal power policy :)

STATEMENT OF FEDERAL POWER POLICY ADOPTED BY THE NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, FEBRUARY 1, 19511

A mid-century review of present policies with certain proposals relating to the development and control of electric power by the Federal Government and a means of conserving natural resources, developing the national economy, and promoting national security.

INTRODUCTION

A study of Federal legislation and court decisions of the past 50 years relating to the interest of the Federal Government in the production and distribution of electric power reveals basic principles which form the foundation for the Federal power policy as outlined herein. Because of the very nature of the Government's programs of river development, this policy is not static and inflexible; on the contrary, like the projects in which it finds expression, the policy is dynamic and constantly growing.

EDITOR'S NOTE.-Background of the preparation and presentment of this statement deserves mention. During the midyear board of directors meeting of the National Rural Electric Cooperative Association in July of 1949, an extensive study and review of the legal basis and administrative policies of the Federal Government in the development of electric-power resources was proposed. Particular attention was directed to principles in the disposition of wholesale power produced by the Federal Government.

A month later the association's president, Clark T. McWhorter, of Blair, Okla., presented a general statement of the preliminary findings before the American Institute of Cooperation at Madison, Wis. During the following 18 months, more intensive research was carried on to segregate all the elements of administrative practices, judicial decisions, and laws adopted by Congress affecting Federal power policies. These elements were then related and examined to develop a comprehensive and consistent Federal power-policy pattern.

The NRECA board of directors approved, with modifications, the first drafts of this pattern in March and July of 1950. The association's executive committee subjected these drafts to further consideration at meetings in May and November of that year.

The final statement had been revised, expanded, and modified several times to reflect the real views of rural-electrification leaders throughout the Nation during the 18 months it was in preparation. In this form it was distributed to all member systems of NRECA before the association's 1951 convention convened in Cleveland, Ohio. It was posted for consideration of all voting delegates before being presented for adoption there. The statement received unanimous approval of the convention, and has been described as a "fair and reasonable policy to which all elements can subscribe."

IN A NUTSHELL

The established power policy of the United States embraces the development of our country's potential hydro power and its sale and delivery at wholesale to load centers at the lowest possible cost consistent with sound business principles, first to public bodies and cooperatives and then to others.

Multipurpose dams

River-development projects undertaken by the Federal Government should include optimum benefits of flood control, irrigation, soil and forest conservation, power production, improvements to navigation and municipal water supplies, stream-pollution abatement, promotion of fish and wildlife resources, recreational and cultural facilities, salinity control, etc., emphasis to be placed on the development of those benefits which best suit the economic needs of the greatest number of people.

(In undertaking the development of flowing surface waters there seems to be no reasonable justification for neglecting to develop or to make possible future development of all benefits to be derived from such waters.)

Planning for ultimate development

Comprehensive plans for the ultimate development of the principal river basins should be undertaken and completed as soon as practicable and no public or private works should be undertaken which would not be in harmony with such plans. Concomitantly, studies of secondary river basins, adjacent to the principal river basins or to each other, should be made on a regional or other geographic area basis to determine which streams when fully developed would contribute greater benefits to the national welfare than they do in their natural or present state of development. Comprehensive plans for the ultimate development of such streams should likewise be formulated as soon as practicable.

(This proposed planning is a necessary adjunct to a well-rounded power program as well as to all other programs of water-use development.) Evaluation of benefits

In the planning stages the economic value of a river development project should be determined by giving full consideration to all benefits to be derived from such project, including besides flood control, navigation, irrigation, and power benefits, such secondary benefits as soil and forest conservation, streampollution abatement, fish and wildlife promotion, water-salinity control, recreational and cultural facilities, and all other direct or associated benefits which can be evaluated.

Selection of projects

Since it is impractical and inadvisable to develop simultaneously all potential river development projects in the country, it is the continuing responsibility of Congress to select from time to time from completed plans the projects or parts of projects which it determines should be currently developed and by authorizations and appropriations to direct their construction and operation.

(The Bureau of Reclamation of the United States Department of the Interior and the Corps of Engineers of the Department of the Army have plans for the development of many streams not yet developed but such plans for the most part required specific legislative authorization before they were undertaken. Neither agency, nor any other agency, has been authorized to make comprehensive plans for all watersheds of the country. The President's Water Resources Policy Commission in its first report has pointed up the necessity for such comprehensive planning.)

Maximum power development

Power production should be recognized as a legitimate primary purpose of some river development projects. Whenever the primary purposes do not include power production, the construction and operation of such project shall include optimum development of all potential hydropower benefits as a secondary purpose. (Cf. Reclamation Act of 1906, Boulder Canyon Project Act of 1928, Tennessee Valley Authority Act of 1933, Bonneville Act of 1937, Fort Peck Act of 1938, Reclamation Project Act of 1939, and Flood Control Acts of 1938, 1944, and 1945.) Fuel-burning plants

Hydropower development should be supplemented with fuel-burner powerplants whenever the anticipated needs of the area served or whenever optimum utilization of water for power-productive purposes requires them. (TVA-New Johnsonville steam plant, 1949.)