pal boundaries or by building directly into old and new subdivisions outside of municipal boundaries; and Whereas in some States legislation has been promoted to support the municipalities and power companies in this practice to the hurt of the cooperatives: Be it Resolved, That the delegates of region III of NRECA go on record as condemning this practice and recommending that study be given to ways and means of assisting the cooperatives to retain and to control their service territories in such a situation; be it further Resolved, That copies of this resolution be submitted to all forthcoming NRECA regional meetings and the national meeting to develop an awareness to this situation and to develop a policy with reference thereto. REGION IX, OCTOBER 31, NOVEMBER 1, 1955, MEETING HELD IN RIVERSIDE, CALIF. We urge REA to initiate studies for control of piracy against cooperatives by privately owned utilities. We also urge investigation by REA and appropriate congressional committees of the extent to which the security of Federal loans to cooperatives is threatened by the inroads of private monopoly, through pirating activities, to the end that remedial Federal legislation may be undertaken. We declare as a matter of policy that our rural electric cooperatives may serve any and all loads which may legitimately be served by any private electric corporation. Mr. JONES. Our next witness this afternoon is Mr. M. C. Stewart, of Fort Payne, Ala., who is manager of the Sand Mountain Electric Cooperative and is representing the TVPPA. I want to explain that Mrs. Griffiths and Congressman Reuss have already engaged transportation for a 4 o'clock departure in order to get to Memphis. They had not visited this area before, and they wanted to see as much of the country as they possibly could before nightfall on their way to Memphis. The committee meets in the morning at 9:30 at Memphis, and that is the occasion for their absence at this time. Mr. Stewart, you may proceed. STATEMENT OF M. C. STEWART, REPRESENTING TENNESSEE VALLEY PUBLIC POWER ASSOCIATION, NORTH ALABAMA POWER DISTRIBUTORS ASSOCIATION, AND MANAGER, SAND MOUNTAIN ELECTRIC COOPERATIVE Mr. STEWART. Thank you, sir. Mr. Chairman and members of the committee, my name is M. C. Stewart. I am manager of the Sand Mountain Electric Cooperative, with headquarters in Fort Payne, Ala., and serving some 10,700 families in De Kalb, Jackson, and Marshall Counties in the northeast corner of Alabama. We have service available to more than 98 percent of the homes and establishments in our area. The TVA Public Power Association, whom I am representing, is an organization representing about 90 percent of the distributors in the area. I am also representing the Northern Alabama Power Distributors' Association, an association of all the TVA distributors in north Alabama, and a local organization for Alabama for service in the exchange of information. It gives me great pleasure to appear before your committee, chairmanned by our able Congressman, the Honorable Robert Jones, who has been such a great help to us-and by us I mean the Sand Mountain Electric Cooperative, all distributors of TVA power, the TVA, 70818-56-pt. 5-16 REA, all REA cooperatives, and all power developments whose main purpose is to serve the American people. I feel very lucky in that the Sand Mountain Electric Cooperative's area is located in two congressional districts; and while I live in the Fifth District, represented by the Honorable Albert Rains, so many of our members are in Congressman Jones' district, and he has worked with us so consistently and helpfully to make electric service available to all in the area, that I feel that he is our Representative also. I can't help but feel that we in northeast Alabama are fortunate in having the best representation in Washington of any area of the United States. Senators Lister Hill and John Sparkman both have enviable records of service to Alabama and the Nation in the United States Senate, and no less illustrious, though not yet of quite such duration as the Senators', is the record of Congressmen Albert Rains and Robert Jones; but I surely hope and feel that the passing of the years will remedy this matter of duration. Again, Congressman Jones, I say it is a great pleasure to appear here before your committee. Mr. JONES. I hope you give me an opportunity to come over there to some of your meetings so that I can advocate an increased amount of pay for you to your board of directors, Mark. Mr. STEWART. Thank you. Mr. JONES. Because with all of the kind things you say, I would be entitled to come over and insist that they pay you. Mr. STEWART. I am happy that you are looking into the conduct or, rather, misconduct of the task force on water resources and power of the Hoover Commission. I appeared before that task force in Chattanooga, June 1, 1954, and while I had been promised 15 minutes, the private power representatives were so allowed to extend beyond their time limit that when my turn came, I had only a little over 5 minutes if the remaining public power representatives were to be heard. Listening to the questioning and conduct of the hearing, I could not but agree with Major Allen, of Memphis: The task force was determined to give the defendant a fair trial and then hang him. I believe that you gentlemen are finding this to be true. While there may be no untruths in the Hoover Commission report, there are many misrepresentations, one of which I would like to point out here. TVA has constructed 20 dams and 8 steam plants. The total estimated costs for these projects as presented to Congress were $1,541,998,339, or 1.3 percent less than estimated costs. These figures are a matter of public record at pages 60-61 of the House Appropriations Committee hearings on the public works appropriations for 1956. The Hoover Commission report and that of its task force make no reference to this record taken as a whole. Instead they single out for comment three specific projects-Kentucky, Fort Loudoun, and Fontana Dam. The Commission report states (pp. 20-21) that an examination of TVA's 1936 report on the unified development of the Tennessee River system showed that later estimates for Kentucky Dam exceeded the original by 93.6 percent; for Fort Loudoun Dam by 74.7 percent; and for Fontana Dam, by 137.7 percent. This statement and its implications are misleading. In its 1936 report, TVA described a number of proposed projects in the Tennessee River and its tributaries. TVA had made firm cost estimates for some of these projects, but not for others. With respect to the Kentucky, Fort Loudoun, and Fontana projects, among others, the report expressly stated that the estimates included therein were merely tentative preliminary estimates based upon preliminary studies and not upon determinative plans and designs. Complete plans may result in substantial changes in estimates of cost (p. 25). Firm estimates were submitted for these projects when appropriations for them were actually requested. All of them were completed during World War II, on emergency schedules and in the face of labor and materials shortages, and actual costs did exceed estimates. However, based on a comparison with the firm estimates submitted to Congress rather than the tentative preliminary ones contained in the 1936 report, the extent of the overrun on Kentucky was 3.8 percent rather than the 93.6 percent stated by the Commission; on Fort Loudoun, 22.5 percent rather than 74.7 percent; and on Fontana, 43.7 percent rather than 137.7 percent. Further, the inference from the Commission report is that the experience with respect to these 3 projects is typical of the experience for TVA projects generally. Obviously, use of 3 wartime projects out of a total of 28 projects constructed by TVA throughout its existence, without reference to projects where actual costs were less than estimates or to figures for all projects taken as a whole, presents a very inaccurate picture. I would also like to file with my statement, if I may, a copy of the TVA's 1954 annual report on distributors of TVA power, which is the last one available. Mr. JONES. Is it the annual report? Mr. STEWART. That is the annual report for 1954. Mr. JONES. For the distributors? Mr. STEWART. For the distributors of TVA power. I have some extra copies, if you would like one. Mr. JONES. Since it contains tables and charts, the report will be received and a reference will be made to the fact that it has been received by the committee, but will not be printed at this point in the record. Thank you, sir. Mr. STEWART. Thank you. (The annual report referred to was filed with the committee.) Mr. STEWART. Please refer to page 12 if you do not have time to read the complete report. I think this will dispel any doubt as to the consumers of TVA power paying taxes in their power bill. The 148 distributors paid in 1954 a total of $5,679,000 in taxes and tax equivalents. In addition to this, TVA paid $3,579,000 in State and local tax equivalents, of which $2,357,000 related to the revenues received during the preceding year from sales to the municipal and cooperative distributors. In total, therefore, the 1,333,000 consumers served by the 148 distributors paid $7,853,000 in State and local taxes. This amounts to 6.2 cents out of each dollar of their electric bill. The national average among the Nation's privately owned utilities in 1953 was 8.6 cents out of each dollar of revenue. The average of the 13 privately owned utilities that neighbor the TVA area was 8.0 cents, and the range among them was from 4.6 cents to 11.4 cents. The taxes or tax equivalents paid by consumers in the TVA area to State, county, and local governments are within the general range of payments by privately owned utilities. These figures, of course, are a year old, but the new report will be out in 3 or 4 weeks and I will be happy to see that the committee receives copies of the same. A newspaper release in June gave an estimated figure for 1955 of $6,305,000 for the distributors and $3,878,466 for TVA, making a total of $10,183,466 paid to the States, counties, and municipalities as taxes or tax equivalents. Also, if I may I would like to file a copy of the TVA financial statement for fiscal year 1955. I have found these figures very interesting and informative, and I am sure you are interested in the same and may not as yet have received a copy. Mr. JONES. Is that an excerpt from the annual report? Mr. JONES. The reporter will note the reference made by the witness to the TVA financial report, which will be submitted as a public document to the House and Senate. It will be noted, but not printed as a part of the record. The reference will go to the designation of the public document when it is distributed. (The TVA financial statement for fiscal year 1955 was filed with the committee.) Mr. STEWART. Thank you. I have a chart, in answer to the question that came up this morning in Mr. Radin's testimony, when Congressman Lipscomb asked about the proportion of the power that went to the private utilities and the industries in the area. I believe you commented TVA was 41 percent. The chart here shows that 41 percent of all TVA power went to Federal agencies; 18 percent to directly served industries; and 2 percent to other power distributors; municipalities and cooperatives received 39 percent of the power. Mr. LIPSCOMB. That is the chart I was referring to. Mr. STEWART. However, it takes both reports to show the total taxes paid by the consumers of TVA power. For myself and the several thousands that I represent, we ask that the Congress throw this report and recommendations of the Hoover Commission in the round file, and continue the program and policy of water resources and power, development and conservation evolved over the past 50 years by Congress. The program that we wish to see continued is so ably represented by your chairman that he has been called Mr. TVA, and with this I wholeheartedly agree. In his hands and yours I am sure that these resources will be developed for the benefit of all our people, and not just a few. Thank you for your time, consideration, and efforts in our behalf. We certainly hope that you can convince Congress that both TVA and REA should and will be continued as in the past, and a program of development in other areas suited to their conditions will be constituted or continued. Thank you, gentlemen. Mr. JONES. Thank you very much. Are there any questions? Mr. LIPSCOMB. In regard to your last statement, do you not feel that we do need a national water resources policy? Mr. STEWART. I feel that we have a policy, Congressman. It needs implementing and maybe enlarging a little bit, but over the past 50 years practically any act of Congress that has had to do with our water resources has pointed out the policy that has grown up, and there have been pointed out in the testimony today the main facts on that policy. Mr. LIPSCOMB. Without leadership from the national level some areas are today almost dry. If we do not do something soon, when they turn on the faucet there will not be any drinking water, if we do not get some kind of a national water resources policy. Mr. STEWART. I think that is true. There are some areas where the people are awakened to the fact that they need to do something about their water resources. That is why I pointed out it should be started in the area where it has not been, and in the areas it has been, have it continued. Mr. LIPSCOMB. If we follow the same policy of taking all of the water out of the ground, we just will not have any water. For example, on the west coast we are concerned about salt-water intrusion, and on the Atlantic coast also. We must somehow look into getting a national water resources policy. At least that is my belief. Mr. STEWART. I think you are right, and you should implement the present policy by developing it to take care of shortages that have been developed. We have gone on for years and wasted our water resources, but in some of the areas we are taking care of it, and we should do that in all areas. Mr. LIPSCOMB. I think that great progress has been made in this area under the previous policy, and you are satisfied with it. Mr. JONES. Any further questions? Mr. LIPSCOMB. That is all. Mr. JONES. Thank you very much, Mr. Stewart. We appreciate your being here with us today. Mr. Jesse Williams, of Montgomery, Ala., representing the Alabama Rural Electric Cooperatives. We are glad to have you, Mr. Williams. STATEMENT OF JESSE M. WILLIAMS, JR., REPRESENTING THE ALABAMA RURAL ELECTRIC ASSOCIATION OF COOPERATIVES Mr. WILLIAMS. Mr. Chairman and members of the committee, my name is Jesse M. Williams, Jr., and I am a practicing attorney of Montgomery, Ala. I have represented REA cooperatives for the past 15 years and am sympathetic with the programs and problems of REA cooperatives, the TVA, and other public power projects. I now represent the Alabama Rural Electric Association of Cooperatives, an association of 16 REA cooperatives who have banded together for their mutual protection in order to better promote the REA program; the Central Alabama Electric Cooperative at Prattville, Ala., a distributing cooperative, and Alabama Electric Cooperative at Andalusia, Ala., a generating and transmission cooperative. Mr. JONES. That is the Gant station? |