Mr. CRAMER. You mentioned the figure of $5 or $10 billion in Federal commitments being envisaged as a result of this Appalachian approach, is that correct; that is, Federal expenditures.

Mr. ROBINSON. Those are the figures I used. Of course, they are estimates at this time.

This bill as I understand it constitutes a commitment of about a billion dollars. If you consider the fact that there are apparently four additional bills of this nature in the pipeline at the moment, it seems to me that you are talking in terms of from $5 to $10 million. Mr. CRAMER. Of course a billion dollars in this program is only for a 2-year program other than for highways. So actually the cost of Appalachia alone is far in excess of a billion dollars.

Mr. ROBINSON. Yes; I would say that is all the more reason to place it on a self-liquidating basis if it is at all possible.

Mr. CRAMER. I am glad to get those figures in the record because I have been maintaining for some time that the cost of this program will be close to $4 million before they get through over the 6-year life of the commission in Appalachia. It may be extended beyond that.

You have suggested with these new proposals that we are talking about possibly a $10 billion program.

I am glad to get those figures in the record with regard to the cost of the program.

Mr. ROBINSON. I do not wish to convey the impression we are opposed to this type of program unless power facilities can be put into it. Our people have consistently, as I previously stated, adopted resolutions to support redeveloping depressed rural areas. Of course, the entire history of our own program, rural electrification and Federal power, has been self-liquidating. The REA loans are paid back. The Federal funds invested in hydroelectric stations are paid back. So we tend to think in terms of self-liquidating Federal programs.

Mr. CRAMER. You do not believe as far as the Appalachian region is concerned that REA and private enterprise can provide the power facilities and generation facilities needed to do the job you are talking about?

Mr. ROBINSON. I do not think it is a question of a shortage of electricity at all. I think the issue here is not that. I think certainly that the power companies can provide the power that is needed. I think it is a question whether or not we want to maintain in the growing power industry a concept of the Federal yardstick which we believe has served well to control electric rates, and whether or not we want to place in this regional development program at least one element that will generate some cash flow. There is nothing in this bill that will generate cash flow to either repay the Federal investment or sustain and allow expansion of the program in future years-nothing whatever. It seems to us that the one element in Appalachia, the richest resource of the area, coal, has been completely omitted from mention in the bill. There is no mention of it at all.

Mr. CRAMER. I was interested in that comment because coal is mentioned in the bill in the section dealing with the coal provisions in Pennsylvania, principally. I refer you to the bottom of page 21, section 205, mine area restoration, make financial contributions to fill voids in abandoned coal mines. Section 2 is outcrop mine fires relating to coal mines. Anthracite coal on page 22, line 6.

Mr. ROBINSON. At the very least, Mr. Chairman, I would say that is a pretty negative reference to the coal industry. It is an attempt to repair damage that has been incurred as a result of operations carried on in prior years. What I would think the legislation ought to envision is some method of using coal to stimulate the economy of the region in the future and to make more certain that a permanent industrial complex is attracted.

I do not question the fact that there is language in there that will repair the ravages brought about by prior mining of the area.

Mr. CRAMER. And industry in my district, the Florida Power Corp., private enterprise, I think has done as much to help Appalachia from a single industrial standpoint as anything I have seen recently. They have signed a contract for use of $100 million worth of coal in the next 10 years to be used in a new plant they are building on the west coast of Florida.

If you are going to discourage that private enterprise approach that can do the job without Federal subsidization and is in fact making a great contribution, is that the approach you are encouraging?

Mr. ROBINSON. No, sir. The Federal Power Commission's national survey indicates that between now and 1980 there will be located in the Appalachia region some 40 million kilowatts of mine-mouth generation because of the fact that mine-mouth generation plus the cost of transmission is becoming more and more economical with generation of power at the load. If you take 40 million kilowatts and superimpose upon it even 4 million kilowatts of Federal plants you are still only 10 percent of capacity, which is a lesser percentage than the Federal power system now bears to the total system in the United States. I do not really think you are going to discourage private enterprise by competing with it a little bit. If private enterprise is what I think it is, I do think you will provide some revenue to fund these programs and I think you are going to maintain the Federal yardstick. I do not think you will discourage private enterprise any more than the Federal power program as we know it today has discouraged private enterprise. The Federal Power Commission reports that the electric utility industry is the largets industry and the most rapidly growing industry in the United States. This is at a time when we have a Federal power program that is something on the order of 12.7 percent of total installed capacity. I do not think it really discourages Federal-private enterprise.

Mr. SWEENEY. If the gentleman would yield, I should like to pursue Mr. Cramer's point of this business of the Federal Government being competitive with investor utilities and the broad concept of need of electric power in Appalachia. The committee last year was informed by the president of the Monongahela Power Co. that the Appalachian region has ample generating capacity for all current needs, with less than 10 percent of the total U.S. population, the region having available 38 million kilowatts of generating capacity, or 18 percent of the Nation's total and has more than 10 million additional kilowatts now scheduled or under construction. In the light of his testimony, would you agree that there seems to exist a power surplus rather than a power shortage in Appalachia?

Mr. ROBINSON. No, sir, I cannot agree with that, Mr. Sweeney, because his company is among those adding additional capacity. Mo

nongahela Power Co., I believe, and I will check that, is one of the holding companies that is part of the Allegheny Power System. As I stated a few minutes ago, Allegheny Power System is in the process of right now building a half million kilowatt plant at Morgantown, W. Va. If there is a surplus in the area it would not be building additional plants.

Mr. SWEENEY. One of the biggest single powerplants ever announced is an investment by all of these investor-owned utilities of moneys approximating $42 million. Isn't that the end investment that will result once that is completed by private investor utilities in this country.

Mr. ROBINSON. $42 million sounds like an awfully large figure. I do not know what that would include.

Mr. SWEENEY. That has been reliably reported as being the Nation's investor-owned utilities investment in plant during the period 1960 to 1970, and it will rise to $80 billion, we are told, by 1980.

Mr. JONES. I think the figures will disclose that those estimates were based on the ratio of annual growth of 12 percent per year.

Mr. SWEENEY. I believe that is correct.

Mr. JONES. If they hold up to those figures that would be the requirement for thermal plants to generate the power that would be required as to the terminal date.

Mr. SWEENEY. Mr. Robinson, what would you say in the light of that?

Mr. ROBINSON. This figure is not related to the plant I mentioned. Mr. SWEENEY. I am interested in the light of the enormity of that privately owned investment, would you agree that to put the Federal Government in a competitive position with these privately owned investor-operated utilities would adversely affect the economy rather than to benefit the overall economy of the country?

Mr. ROBINSON. I think it would benefit the economy, Mr. Sweeney. I do not know how familiar the committee is with the national power surveys recently published by the Federal Power Commission. It is a monumental piece of research. It indicates that the companies are at the moment generating something on the order of 60 percent of their investment capital from their rate schedules. We feel in this type of situation a little competition might serve the public interest by reducing this contribution of the ratepayers to the structure of these companies which money should be provided by the investors.

The proof is that the companies in the Pacific Northwest and the TVA area which are closest to sources of Federal power have prospered in excess of industry averages in the past several years. What we are talking about in effect is 10 percent. If a man owns any business and has 10-percent competition it does not seem to me he is very seriously injured.

Mr. CRAMER. Isn't REA operating in this area now?

Mr. ROBINSON. Yes, sir.

Mr. CRAMER. Doesn't that give them the competition they need in the area?

Mr. ROBINSON. No, sir; and for several reasons. In the first place REA co-ops do not generate any power. They have to buy it from companies in this area at wholesale. Surprisingly enough where we have these mine-mouth plants being built, to generate power at 41⁄2 to 5

mills, the co-ops in West Virginia and Pennsylvania are paying 9 mills. We would hope if we could get one or two Federal plants it would cut that a little bit. We are not in a position to provide very much competition in those areas.

Mr. BALDWIN. If the gentleman would yield. Mr. Robinson, if you feel that there should be fair competition why are not the REA's willing to increase the rate of interest on the loans they get from Federal Government, so the interest rate would be fairly competitive with private enterprise, instead of getting a subsidized rate of 2 percent?

Mr. ROBINSON. Mr. Baldwin, we did not come to argue the 2-percent issue today but I will be happy to try to answer that question. We are working on a study. We have employed Kuhn, Loeb Co., of New York to study the possibility of several modifications in the REA financing situation, (a) increasing the interest rate and maintaining the present Federal loan program, or (b) borrowing money in the open market. We expect the results of that study will be available in a few months. It has taken a year and a good deal of money. The indications are that perhaps about a fourth of the distribution systems could afford to pay perhaps a little higher rate of interest, but the G. & T. systems and remaining distribution systems could not. You say it is a subsidized rate of interest. By that I guess you mean it is lower than the average cost of money to the Government at the present time and that is true. Mr. BALDWIN. That is right.

Mr. ROBINSON. By the same token, we do serve awfully thin areas. About 3 consumers per mile compared to 30 by privately owned companies.

I would point out also that REA loans are being repaid. This is a self-liquidating program. They are being paid with some interest, though the rate may be low. The program being considered here today, though it is a meritorious program, is completely nonreimbursing. Yet they are both designed to serve a social purpose and both do serve social purposes. In view of the history of the REA program, it seems to me that in terms of repayment, in terms of reimbursing the Government, it has performed pretty well.

Mr. CRAMER. If you were to build the mine-mouth power generating plants with the anticipation of providing employment in the area through the generation of plant operation itself, and thus transmitting this power to other parts of the country outside Appalachia, what you would have to do through this corporation would be to set up a grid of transmission lines through the service area and the result would be a federally owned transmission line and power generating program in competition with private enterprise.

Mr. ROBINSON. There is no question, Mr. Cramer, that this proposal would offer a measure of competition with private enterprise. I will be the first to admit that. I would like to see associated with these plants, and I think I can speak for the association in that, at least a minimum transmission network. But the major block of the power would unquestionably be delivered to the investor-owned companies who have their own transmission. Rural electric co-ops constitute perhaps as much as only 4 percent of the total electricity market in the United States. We would like to buy a little of the power. We would like to have a little transmission with this if it were built with the mine

mouth plant. But the bulk of the power would go to the investorowned companies.

Mr. CRAMER. That is all I have.

Mr. JONES. Thank you very much, Mr. Robinson. It has been a pleasure to have you, sir.

Mr. ROBINSON. Thank you.

Mr. CRAMER. May I ask a question of the committee? We have requested or permitted REA to come in and testify. I wonder if the opportunity will be given to other persons or organizations who might have a different view with regard to setting up a Federal corporation.

Mr. JONES. As far as I know it has never been the policy of the committee to make solicitations to anybody to come to testify before the committee. If there is a request pending certainly we will take

that into account.

Mr. CRAMER. Do I understand that the record will be left open for such statements if anybody wishes to make them for a period of about 10 days?

Mr. JONES. If there is no objection from the members. It has to be a unanimous-consent agreement. I will make the request of the committee to permit me to make these statements or additional statements that will be submitted as part of the record.

I would want them examined, as I have just handed the ones I have in my hand at the moment to Mr. Baldwin for review, and see if he had any objection to the substance contained in the statements that would be made a part of the record.

I want all the members to examine the statements. I am not going to offer them at the present moment because we have one more witness, Mr. Robert Holcomb, president, National Independent Coal Operators Association.

STATEMENT OF ROBERT HOLCOMB, PRESIDENT, NATIONAL INDEPENDENT COAL OPERATORS ASSOCIATION

Mr. HOLCOMB. My name is Robert Holcomb. I am president of the National Independent Coal Operators Association.

Mr. JONES. We are glad to have you.

Mr. HOLCOMB. The members of this association are small coal operators located largely in the Appalachian region. I am speaking for approximately 5,000 such operators who employ about 70,000

men.

The story of distress and poverty and the coal mining regions of Appalachia is not new; it has been spread far and wide by the news media, by reports of Government agencies and by the hearings of this committee. However, there is a story about the coal mining industry which very few people know and which bears directly on the future of Appalachia. That is the story of pockets of prosperity in the midst of poverty.

Pikeville, Ky., my hometown, is situated on the Cumberland Plateau, about 300 miles from Washington. Four years ago, people in Pikeville talked about pulling up stakes and moving elsewhere to make a living. Today, Pikeville is experiencing an economic boom and there is a growing new spirit in the community. Investment is up. A new shopping center, an $800,000 motel, a $750,000 bowling center and a

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