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Mr. HOLWAY. If all we were getting in this bid were the two boilers and the four units in there which aggregate 20,000-kilowatt capacity, the authority would be better off to build a new plant. But there are other facilities that go with this steam plant that make it worth more. Mr. DONOHUE. What are the additional facilities?

Mr. HOLWAY. Extra boilers, extra buildings, extra water facilities. Mr. DONOHUE. Is there a complete water plant there?

Mr. HOLWAY. Yes. There is a 100,000,000-gallon per day water pumping plant on the river; a 48-inch pipe line; a 25,000,000-gallon per day filter plant; a 2,000,000-gallon per day Zeolite softening plant; cooling towers; and other equipment.

Most of the water plant and facilities I have mentioned are not necessary to the operation of a 20,000-kilowatt steam plant There is enough capacity in the other facilities to operate a 70,000- or 80,000kilowatt steam plant.

Mr. DONOHUE. Has GRDA received any assurances from pipe line companies to the effect that if this steam plant was acquired the pipe line companies would become customers of the Grand River Dam Authority?

Mr. HOLWAY. Yes. One is the Ajax Co., and one other, definitely want the pumping power to replace their Diesel engines.

Mr. DONOHUE. You mean at the present time they are buying power from private utility companies?

Mr. HOLWAY. No. They have Diesel engines. They want to shut them down.

Mr. DONOHUE. It would be more economical for them to purchase power and energy from the GRDA than to operate their own Diesel plants?

Mr. HOLWAY. That is their statement to us, and I am sure it is correct.

Mr. HOLIFIELD. In addition to the water facilities, is there a possibility of furnishing this byproduct steam and obtaining revenue for that?

Mr. HOLWAY. Yes. If we can locate an industry that could use the steam, not only could the authority sell the steam, but they could operate the two non-condensing units efficiently.

Mr. HOLFIELD. In a situation like that you could make a very attractive offer to a private industry to come in and set up a plant?

Mr. HOLWAY. Very; and we have had considerable correspondence with industries that might be interested in moving in.

Mr. HOLIFIELD. What types of industries would use that?

Mr. HOLWAY. Fertilizer plants have been talked about. There is still some acid equipment there that WAA has. Also metallurgical companies; mostly chemical companies would use this steam. Mr. HOLIFIELD. Great quantities of steam?

Mr. HOLWAY. Yes.

Mr. HOLIFIELD. Mr. Chairman, I will have to ask to be excused. I have a 12 o'clock appointment.

(Mr. Holifield left at this point.)

Mr. DONOHUE. Would you care to make a statement relative to the present status of power supply in the State of Oklahoma, as to whether there is a surplus?

Mr. HOLWAY. I think the power commission's analysis is more accurate than mine. I just know, in general, that there is not too much power out there.

Mr. DORN. Is that due to dry weather in Oklahoma this fall? Mr. HOLWAY. No. It is due, (1) to the inability of the utilities to get steam equipment during the war; the War Production Board wouldn't let them have it; and (2) to their underestimating the use of power after the war.

Mr. DORN. In other words, it is more in demand than they thought? Mr. HOLWAY. Yes.

Mr. DORN. There were questions about getting a new steam plant. Could you get a new one?

Mr. HOLWAY. Yes, in about 2%1⁄2 years.

Mr. DONOHUE. Have you made any study of the projected operating costs and revenues in the event of acquistion of this steam plant, in contrast to your present operating costs and revenues?

Mr. HOLWAY. Yes. I have that in typewritten form and can leave it with the committee.

Mr. DONOHUE. Will you give the committee a résumé of that, please?

Mr. HOLWAY. This consists of four pages. The first page shows the power sales per year without the steam plant, which are pretty well established because all of our power is sold. The firm power that is now sold to the companies can be recaptured and sold to other people.

The second page shows an income and expense statement for the years 1948-62, showing the total power sales per year, the revenue, the estimated operating expense, the debt service on the $14,000,000 of bonds, total annual charges, and the balance that would be left.

Sheet No. 2 is for the present project without the steam plant, which shows net revenue to be an average of $23,000 per year over that period, 1948-62. The debt service varies from $445,000 a year to a maximum of $662,500 a year, and it is not regular. It does not increase regularly.

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Sheets 3 and 4 of this schedule show the power sales from the project if the steam plant were purchased and operated. Sheet 3 covers the years 1948-52, and the last sheet shows the expenses and revenue and balance sheet for the years 1948-62, showing an average net income after paying all expenses, operating and fixed charges and debt service, of $2,305,700 for the 15 years, which is over $150,000 a year. That is figured as the minimum amount that the authority could benefit financially by acquiring the steam plant.

Mr. SNYDER. How long will it take you to pay the $14,000,000 you owe the Federal Government?

Mr. HOLWAY. They are scheduled to pay so much a year. I think they are 30-year bonds.

Mr. DONOHUE. I would like to offer this study in evidence as exhibit 369.

Mr. SNYDER. It will be received.

(The document above referred to, marked "Exhibit 369," is filed in connection with this record.)

Mr. DONOHUE. I have no further questions.

Mr. DORN. I believe you testified that in only one or two years out of 30 do your streams go down to such an extent there is serious impairment of electrical supply?

Mr. HOLWAY. No. I don't think you understood me correctly. During one dry year, 1938-39 or 1939-40, this plant could have developed and sold, we will say, 160,000,000 kilowatt-hours. That

means we can contract for that with confidence, because that was the driest period. 1934 was the next driest period. During that period we could have contracted and sold a little over 200,000,000 kilowatt-hours. There are dry months every year, but it is a matter of determining the amount you can sell that you can depend on, and this steam plant would fill in this curve and make it a solid block of power.

Mr. DORN. But the steam plant would be run all the time?

Mr. HOLWAY. One unit would be run at least 80 percent of the time. It could be ready to be operated at all times, and our operating costs are figured on the basis of a full operating crew there at all times.

Mr. DORN. Did you get any grants on this thing from the Federal Government?

Mr. HoLWAY. On the original project, $9,800,000; something like that. But there was no aid given for the flood control separately. If this dam had been built as a power dam the Federal Government would have contributed for flood control.

Mr. SNYDER. Thank you very much.

(Witness excused.)

Mr. SNYDER. The committee will stand adjourned until 2 o'clock. (Thereupon, at 12:10 p. m. a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

(The subcommittee reconvened at 2 p. m., Hon. Ross Rizley (chairman) presiding.)

Mr. RIZLEY. The committee will be in order.

Yesterday, Mr. Donohue, former Congressman Ellis, who wants to testify in this case, told me he wanted to leave early today because of previous engagements, and I told him if he came here right after the noon recess today we would hear him.

Mr. DONOHUE. Mr. Ellis.

(Clyde T. Ellis was duly sworn as a witness by Mr. Rizley.)

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

Mr. DONOHUE. State your full name and official position to the reporter, please.

Mr. ELLIS. Clyde T. Ellis, executive manager, National Rural Electric Cooperative Association, Washington, D. C.

Mr. DONOHUE. Do you have a statement prepared?

Mr. ELLIS. I do not. I have some statements I should like to make orally to the committee, but I do not have a prepared statement. I have some documents I shall offer and ask that they be incorporated in the record.

Mr. DONOHUE. Will you proceed with your statement, please?

Mr. ELLIS. Mr. Chairman and gentlemen, I appreciate your hearing me at this time. I am executive manager of the National Rural Electric Cooperative Association, which is the national service organization of the rural electric systems of the country-741 of the 900-plus rural electric cooperatives are members of our organization, and 1,300,000 farm families are represented in the organization.

My home is in the watershed of Grand River above Pensacola Dam. I have lived all my life in that watershed. The watershed, as you

know, extends back into Arkansas, Missouri, and Kansas, as well as Oklahoma.

In that area are located several rural electric cooperatives. That is one of the most rural areas, we believe, in the United States. Rural people, not urgan people, comprise the bulk of the population of that area. We represent a substantial number of those rural people.

I have here a resolution-it isn't very long; it was sent to me by telegram-which was passed a few days ago, bearing directly on this subject, by the board of directors of the KAMO Electric Transmission Cooperative, which was originally set up during the war to obtain power from the Grand River Dam Authority and distribute it to 15 rural electric cooperatives in Kansas, Arkansas, Missouri, and Oklahoma. That is where they get the name KAMO. With your per-. mission, I would like to read that resolution:

Whereas the Grand River Dam Authority has heretofore constructed a great dam in northeastern Oklahoma utilized to capacity for power purposes in prosecuting the war; and whereas the United States of America constructed the Oklahoma Ordnance Works in Mayes County in said State, including a steam generating plant for similar purposes; and whereas, the Congress of the United States has ordered disposition of various industrial plants acquired during the war effort, including the electric generating facilities aforesaid; and whereas said power plant of the Oklahoma Ordnance Works if integrated as part of the system of the Grand River Dam Authority would continue available to serve the United States should another war emergency arise; and whereas, we believe it is best that this great power plant be permitted to produce electric energy for use of the people by distribution through a public agency at very low cost rather than permitted to pass to private ownership for resale of electric energy at greatly increased costs; and whereas, rural electric cooperatives in Arkansas, Kansas, Missouri and Oklahoma desire to purchase electric energy from the Grand River Dam Authority and thus accomplish tremendous savings to the farmers and rural areas of said States; and whereas, the Grand River Dam Authority by integrating said steam generating plant as a part of its system could furnish approximately twice the amount of firm power as now produced without such generating facilities: Now, therefore, be it

Resolved, the KAMO Electric Cooperative, Inc., of Oklahoma, That the War Assets Administration of the United States of America is hereby respectfully requested to complete the sale of the steam generating plant of the Oklahoma Ordnance Works, located in Mayes County, Okla., to the Grand River Dam Authority of said State, and that the Members of the Congress are hereby respectfully petitioned to actively support completion of the sale of said steam generating plant by the War Assets Administration to the Grand River Dam Authority of Oklahoma so that the benefits resulting from expenditure of public funds for building said electric generating facilities shall be shared by the people through the medium of said authority; and that a copy of this resolution be presented to the War Assets Administration, Members of the United States Congress now investigating the sale of said electric generating facilities.

This is a further statement by the manager of KAMO Electric Cooperative:

The

The foregoing resolution was unanimously passed by the board of directors of KAMO Electric Cooperative on November 20, 1947. KAMO represents 15 cooperatives in Kansas, Oklahoma, Missouri, and Arkansas. KAMO cooperatives will purchase approximately 60,000,000 kilowatt-hours of power in 1948. acquisition would comply with the wishes of Federal Power Commission as outlined in their bulletin of November 22, 1947, on "Power supply and requirements," for interconnections to alleviate current power shortage.

Now, Mr. Chairman, I have here statements which I offer for the record from the State Association of Cooperatives in each of the States of Missouri, Arkansas, Oklahoma, and Kansas. They are not long, and with your permission I would like to offer a copy of each for the record.

Mr. DONOHUE. I offer them in evidence, Mr. Chairman, as exhibits 370, 370-A, 370-B, and 370-C.

Mr. RIZLEY. Very well.

(The documents above referred to, marked "Exhibits 370, 370-A, 370-B, and 370-C," are filed in connection with this record.)

Mr. ELLIS. It is our belief that most of the 15 member cooperatives of the KAMO Electric set-up are having power troubles. I have been away on other meetings. I didn't know this hearing was coming up. I didn't have time to get specific information, except yesterday I asked the Rural Electrification Administration to give me such information as it had in its files relative to the troubles of rural cooperatives on power, and I have a statement indicating that 6 cooperatives within a 100-mile radius of Grand River Dam, 5 of them members of the KAMO Electric Transmission Cooperative, are having power difficulties, either lack of power or voltage difficulties or both. We believe there is great need for power in that area.

Mr. SNYDER. Where are they getting their power now?

Mr. ELLIS. Arkansas Valley Cooperative, Ozark, Ark., gets its power from the Southwestern Gas & Electric Co. at Waldron, which is interconnected with the Public Service Co. that you have already heard about. They are having shortage of power difficulties. According to their statement they have $1,000,000 allotted but not advanced.

Carroll Electric Cooperative, Berryville, which gets its power from the Arkansas Power & Light Co., is having low voltage and shortage of power difficulties.

Indian Electric Cooperative, Cleveland, Okla., low voltage from Oklahoma Gas & Electric Co. and low voltage from Oklahoma Power & Water Co.

Eastern Central Electric Cooperative, Okmulgee, which gets its power from the Oklahoma Gas & Electric Co., is having both low voltage and shortage of power difficulties.

Seekan Electric Cooperative, Girard, Kans., which gets its power from Eastern Kansas Utilities Co., is having shortage of power difficulties.

All five of the cooperatives I have just named are members of KAMO, which is depending on the Grand River Dam Authority for part of its power load.

Mr. SNYDER. In other words, if the Grand River Dam Authority were permitted to supplement its power, these cooperatives would change from the private utilities from whom they now purchase to State-owned facilities?

Mr. ELLIS. Not necessarily.

Mr. SNYDER. If not, what difference does turning over this facility to GRDA make to them?

Mr. ELLIS. I should have said not in toto. Any rural electric system usually has several places where it gets power. The future expansion in the area does depend to some extent on new power sources, new power delivery sources, and some of that would come from GRDA. That is what KAMO was set up for. They expected to get power from the Grand River Dam Authority and made a a contract for such.

Mr. SNYDER. Then, if I understand you correctly, these cooperatives would not change their present source of obtaining power, but

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