THE NEW BATTLE FOR RURAL POWER
Clapp, Norman
The New Battle for Rural Power by NORMAN CLAPP An understanding of what is at stake in the current propaganda attacks of the power companies against the Rural Electrification Administration and...
...This gives the rural electric cooperatives across the nation an average of only 3.3 consumers per mile of line...
...There is no way to compute the increase and improvement in agricultural production that has come from electrification in dairying, poultry-raising, and other farm operations...
...5. The average number of copies of each issue of this publication sold or distributed, through the malls or otherwise, to paid subscribers during the 12 months preceding the date shown above was 32,775...
...It includes commercial and industrial loads that bring in revenue to help offset the cost of serving remote ranches and isolated farms where initial consumption may be low...
...3. The known bondholders, mortgagees, and other security holders owning or holding one per cent or more of total amount of bonds, mortgages, or other securities are: (if there are none, so state...
...These generating and transmission loans will help meet a demand that engineering studies calculate will jump from the thirty-one billion kilowatt hours experienced in I960 to seventy billion kilowatt hours in 1970, and to 140 billion by 1980...
...The other ninety per cent were without such commonplace conveniences as electric lights, radios, refrigerators, and running hot water...
...With the addition of this security criterion in making loans for generating and transmission plants, REA hopes to assure each borrower full opportunity to serve all consumers that may develop in the rural territory...
...Within a few years, however, the need for adequate supplies of dependable power at reasonable costs along the riew rural distribution lines resulted in applications for generation loans...
...REA is a lending agency, and shows an impressive repayment record...
...REA hopes and expects that the cooperatives will be able to continue buying energy from the electric companies, but there must be no forced dependence upon hostile power suppliers...
...The wholesale power supplier which seeks to reserve for itself the right to serve at retail those consumers it selects from the territory of its wholesale customer is going to find that it can lose that wholesale contract...
...1. The names and addresses of the publisher, editor, managing editor, and business managers are: Publisher, The Progressive, Inc., Madison, Wisconsin...
...In addition, interest payments to the Federal Government amount to another half a billion dollars...
...The amount borrowed for generation and transmission was $144 million, which was 55.8 per cent of the total amount of $258 million expended in electric loans...
...Along with the right to serve all consumers in their rural territories, the cooperatives must have full access to a dependable source of power—ample wholesale power at a low enough price to keep rates reasonable for the ultimate consumers...
...In 1935, only one farm in ten enjoyed electric service...
...Across the country the rural electric cooperatives face a pattern of territorial encroachment, consumer pirating, and unfair power contracts...
...None...
...situations, only through REA loans for generating and transmission facilities, so that the cooperatives, through outright ownership, can control their source of power...
...Borrowers in the electrification program have received about $3.8 billion in REA loan funds...
...In the year that ended June 30, 1961, the bill for this wholesale power amounted to $92.5 million...
...Editor, Morris H. Rubin, Madison, Wisconsin...
...If not owned by a corporation, the names and addresses of the individual owners must be given...
...REA believes that the addition of a security criterion in making generating and transmission loans is necessary to safeguard the unique contribution which the rural electric cooperative makes to American life— the opportunity for consumers to own and control the source of power on which they depend so heavily...
...REA-financed systems currently buy about thirty-eight per cent of their power needs from commercial power companies in the wholesale power market, and generate only about sixteen per cent of their own power...
...It is a matter of life and death to the cooperatives, therefore, to obtain whatever revenue advantages they can from serving commercial and industrial consumers, a market being contested by private power...
...It is the point at which the security of the REA loans and the continued existence of the borrower systems are most vulnerable...
...Total loans for generating and transmission since the inception of the program came to $1.2 billion, which is 26.7 per cent of all electric loans...
...In the period immediately following enactment of the rural electrification program, loans for the construction of distribution systems took precedence...
...We do know that rural electrification has strengthened the American economy...
...To break this barrier, farmers were forced to organize consumer-owned cooperatives and build their own electric systems with REA financing...
...Now the power companies want the...
...Gordon Sinykin, Madison, Wisconsin...
...The member-owned rural electric cooperatives are an outstanding example of local initiative teamed up with government financing to accomplish a difficult task...
...While many well-qualified observers of the American economy would see justification for outright grants in a program which has accomplished so much, this was neither proposed nor provided by the Act...
...Under the present Administration, REA for the first time made a generating and transmission loan—$20 million to the Alabama Electric Cooperative—primarily to protect the security of distribution borrowers and to help rural cooperatives maintain their place in the electric power industry against the inroads of a powerful electric company...
...REA requires as a condition for its loans that the borrowers provide electricity to everybody in the service territory, on a full area coverage basis...
...The reason is easy to find...
...In some counties, the cooperative has built the most modern building and is the largest payer of property taxes...
...There are many power suppliers that take their responsibilities as wholesalers seriously enough to respect the interests of their REA-financed customers...
...2. The owner is: (if owned by a corporation, Its name and address must be stated and also Immediately thereunder the names and addresses of stockholders owning or holding one per cent or more of total amount of stock...
...They purchase the balance from publicly owned sources such as the Tennessee Valley Authority, the Bureau of Reclamation, regional power authorities, and municipalities...
...When the REA was created, it was expected in Washington that existing power companies would avail themselves of the favorable loan terms to invest in service for rural areas...
...Power companies, by contrast, serve urban areas of high population density, where they average thirty to forty customers to a mile of line...
...The greatly increased amount for generating and transmission loans in 1961 reflects: A new awareness of power company harassment, and the extent to which it endangers the security of the cooperatives...
...This powerful opposition comes from the very power companies that refused in the early 1930's to extend their lines to nine out of ten farms...
...The significance of power company attempts to cripple REA's authority to make loans for generating plants and transmission lines is best clarified by a look at the growth of rural electrification over the last quarter of a century...
...choice portions of rural territory that were developed STATEMENT OF THE OWNERSHIP, MANAGEMENT, AND CIRCULATION REQUIRED BY THE ACT OF CONGRESS OF AUGUST 24, 1912, AS AMENDED BY THE ACTS OF MARCH 3, 1933, AND JULY 2, 1946...
...Year after year, attempts to cripple or kill REA's generating and transmission financing were made and were turned down by Congress...
...One cannot measure in dollars and cents the importance of lifting millions of farmwives from a lifetime of drudgery...
...The annual rural market for electrical appliances alone is estimated at $1 billion...
...The private power company propaganda mill relentlessly grinds out false charges and distortions, especially about REA's generating and transmission loans...
...The court ruled for the REA administrator and the other defendants...
...Associate Editors, Mary Sheridan and John McGrath, Madison, Wisconsin...
...The rural electric cooperatives have created new payrolls in the communities they serve...
...the cooperatives did the job that the power companies were unwilling to do...
...But the companies turned their backs on the fanners...
...They use whatever techniques are most effective in accomplishing the particular "take-over" project on the agenda...
...With the passage of the Rural Electrification Act by Congress the following year, rural America finally began to emerge into the Twentieth Century...
...4. Paragraphs 2 and 3 include, in cases where the stockholders or security holder appears upon the books of the company as trustee or in any other fiduciary relation, the name of the person or corporation for whom such trustee is acting...
...Where the cooperative depends upon the power company for its supply of wholesale power, the company can take for itself the revenue benefits from the more profitable consumers by means of dual rates in a power supply contract—the cooperative pays one rate for electricity destined for residence and other small loads, and a higher rate for power to serve the larger commercial and industrial loads in the rural areas...
...The New Battle for Rural Power by NORMAN CLAPP An understanding of what is at stake in the current propaganda attacks of the power companies against the Rural Electrification Administration and the rural electric cooperatives requires some historical perspective...
...In that year, the Rural Electrification Administration was created by an Executive Order of President Franklin D. Roosevelt, to finance the extension of electricity to unserved rural consumers...
...MORRIS H. RUBIN, Editor Sworn to and subscribed before me this twenty-eighth day of September, 1962...
...Last year 189 REA borrowers were forced to buy their power under such dual rate contracts...
...Section 4 of the Rural Electrification Act of 1936 states: "The Administrator is authorized and empowered...
...This prompted obstructive tactics from some of the power companies...
...25, 1963) from scratch by the local cooperatives...
...If rural electric cooperatives are to keep pace with the needs of their consumers and if ownership and control are to remain in the hands of the rural people who depend upon them, then these cooperatives must have continued access to financing of their own generating capacity...
...Only one rural electric system was behind in its repayment schedule at the beginning of this year—and it is expected to catch up soon...
...With such a record why is it that the REA program is under attack today...
...A resolve to meet the needs for power to serve rural America in the 1970's, the 1980's and thereafter...
...An industry-wide trend toward larger size, more efficient—and also more expensive—generating units...
...Ownership of power supply for the rural areas is the key to control of a great and growing power market...
...The benefits of the rural electrification program are wide-ranging and valuable beyond calculation...
...This is possible, in many NORMAN CLAPP is the administrator of the Rural Electrification Administration...
...Title 39, United States Code, Section 233...
...It is the practical success of the cooperatives that draws the fire of profit-seeking power companies...
...We have to concern ourselves not only with where the power is coming from but the terms under which it is delivered...
...Today, ninety-seven per cent of all farms and ranches in the United States are electrified, together with millions of rural homes, schools, churches, crossroads stores, and processing plants...
...It was no easy task in the early days, and it is not easy today...
...More than half of all farms depend on REA borrowers for their electric service...
...This means the big loads as well as the small ones...
...to make loans . . for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing of electric energy to persons in rural areas who are not receiving central station service...
...The charge was using REA funds, without Congressional authorization and in violation of the law, to enable the Southwestern Power Administration to acquire facilities which would duplicate those of the companies, deprive them of customers, and bring destructive competition to "privately owned" utilities in the area...
...REA's authority for making loans to build generating and transmission facilities is clear and unmistakable...
...They also claimed that most farmers would not use enough power to make additional line construction Worthwhile—or profitable...
...If owned by a partnership pr other unincorporated firm, its name and address, as well as that of each individual member, must be given...
...This is a last resort, but one to which more and more REA distribution borrowers find they must turn...
...MILDRED LOHFF Notary Public, Dane County, Wis...
...Under the present Administration, REA is joining its cooperative borrowers in fighting unfair restrictions in wholesale power contracts...
...The Progressive, Inc., Madison 3, Wisconsin, a non-profit corporation consisting of more than 7,000 members, none of whom holds 1 per cent of the stock...
...An appeal by the power companies was dismissed...
...Unable to get Congressional action to help them secure control of the supply of power for the rural cooperatives, the power companies turned to the courts...
...Of The Progressive, published monthly at Madison 3, Wisconsin, for October 1, 1962...
...One way in which REA can support the rights of its borrowers is by offering technical assistance and counsel to the cooperatives in their negotiations for better contracts...
...But if this fails to protect the legitimate interests of the rural electric systems financed by REA funds, then the opportunity to provide their own source of power must be readily available to them as an alternative...
...In October, 1950, the Kansas City Power & Light Company and nine other electric utility corporations joined in a suit for injunction against the REA administrator and other specified government officials...
...Spokesmen for the electric industry claimed that those farms which needed electricity were already being supplied (about eleven per cent at that time...
...Yet this part of the rural electrification program has been repeatedly challenged and continues to be the principal target of power attacks...
...Electric power highways and telephone service attract new rural residents from the cities as well as commercial and industrial establishments with large power loads...
...Some of the remote countryside that was once thinly populated is no longer remote or thinly populated...
...Business Manager...
...The alternative for the distribution cooperative, when fair play cannot be obtained from the commercial power supplier, is to turn to REA and apply for a loan to build its own generating plant, either by itself or in conjunction with neighboring rural electric cooperatives...
...The rural electric cooperatives are important customers of the power companies...
...also the statements in the two paragraphs show the affiant's full knowledge and belief as to the circumstances and conditions under which stockholders and security holders who do not appear upon the books of the company as trustees, hold stock and securities in a capacity other than that of a bonafide owner...
...The year 1961 set a new high mark for REA generating and transmission loans, both in dollars and as a percentage of total loans during the year for all purposes...
...Repayment of principal recently passed the $1 billion mark...
...My Commission expires Jan...
...It is important to realize that REA's electrification program is being accomplished with interest-bearing loans...
...The supply of power to the distribution cooperatives is our most immediate concern in rural electrification...
...For every dollar invested in REA loans, rural consumers on the lines of REA borrowers have spent more than $5 for wiring, plumbing, and electrical appliances...
Vol. 26 • November 1962 • No. 11
