Wilson, R. B., president, Mississippi Power & Light Co- Tripp, Hon. Nelson, mayor of Fulton, Ky Vogel, Brig. Gen. Herbert D., Chairman of the Board, TVA.. Watson, A. J., Jr., president, Mississippi Power Co... Watt, R. M., chairman of the board, Kentucky Utilities Co---. Wessenauer, G. O., Manager of Power, TVA_ Westpheling, Paul, plant board member, Fulton, Ky.. Williams, Clyde P., chairman, Electric Plant Board, Fulton, Ky. Wilson, Cecil C., attorney, Glasgow, Ky.. Winter, Everett T., executive vice president, Mississippi Valley Asso- 237 Ashley, Frank, president, Marshall County, Ky., Chamber of Com- merce_ Boppo, D. P., district manager, Eastern Division, Ohio Power Co.. Chronological history of Fulton's fight. Coal buying policies of TVA............ Conover, Julian D., executive vice president, American Mining Con- gress_ 262 267 123 271 30 252 270 Robbins, Hon. Laurence B., Assistant Secretary of the Treasury- Schwartz, Carl H., Jr., Chief, Resources and Civil Works Division, Statement of power exchanges by American Electric Power and TVA.. 154 REVENUE BOND FINANCING BY TVA TUESDAY, JUNE 9, 1959 U.S. SENATE, SUBCOMMITTEE ON FLOOD CONTROL-RIVERS AND HARBORS Washington, D.C. The subcommittee met, pursuant to call, at 10 a.m., in room 4200, New Senate Office Building, Washington, D.C. Senator Dennis Chavez (chairman of the committee) presiding. Present: Senators Chavez, Kerr, Randolph, Young (Ohio), Muskie, Case (South Dakota), Martin, Cooper, and Prouty. Also present: Senators Stennis and Gore. Senator CHAVEZ. Please come to order. The bills that will be discussed this morning are Senate 931 introduced by Senator Kerr and others, with reference to the Tennessee Valley Authority Act of 1933, as amended, and also, H.R. 3460, on the same subject matter. (S. 931 and H.R. 3460 are as follows:) [S. 931, 86th Cong., 1st sess.] A BILL To amend the Tennessee Valley Authority Act of 1933, as amended, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the last three paragraphs under the subtitle "Independent Agencies and Corporations" in title II of the Government Corporations Appropriation Act, 1948 (61 Stat. 576-577), are hereby repealed effective with the close of fiscal year June 30, 1959; and the Tennessee Valley Authority Act of 1933, as amended, is hereby amended by inserting immediately after section 15c thereof (16 U.S.C. 831n-3) the following new section: "SEC. 15d. (a) The Corporation is authorized to issue and sell bonds, notes, and other evidences of indebtedness (hereinafter collectively referred to as 'bonds') in an amount not exceeding $750,000,000 outstanding at any one time to assist in financing its power program and to refund such bonds. The Corporation may, in performing functions authorized by this Act, use the proceeds of such bonds for the construction, acquisition, enlargement, improvement, or replacement of any plant or other facility used or to be used for the generation or transmission of electric power (including the portion of any multiple-purpose structure used or to be used for power generation); as may be required in connection with the lease, lease-purchase, or any contract for the power output of any such plant or other facility; and for other purposes incidental thereto. It is hereby declared to be the intent of this Act that the power facilities built or acquired with the proceeds of such bonds or power revenues shall not be used, without prior approval by Act of Congress, for the sale or delivery of power by the Corporation outside the counties which lie in whole or in part within the Tennessee River drainage basin or the service area in which power generated by the Corporation is being used on July 1, 1959, except, when economically feasible, to serve the United States or agencies thereof or to interconnect with other utility systems for exchange power arrangements, or to interconnect Tennessee Valley Authority generating plants, or to serve existing rural electric cooperatives (as same now exist as to area and as of July 1, 1959) now being 1 served in part by the Tennessee Valley Authority: Provided further, That except as expressly provided above, all contracts entered into after this provision becomes law for the supply of power to any distributor shall contain an agreement by said distributor to confine the resale of such power within the boundaries of the counties above described and such additional areas (not more than five miles from such boundaries) as may be necessary to care for the growth of communities within said counties provided said communities were receiving Tennessee Valley Authority power on July 1, 1959. The principal of an interest on said bonds shall be payable solely from the Corporation's net power proceeds as hereinafter defined. Net power proceeds are defined for purposes of this section as the remainder of the Corporation's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties (including costs applicable to that portion of its multiple-purpose properties allocated to power) and payments to States and counties in lieu of taxes but before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus the net proceeds of the sale or other disposition of any power facility or interest therein, and shall include reserve or other funds created from such sources. Notwithstanding the provisions of section 26 of this Act or any other provision of law, the Corporation may pledge and use its net power proceeds for payment of the principal of and interest on said bonds, for purchase or redemption thereof, and for other purposes incidental thereto, including creation of reserve funds and other funds which may be similarly pledged and used, to such extent and in such manner as it may deem necessary or desirable. The Corporation is authorized to enter into binding covenants with the holders of said bonds— and with the trustee, if any-under any indenture, resolution, or other agreement entered into in connection with the issuance thereof (any such agreement being hereinafter referred to as a 'bond contract') with respect to the establishment of reserve funds and other funds, provisions for insurance, charges for supply of power, application and use of net power proceeds, restrictions upon the subsequent issuance of bonds or the execution of leases or lease-purchase agreements relating to power properties, and such other matters, not inconsistent with this Act, as the Corporation may deem necessary or desirable to enhance the marketability of said bonds. The issuance and sale of bonds by the Corporation and the expenditure of bond proceeds for the purposes specified herein, including the addition of generating units to existing power-producing projects and the construction of additional power-producing projects, shall not be subject to the requirements or limitations of any other law: Provided, however, That, except with the approval of the President during a period of national defense emergency hereafter declared by the President or by the Congress, no such bond proceeds, nor any power revenues, shall be used to initiate the construction of an additional power-producing project until (1) the Corporation notifies the President and the Congress of its plant to construct such additional project, and (2) following such notification, a period of ninety days, while Congress is in a single session, elapses without the passage of a concurrent resolution disapproving such construction. "(b) Bonds issued by the Corporation hereunder shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States. Proceeds realized by the Corporation from issuance of such bonds and from power operations and the expenditure of such proceeds shall not be subject to apportionment under the provisions of Revised Statutes 3679, as amended (31 U.S.C. 665), and such proceeds and bonds shall not be included in computations of receipts, expenditures, surpluses, or deficits in the Budget prepared annually pursuant to section 201 of the Act of June 10, 1921 as amended (31 U.S.C. 11), except to the extent of the amounts budgeted by the Corporation for payments pursuant to subsection (e) hereof on account of the appropriation investment as therein defined, and for reduction of said investment. "(c) Bonds issued by the Corporation under this section shall be negotiable instruments unless otherwise specified therein, shall be in such forms and denominations, shall be sold at such times and in such amounts, shall mature at such time or times not more than fifty years from their respective dates, shall be sold at such prices, shall bear such rates of interest, may be redeemable before maturity at the option of the Corporation in such manner and at such times and redemption premiums, may be entitled to such relative priorities of claim on the Corporation's net power proceeds with respect to principal and interest payments, and shall be subject to such other terms and conditions, as the Corporation may determine: Provided, That before issuing any bonds |