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B-149244 1 (1970-06-01)

handle is hein.gao/gaobabkrt0001 and id is 1 raw text is: RESTRCTIED- M~ot to te released out -Yd ttse %.en~erai A| , Accoufit'g Cff ce except Ol he basis of prc4,c approval ,-/i T 4 ~ by the Office of Legislative Uaison,* a recot d of which is kept _4r i5:_ & by the D btibuian.EStiCn APblicaiftimEBrjgs OAS WASHINGTON D C 20$43 ? RELEASED B149244 J 4 1 1970 Dear Mr. Langen: This is in further response to your communication enclosing a copy of a letter dated March 19, 1970, from Mr. Carl R. Sullivan xelative to Rural Electrification Administration (REA) cooperatives competing unfairly with independent fuel oil distributors and a privately owned gas utility company in Alaska. Mr. Sullivan stated in his letter that four cooperatives--Golden Valley Electric Association, Inc., Fairbanks, Alaska; Chugach Electric Association, Inc., Anchorage, Alaska; Matanuska Electric Association, Inc., Palmer, Alaska, and Homer Electric Association, Inc., Homer, Alaska--(1) do not support local government since they are exempt from local property taxes, (2) have unlimited 2-percent Government financing available to them, (3) have electric-heating rates which are below their cost of supplying services to members and thus require standard service subscribers to pay extra to cover the electric-heating losses, and (4) are making loans to members for the installation of electric heat at interest rates much lower than commercial rates. Mr. Sullivan is concerned also that the Chugach Electric Associa- tion, Inc., made two reductions in its electric rates during the period of a 4-year deferment on repayment of its REA loan and that the Homer Electric Association, Inc., is offering cash bonuses to individuals for switching to electric heat. In examining into the issues raised by Mr. Sullivan, we reviewed pertinent legislation and policies and procedures under which REA makes rural electrification loans to cooperatives. We also reviewed loan records of the four cooperatives and interviewed officials of REA. Our review was made at REA headquarters in Washington, D.C. General background information and our comments on each of the issues raised by Mr. Sullivan are presented in the following sections. This information and our comments were discussed with your legislative assistant on May 14, 1970, and he agreed that, if any furthei work on our part should be desired, you would advise us. As requested by your legislative assistant, we are not furnishing a copy of this ieport to the Department of Agriculture, nor are we advising the Department of its release.

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