Florida Power & Light Co. would have materially strengthened the competitive position of the city of Gainesville in furnishing low-cost electricity to the University of Florida.

In more recent negotiations, as well as prior negotiations, in an attempt to settle this matter outside the jurisdiction of the Federal Power Commission, and upon the informal recommendation of the trial examiner, the city has found itself being strangled by the huge power companies.

Only last week at a meeting with the president of the Florida Power Corp., he stated that the company would be glad to intertie with us provided the city would sign a rigid noncompetitive territorial agreement which would restrict our future growth, and not allow us to compete with them in the lucrative suburban market contiguous to our city limits where we furnish many other municipal services.

This is the most flagrant type of agreement in restraint of competition and trade. It further would violate our city charter which prohibits the city from entering into territorial agreements with power companies. Furthermore, it is a violation of public policy as set forth in the National Power Survey as set forth on page 273:

The recent expansion of the Federal Power Commission's electric rate regulation staff, the Commission's intensified interest in wholesale rate regulation and the recent clarification by the Supreme Court in the "Colton" decision of the scope of the Commission's wholesale rate jurisdiction, offer promise of effective regulation for the future. Effective regulation would mean that the small distributor need not accept excessive rate levels or agree to unfair contract terms. Such a distributor could buy power at wholesale in the reasonable expectation that the seller would recognize his right to exist, would not invade his territory, would share fairly the economies of low cost power sources, and would cooperate in meeting the purchaser's long-term load growth. The small system would have assurance that a wholesale power contract with a large neighboring system would not impair its competitive position. Given the assurance of an impartial forum, the small distributor could explore wholesale purchases as a future power supply source with confidence, and a more rational power supply structure would be within reach.

In what appears to me to be a violation of the antitrust laws and of the total concept of the function of a public utility to serve the public, is a policy which was adopted by the board of directors of the Florida Power Corp., June 16, 1960, and is still in full force and effect. It reads as follows:

Resolved, That it is the sense and intention of the Board of Directors and of the officers of the Company, that the policy of the Company be reaffirmed to the extent that the Company will not supply wholesale power to any municipality other than those heretofore served under contract, and the President and the officers of the Company here hereby authorized instructed and directed to carry such policy into effect and to notify any new municipality of this policy.

How this company, a "public utility," could so blatantly and boldly misuse economic power is almost beyond the comprehension of fair and reasonable men. This company and the private sectors of this industry, that the public has granted the right of eminent domain, exclusive franchises, and many other noncompetitive and valuable rights and privileges, is now seeking the right and privilege to be exempt from the antitrust laws, one of the most basic and fundamental laws in our entire legal and economic system. Laws by which we hope to keep competition alive and democracy strong by not crushing t small producer with the economic power of monopoly in the hands a few of the mighty.

The Florida investor-owned utilities appear to be adamant in their refusal to provide pool benefits to municipals other than Jacksonville and Orlando. In addition to the refusal to admit Gainesville, Florida Power Corp. has refused to discuss interconnection arrangements with the Wauchula municipal system despite a study made by the Federal Power Commission staff recommending that consideration be given to such interconnection.

Moreover, there are territorial agreements among the investorowned utilities which purport to limit the interconnection choice by a municipal. Both Florida Power Corp. and Florida Power & Light Co. have publicly stated policies against connecting with municipals for the purpose of selling wholesale power. Finally, there are provisions in Florida Power Corp.'s wholesale contracts limiting the customer's right to interconnect with other electric utilities.

We feel that the type of combinations agreements, and understandings emerging in Florida is a part of an overall problem which may ultimately need to be determined under the standards and concepts of the antitrust laws. The pooling arrangement is only one aspect of the problem, but the Commission's immunity bath for the pooling could disrupt the ability to deal with the total problem under the antitrust laws.

While we are seeking to obtain relief by application to the Federal Power Commission, it must be recognized that Federal Power Commission's power in the electric field is limited. It lacks certificate authority over generation and transmission and therefore cannot assure that the design and location of facilities serve the public benefit of all electric utilities in the area. Moreover, its authority to require pool admission is seriously questioned. We hope it certainly has under section 202(b).

It seems clear that Congress must grant the Federal Power Commission this broadened authority if it is to give the Federal Power Commission authority to provide immunity under the antitrust laws.

However, with this broadened authority, we question whether the Federal Power Commission is the appropriate agency to determine the nationwide makeup of the electric utility industry, or whether there are problems here which involve the byplay of many factors, regional, political, and economic, which should be allowed to work themselves out under the generally salutary limitations and policies of the Antitrust Acts.

Finally, I want to thank this committee, and you, Senator, for the privilege of allowing us, a small political and economic unit, to present our views on this issue, and we trust that the Congress will not grant immunity from the antitrust laws to huge electric power combines, but rather will continue to allow these basic laws to protect the consumer, the small producer, and the small and growing city that daily faces problems undreamed of a generation ago.

Thank you.

The CHAIRMAN. You seem to need a bill pretty bad, with your problems.

Mayor RICHARDSON. We have had some serious ones.

The CHAIRMAN. Some kind of legislation would be helpful.

The only thing I would question is that you seem to believe that the Federal Power Commission wouldn't be the proper agency to resolve these questions.

Mayor RICHARDSON. We would hope so, sir, but

The CHAIRMAN. I think your suggestion on the bill is good, that the Commission have broader authority to require certain things to be done. Maybe in your case they would have to do that. It seems to me you have to go some place to resolve these questions.

Mayor RICHARDSON. To date, I know of no case where the Federal Power Commission has ordered a public utility to intertie directly with a municipal system.

The CHAIRMAN. That is past experience, but supposing legislation would allow them to do so?

Mayor RICHARDSON. We hope it has that authority now, but we are testing this.

The CHAIRMAN. I don't know whether they do or not.
Mayor RICHARDSON. We hope they do.

The CHAIRMAN. Of course, we don't want to weaken, in any way, the broad aspects of antitrust laws. You might be better off if the FPC had the authority mentioned in the bill, to give you a forum to go to.

Mayor RICHARDSON. The thrust here that we are concerned with primarily is that they are using pool access, which they are willing to give to us, provided we agree to certain restrictive practices.

The CHAIRMAN. These are some of the problems that we are facing and we are trying to arrive at some kind of practical solution where you people, if you felt there was an injustice, would have some place to go to get a decision.

Mayor RICHARDSON. The territorial arrangement is a very significant one here, you see, and as I understand it, as I read the bill, I am not sure where we would stand on this as currently written.

The CHAIRMAN. You have no place to go but up now.

Mayor RICHARDSON. We hope if we do not get proper satisfaction at the Federal Power Commission, we intend

The CHAIRMAN. I have known about your problem down there so long, that is why I talk this way about it. It seems to me that there ought to be some procedures where you could resolve your case without a costly, long, trial that could go on and on and be very costly.

Mayor RICHARDSON. It is about to break us now. But, we plan to pursue this through the Federal courts, if necessary, if we do not get relief.

The CHAIRMAN. It is a long, costly situation. Many municipalities similar to yours, throughout the country, have had to go through the same thing.

Mayor RICHARDSON. It is very expensive being a pioneer.

The CHAIRMAN. All right, Mr. Cunningham, we will be very glad to hear from you.

STATEMENT OF MAC H. CUNNINGHAM, EXECUTIVE VICE PRESIDENT, FLORIDA MUNICIPAL UTILITIES ASSOCIATION

Mr. CUNNINGHAM. My name is Mac H. Cunningham. I am the executive vice president of the Florida Municipal Utilities Association, which represents the 34 municipal electric utilities in Florida.

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My request to appear before this committee is pursuant to a directive of the board of directors of the Florida Municipal Utilities Association, which opposes the enactment of Senate bill, S. 3136.

Our municipal association believes that the record of more than 40 years of growth of interconnections and pooling of commercial power systems belies the purported need now to enact a basic change in the Federal Power Act, and to exempt these interconnected systems from the possibility of antitrust action.

On the contrary, as statewide and area power pools continue their present trend of merging into vast regional multistate operating groups, we believe the need grows correspondingly greater to safeguard and protect the public interest, rather than to diminish and strip away such protection, which we believe would be the result of the enactment of S. 3136.

We understand the avowed purpose of S. 3136 is to encourage voluntary interconnection, but we are convinced that not only is S. 3136 not necessary to further promote what now exists in tremendous measure as an accomplished fact, but it may well affect profoundly and adversely present Federal Power Commission authority and jurisdiction over matters of vital interest and concern to systems which are not now members of power pools.

Since almost all, if not all, of the economic power sector of the electric industry enjoys the economic and other benefits of interconnections and pooling arrangements, it follows that most systems not now receiving any of these benefits are the smaller systems in the Nation, and those of particular concern to our association are the municipal systems.

Recent events relative to possible or proposed interconnections between municipal generating systems and the Florida Power Corp. underscores our apprehension concerning the substitution under S. 3136 of "voluntary" agreements for interconnection in lieu of authority of the Federal Power Commission to require such interconnections in the public interest.

The city of Gainesville, Fla., which generates its power requirements, was not successful in negotiating an interconnection with the Florida Power Corp., a member of the Florida pool, which includes Tampa Electric Co. and the Florida Power & Light Co., and is also interconnected with Georgia Power Co. and Alabama Power Co., which are members of the southern company pool, which includes Gulf Power Corp. and the Mississippi Power Co.

The city of Gainesville, Fla., then filed a complaint with the Federal Power Commission to obtain the interconnection.

Hearings have not been completed and no decision has been reached by the Federal Power Commission, but it is completely obvious that if the city of Gainesville eventually obtains an interconnection, it will be the result of action of the FPC, and not the result of any voluntary action on the part of the Florida Power Corp.

In January 1966, the Federal Power Commission released a report of its study of benefits of an interconnection between the small generating system of the city of Wauchula, Fla., and the Florida Power Corp.

The study was made by the FPC on its own initiative pursuant to its responsibility to encourage voluntary interconnections, and coordination of electric systems.

Although the report pointed out advantages of an interconnection to the Florida Power Corp., as well as to the city, the power company exhibited no interest in an interconnection, but instead offered, as a "solution," to purchase the city's municipal power system.

Another example of power company interest in "voluntary" cooperation with small municipal systems seeking to negotiate an interconnection is the action finally taken after failure of negotiations by the Crisp County Power Commission, Crisp County, Ga., in filing a complaint with FPC to obtain an interconnection between its generating system and Georgia Power Co.

The Georgia Power Co. opposed the interconnection, although an FPC staff study showed significant savings, amounting to hundreds of thousands of dollars, which would accrue to both systems over a 3-year period.

In April 1966, the Federal Power Commission ordered the interconnection on a temporary basis, pending final settlement of an interchange agreement.

Under the Federal Power Act, as amended by S. 3136, neither the city of Gainesville, nor the city of Wauchula, nor the Crisp County Power Commission, nor any other similar isolated system would have recourse to FPC authority to obtain the benefits of interconnection with the vast pooled resources of the private power companies, and there can be no doubt of the companies' attitude toward extending these benefits "voluntarily" to the many small generating municipal systems.

Florida is one of the fastest growing States in the Union, and the 34 municipal systems in Florida average doubling their power sales at about 7-year intervals. Consequently, as municipal systems grow rapidly, significant changes in solutions to economical power supply most certainly will occur.

Some systems which purchase wholesale power soon may find that because of load growth, investment in generating equipment is warranted.

Little encouragement exists to believe subsequent efforts to obtain interconnections and interchange agreements with members of commercial power company pools would be successful, and under the Federal Power Act, as amended by S. 3136, there would be no recourse against arbitrary and discriminatory exclusion from interconnection agreements.

Where then is the basis for the stated purpose of S. 3136, to improve prospects for interconnection over the existing law by encouraging "voluntary" interconnections and by placing the vast, interconnected private power industry in the role of both judge and jury to decide, without let or hindrance and beyond threat of recourse, whether or not any system is to be admitted to the privileged fraternity of interconnected systems?

We submit that this is a matter of gravest concern to the small municipal generating systems of this Nation, and we hasten to point out that even the largest generating municipal systems are small indeed compared to the gargantuan interconnected operating groups within the private power sector of the electric utility industry.

Since it is the intent of S. 3136 to encourage voluntary interconnections, it is in order to examine the growth of interconnection and pooling arrangements under the present Federal Power Act.