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Show Municipal Power Side Given In Talk By Cc"j?,ci!man Bentley Editor's Note: The following information in-formation was presented In a talk by Mathow Bentley before the Business and Professional Woman's Wom-an's club on March 19. It explains ex-plains Mr. Bentley's personal investigation in-vestigation on the proposed municipal mun-icipal power plant. A talk was also given by Reid Gardner at the same meeting. The News is offering Mr. Gardner the privilege privi-lege of presenting his talk in the column if he desires. This information in-formation is presented in keeping keep-ing wiih the policy of the News to keep tin." public completely informed in-formed on this vital subject.) By MATJIKW HKN'TLEY City ('minciliiiiti! As an opening remark I want to state that I have no personal enmity en-mity toward any member of the Southern Utah Power company or any of its employees and anything that I say here tonight I hope will be taken in the spirit of frankness and without any personal per-sonal feeling, whatever. As an introduction to this topic of a municipal power and light plant, I want to spend a few moments going into the history of our power situation here at St. George. Just a few years prior to 3916, the City of St. George constructed con-structed a small plant on the Cottonwood Cot-tonwood stream at a point near the el low Knolls. At that time conditions were quite different than what they are today. The water was brought from Pine Valley mountain in an open ditch, and in the latter part of the summer sum-mer about 50 was lost through seepage and evaporation. During the winter months, because be-cause of the heavy freezing at certain points along the ditch, the trouble was even greater. With the assistance of two men and a tiorse dragging a log up and down the stream, only a small stream of water was made available with which to operate the plant. Other conditions helped to make the operation op-eration difficult; considerable sand and gravel came down the stream and caused trouble at the penstock pen-stock and water wheel. At that time the diesel engine had not been perfected and supplementary power was not available. These conditions were such that the hydro-electric plant proved to be inadequate. in-adequate. As a result and also considering the growing needs for power, which were greater than the plant could produce, our city officials saw fit in 1916 to sell the power plant to the Dixie Power company ( succeeded by the Southern Utah Power Co.), and in connection with the sale of the plant, a franchise for 25 years was granted to the Power Company. Com-pany. That franchise, being dated October 25, 1916, expires October 25, 1941. Thus, we have the immediate im-mediate occasion for the discussion discus-sion which is before you and all of those interested in the welfare and future growth of St. George the question of whether or not we should construct and operate a municipal power and light plant. Stake Personal Investigation In June of last year, the Mayor and three of the Councilmen made a personal investigation of some of the communities in Utah that were being served by municipal power plants. After returning to St. George the City Council entered en-tered into a contract with Engineer Engi-neer Harry T. Bletzacker of Murray Mur-ray to make an investigation of our power possibilities and report his findings to the City of St. George. After taking 6 months for investigation, getting quotations quota-tions from power machinery manufacturers and compilation of reports, Engineer Bletzacker reported re-ported to the City Council in December De-cember of 1940 and his report shows that it would be entirely feasible for the City of St. George to build a hydro plant on the Cottonwood Cot-tonwood culinary stream of water now piped all the way from the source at a point just a short distance from where the old plant had been and to supplement this hydro-electric plant with a diesel plant to be located in the City of St. George. The amount of power that can be developed at a hydro plant is in direct proportion to the volume of water available, the head pressure that may be obtained ob-tained less, of course, losses due to friction on the pipe used in bringing the water to the water wheel. Engineer Bletzacker reported re-ported that it would be possible during the high flow of water to develop an amount of power near to 500 KW at the hydro-electric plant and during the low period of water we could still develop approximately ap-proximately 100 KW. I think most of you realize that our Cottonwood stream is subject sub-ject to high fluctuation in volume, 7H to 1.4 second feet, but still would be able to produce the amount stated, 500 KW at peak I flow and 100 at the low point. Checks Figures I find in checking the figures reported by the Southern Utah Power company that for the year 1940, 1,987,000 KWH of power were used in the City of St. George. I find also by comparing its figures for the last five years that our power needs have been increasing at the rate of approximately approxi-mately 12 Vi per cent per year. On this basis I have counted that we would have need for just slightly less than 2 'a million KW hours of power for the year 1942; but, in addition to that sold there will be line losses and losses due to distribution, and so I have in creased the figure for 1942 production pro-duction to 2,700,000 KW hours. I find also by taking into consideration con-sideration the varying volume of water that would be available at the hydro plant and using the plant efficiency factor as given by some of the companies with whom 1 had correspondence that it would be possible to develop 1,-600,000 1,-600,000 KW hours during the year which is 60 of what I have figured will be the total needs for the city in the year 1942. I have computed the flow of water on the following basis, and while it may not mean much to some of you, those who are familiar with our Cottonwood stream will know whether I have been reasonable reason-able or not. I have counted that 7 '4 second feet would be available for 1 month, 6 second feet for one month, 5 second feet for one month, 4 second feet for one month, 3 second feet for one month, 22 second feet for two months, 2 second feet for three months, and 1V second feet for 2 months. I have also taken into consideration the fact that when the high flow of water is available avail-able and we are producing near to 500 KW at the hydro plant, there still will be certain times during the day when we cannot use all the hydro power available. While our high peak load for 1940 was 726 KW, as reported by the Southern Utah Power Company, Com-pany, I also find from the information infor-mation given by this company that the low peak is approximately 200 KW and I think you can readily see that during the early morning hours, say from 1 to 4 a. m., that this would be a reasonable reason-able figure. There are other periods per-iods during the day when the full amount of power available could not be used, therefore, deductions have been made for 4 to 12 hours per day for those months in which 300 or more KW of power would be available at the hydro plant. On this basis I find that 60 of our power could be produced pro-duced at the hydro plant and 40 would have to come from the diesel plant. The diesel plant which is proposed pro-posed would be located right in our city, and there are several reasons for having it here: one is the transportation of fuel, another is to decrease line and distribution losses. Engineer's Estimation Our engineer estimated that it Would take approximately $250,-000 $250,-000 to construct this entire plant including a complete distributing system and a $16,000 lighting system. The City Council has, however, figured that because of the rapid growth of our community com-munity and the possibility of our power needs being greater that we had first anticipated that pos sibly we would want to increase the plant capacity. Therefore, in dealing with the bonding company with which we have a contract, we have asked to use an extra $50,000 if we have need for it, which would make the total cost $300,000, if the extra amount is used. The interest on the bonds would be 4 annually for the first $100,000 and 4 for the next $150,000 or $200,000 if we should see fit to use this amount. The difference in rate is due to the latter bonds being callable. Another Problem There is another problem that possibly I should mention in connection con-nection with why we have used $300,000 as the possible amount necessary to build the plant and distributing system. It has been reported to me by some of our business men that Santa Clara and Washington are a part of our business area, and that it might be detrimental to these communities communi-ties if St. George, should construct and operate its own power and light plant. It is not the purpose of St. George to interfere in any way with the Power Company's serving any town outside of St. George, but as a protection to the people of Santa Clara and Washington, Wash-ington, we would be willing to build a plant large enough to supply them if the Southern Utah Power Company found it necessary' neces-sary' to materially increase the rates or found it inadvisable to i furnish power to them. I find in comparing the costs and estimates submitted by Mr. Bletzacker, engineer employed by the city, that when we got them to a common basis there isn't so much difference in his figures and those given by Mr. Roskelly, employed em-ployed by the Southern Utah Power Company, who recommended recommen-ded that we have a diesel plant in St. George, sufficient to supply 1500 KW of power. This would consist of 3 engines costing $95,-000 $95,-000 each. If the price of one of these is deducted from Engineer Roskelly's total cost of $426,000 the cost is reduced to $331,000 which is within 10 of the cost set up by Engineer Bletzacker, including the increase in size mentioned men-tioned above and which could be had for $300,000. Engineer Bletzacker Blet-zacker and the City Council are of the opinion that we do not need a plant as large as Mr. Roskelly proposed, namely a 1500 KW diesel plant plus the hydro unit. Pipeline Capacity I also find that Engineer Roskelly Ros-kelly reports that we can get 4.4 second feet only of water through our pipe line. In 1935 the City entered into a contract with the Federal Government and sold bonds for $102,000 that the extended ex-tended pipeline could be constructed construc-ted as an 8 second feet project, proj-ect, and after talking to local people who have had experience with this stream especially during the last 5V years I feel that we could be safe in using a figure of 7'L second feet as the pipeline capacity and not 4.4 second feet as mentioned above. In considering the costs of power production, especially in connection with a diesel plant, one main item of expense is the oil used as fuel. I have made an investigation from several companies com-panies which manufacture and sell diesel engines, and have figures from some of the communities using diesel plants in regard to the cost of operating a diesel system sys-tem and the amount of fuel used. Worthington Reports The Worthington Company stated in its recent letter that we can expect to receive 11 to 13 KW hours of electricity for each gallon of fuel. In the City of Bath, New York, having a population popu-lation of 4000, when it built it's diesel plant in 1933, I have figures on their operating costs for 1934-35-36. I find that the average power production for the entire year with that community was 11.44 KW hours for each gallon of fuel. I have used 11 KW hours, thinking that it would be a safe figure. Thus to produce 1,100,000 KW hours or the 40 remaining after deducting the amount to be produced by the hydro plant it would take 100,000 gallons of fuel oil for the year. Logan's Rates Logan, Utah, is paying 6 cents per gallon for oil. We should be able to buy ours at a slightly smaller figure, due to our nearness to California; however, I have used 6 cents making the fuel cost $6,500. In connection with a diesel plant, we would have to see considerable lubricating oil, and here I have taken the figures from the actual records of other cities. On this basis, one gallon of lubricating oil, is sufficient for the production of 1470 KW of power. On that basis, we would require 700 gallons of lubricating oil which I have estimated to cost $350. Most of the operating costs which follow are taken from the engineer's report. The two I have given above have been based on my findings through correspondence corre-spondence as mentioned above. Other operating costs are: Insurance $900 Maintenance and repairs $900 Manager and chief electrician $2400 3 operators at the diesel plant $4800 1 lineman and helper (2 persons). $3120 1 meter reader and helper (1 person) $1200 Office help cashier and clerk (2 persons) $1500 Office supplies and postage ....$350 Rent $420 Truck expense $500 Miscellaneous $560 Total operating costs $23,000 Other Items t There are three other items to take into consideration depreciation deprecia-tion on the entire plant, interest expense, and a $5,000 annual allowance al-lowance to be made to the City in view of the tax loss and loss of a franchise fee offered by the Southern Utah Power Company. In setting up the depreciation, I have used the following basis: 20 ' of the entire cost of the plant and distributing system or 300,000. Manager Reid Gardner reported in one of our City Council Coun-cil meetings that 20 years would be a safe basis for depreciation of a diesel plant, and 30 years for a hydro plant, "but I have taken a straight 20 years basis for both the hydro and diesel plant as well as all other distributing equipment equip-ment investments. Depreciation on $300,000 plus the $5,000 to be turned to the City general fund, plus the average interest paid which will amount to $6,146.00 a year gives $49,646.00 as total expense ex-pense of the system as estimated for 1942. According to these figures, the! cost per KW hour would be 1.84 cents for the total amount of power produced, b u t having to produce more than the amount we can actually sell to the consumer, con-sumer, 2 cents per kilowatt hour would be the cost for the power sold. Average Selling Price The average selling price of power in the City of St. George for the year 1939 as reported by the Southern Utah Power Company Com-pany in the statements that were circulated in February, 1940, was between 3 and 31-3 cents. Our cost for production, as shown above, would be 2 cents per KW hour. The power company, after the current franchise expires, proposes pro-poses certain rate reductions. The City of St. George proposes power company rates for all schedules except ex-cept those which are now down to 1 cent per KW hour. We find from the revenue figures given by the power company for the year 1939 and making estimates of about 4 increase for three years, the total revenue for the power to be sold in St. George would be near to $65,000 in 1942. By taking off approximately 10 because of the rate reductions which I have mentioned, it would give $59,-000, $59,-000, as the actual revenue for the year for the municipal plant. I have prepared an amortization schedule which I have set up on the basis of the above figure representing rep-resenting the receipts for 1942 the initial year of the program. I have used as total operating expense $23,500 Interest first year $12,500 Fee to general fund of city $5,000 Extentions to the distributing distribu-ting system $2,000 Total cash paid $43,000 Cash on hand, end of 1st year $16,000 (Usually no bond retirement would take place until the second sec-ond year.) In carrying the program pro-gram on for 17 years which terms I have used in case the full $300,000 is borrowed, I have estimated that the amount of power sold would increase at the rate of 8 per year, but I have estimated that the revenues would increase at the rate of only 4 per year. And that operating costs would increase in-crease at the rate of 4 per year. Operating Revenues The figures I have used for the operating revenues on that basis when carried through for a period of 17 years, would make a total revenue of $1,393,800; Total operating oper-ating expense $550,000; bond redemption re-demption $300,000; interest costs $122,925; amount turned to City $85,000; amount expended for line and distribution extentions $43,000. In the meantime, we would expect that we would have to buy another unit to add to our local plant, paying $60,000 for it. On this basis, we would have, by the end of the 17-year period, a cash accumulation of $226,000 or in round numbers one quarter of a million dollars. In the State of Utah there are quite a number of municipal plants, many of which, in fairness I should say, use hydro energy to develop the power which they distribute. dis-tribute. There are some, however, which operate under conditions very similar to what we would have here in St. George. Murray is an example, but inasmuch as Engineer Bletzacker comes from Murray it might be better to use another case, where the situation is also comparable to ours. In Logan we find a city which has an assessed valuation of about 4 times what we have and a population popu-lation of about 4 times as large as ours. Logan uses a hydro-electric plant which generates from 1200 KW during the high water peak down to 200 KW during the low water period except in the extreme ex-treme cold winter season, when this plant is closed down entirely. To supplement this, the City of Logan has purchased and is using 5 diesel engines, the first of which was purchased in 1927, and the last of which was purchased in 1938. The last is a large unit of 2200 horse power, which, when converted into KW, derated for altitude and adjusted for the gen-erator gen-erator efficiency factor would have a production of somewhere near 1300 KW. Logan Plant About six weeks ago I had an opportunity of talking to the Mayor of Logan and one of the commissioners. They gave me the following information: That last year the plant paid $44,000 on bonds redeemed and turned $30,-000 $30,-000 to the city general fund, and that the City of Logan made a profit on ' the plant, after paying total operating costs, of $100,000. I have had direct correspondence correspon-dence with the City of Bath, New York, as well as have information informa-tion from a magazine reprint article arti-cle concerning its diesel plant that was built in 1933. At La Junta, Colo., there is a city with 7,000 population, which built a diesel plant in 1940 and for which I have direct information. The first city shows $29,000 net income, and the other shows over .$50,000 profit, after paying $22,-000 $22,-000 on bonds and having paid the interest for the current year. The financial statements and rate schedules are available if any of you would like to review them in detail. Same Employees Possible Before concluding, there are one or two points that I want to mention men-tion in brief. It has been reported that if the City of St. George operates op-erates a municipal plant that all the employees of the Southern Utah Power company now working work-ing in St. George would lose their positions. That is not necessarily necessar-ily the case, because if a plant is set up we will need 8 or 9 full-time full-time employees in place of 5 which are now on a full-time basis in the City of St. George. We will need a superintendent, a lineman and a helper and 2 office girls as are now employed. We will also need three diesel operators oper-ators and a meter reader, spending spend-ing part time in miscellaneous service. Hence the amount of labor la-bor employed would be increased and it would not be unreasonable to expect a high per cent of the present power company employees to become employees of the city. Our City, at the present time needs considerable more in street lights than it has, especially on highway 91 and Tabernacle street. We have under construction a city park which will require considerable con-siderable lighting. We have a baseball park to use lights during certain months, and we propose to build a swimming pool. Incidentally Inciden-tally we can use the heat from the exhausts of the plant engines to warm the water in the pool and use the water in the pool to cool the diesel engines. That feature fea-ture is one of the extra advantages advan-tages we can have by combining the two projects and using a circulating cir-culating system that will function for both projects at the same time. Light Bill Increased All things taken into consideration, consider-ation, our light bill is going to be materially increased. The light that we use at the present time costs $1800 per year, and with extensions, ex-tensions, and additions mentioned above, our light bill can easily go to $4000 or $4500 a year. The Southern Utah Power company has offered us $900 a year as a franchise fee, a $1.00, per month reduction on each of our large street lights. It is also paying to the City of St. George $407 per year in property taxes according to the report submitted in February Febru-ary 1940 by Manager Reid Gardner. Gard-ner. After we take all these deductions de-ductions from our future light bill we are likely to still have near to $3,000 to pay for lights. This would amount to a 3-mill tax levy or 1-6 of the total of our city levy at the present time. I am sure there are many points that I haven't covered, but as a concluding statement I would like to ask whether a $60,000 annual business is worth having for the City of St. George; is a quarter' million dollar fund, possible in a 17-year period, worth working for ? As a member of your City Council I merely invite you to give your thorough consideration to these questions. |