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Show to Migipal pifM George FadeladvisedMil-ford FadeladvisedMil-ford and Miners ville Saturday, Satur-day, to make the move to municipal power now, saying say-ing that there should be a savings of 10 percent on power rates immediately, and possibly more if a geo-thermal geo-thermal power plant were constructed. Speaking to the Mayors and City Council members of Beaver, Minersville and Milford, he outlined the procedures pro-cedures and steps necessary neces-sary to make this move. Learning that a feasibility study had already been com -pleted by Ford, Bacon and Davis, he said the next move would be for the City Councils Coun-cils of Minersville and Milford Mil-ford to pass a resolution of their intent to have a municipal muni-cipal system, and they could start the next day. Fadel is the acting legal counsel for the Southwestern Utah Cooperative Power Assn., and has for many years been legal counsel for several municipalities operating op-erating power systems. He has been legal counsel for the Intejrmountain Consumer Power Assn. for 15 years. Beaver or other municipal systems to build a power plant. He said that power could be purchased wholesale from other sources until the power plant is built. If UP&L has surplus power, which they do, he said, they must sell it. If an agreement cannot be reached, the cities ci-ties need only to make application ap-plication to the Federal En-Regulatory En-Regulatory Commission. (FERC). UP&L is guaranteed a 15 percent profit by the Public Pub-lic Service Commission, so they have little incentive to hold back costs. They also receive a profit on whole --sale power, Fadel' said. He said the cities would hot pay state and federal taxes, and property taxes would be replaced re-placed by revenue from distribution dis-tribution and sale of power, which could be infused into the general fund. Beaver Mayor Robert Christiansen told the group that Beaver City power rates were considerably below UP&L. Beavers power rates are generally about 23 those of UP&L. He said that comparative com-parative costs on wells using the same killowatt hours were almost double. He (Continued on Page 2) He said the first step would be to offer to purchase Utah Power and Light's distribution distribu-tion system. However, this is not necessary, as the cities could opt to build their own. The cities could sell revenue bonds to pay for the existing system or for construction. con-struction. Revenue bonds would be paid back through the distribution and sale of power. He said that the cities could be in the power business within six to nine months after passing the resolution if they went right to work. He said a fair price for UP&L's distribution system would be original cost less -depr eciationv-' The Ford; Ba - con and Davis study estimated estimat-ed this figure at $4,500,000. Fadel told the group that UP&L might refuse to sell at that figure, and then negotiations nego-tiations would determine a price somewhere between the deprecated cost and new construction. If the price gets to near new construction construc-tion cost Fadel said, the cities might decide to build their own distribution system sys-tem . Enterprise passed the resolution one day, and started construction the next. They did not even negotiate nego-tiate for the existing Cal-Pac Cal-Pac system when they went municipal six years ago. Recognizing the desire to build a geothermal power plant, and utilize the steam from Roosevelt Springs for power production, he still urged that Milford and Minersville Mi-nersville move ahead and get into the power business now. He said the distribution distri-bution system could be combined with building a power plant, but that to wait would see the cost pushed up by inflation. If Milford and Minersville Miners-ville go ahead with municipal muni-cipal systems, then they could set up any cooperative agreement they want with here's more about ATTORNEY ADVISES said that Beaver City had transferred $65,000 from their power system to the General Fund last year. This is also reflected in the city mill levy. Beaver residents pay 9.8 mills, Minersville 17 mills and Milford 20 mills. In a comparison across ac-ross the state, between cities with municipal power systems, sys-tems, cities with municipal systems mill levy averages eight mills less. It is estimated that in five years, by the time a power plant could be constructed con-structed the cost of geo-thermal geo-thermal will be less than conventional fossil fired power. The differential between be-tween the two could continue to spread, making geother-mal geother-mal power increasingly cheaper.' The Roosevelt Springs unit of operators is expected to put a price on the cost of steam this month. If that price is based on the cost of drilling, maintenance and a reasonable profit, this will hold true. However, if it is tied to fossil fuels, then it would continue to escalate along with the price of fossil fos-sil fuels. Geothermal energy is much less labor intensive than fossil fuels. There is no mining or refining, and therefore should be cheaper. cheap-er. Labor costs would be much less a factor in a geothermal geo-thermal power plant. The Roosevelt Springs reservoir is considered one of the best in the world for electric power generation. It has adequate heat and pressures and is extremely clean compared to other reservoirs, res-ervoirs, therefore requiring less maintenance of the wells and power plant. Asked how the unincorporated unincorpor-ated areas would fit into a municipal system, Fadeltold the groupthatifUP&Ldeter-mined groupthatifUP&Ldeter-mined that it was not feasible feasi-ble for them to continue to service the area, the municipalities muni-cipalities could. However, if UP&L wanted to continue and the pumpers wanted to form a non-profit or ganiza-taion ganiza-taion and purchase their power from the municipalities, municipali-ties, they could. Since the cost of purchasing or construction con-struction of distribution "lines would be paid by con -' sumers through1' revenue bonds, the cities could own the system. Joe Melling, who has been working with the Beaver Co. Power Group told them that the FERC funded the feasibility feasi-bility study in July of 1978. The municipalities are eligible eli-gible for a DOE loan guarantee guar-antee of 75 on a geothermal geother-mal power system. This could include purchase or construction of the dis- trlbution system If started 1 together. The DOE loan ' guarantee carries a default ; , clause which Is undesirable ; to private enterprise, which has held up development of Roosevelt Springs. j Fadel said that UP&L is guaranteed a 15 percent profit after paying all expenses ex-penses and taxes. He said - that includes state and fed- I eral taxes, depreciation, franchise tax, property tax and income tax. Private I power rates are controlled 1 by the Public Service Com -mission, while municipal systems should be able to set rates 10 percent lower, plus save the taxes, which could go into the general fund. He urged Minersville and Milford to purchase their systems now, and use wheeled wheel-ed power until a plant could be built. Fadel indicated that power systems were no more troublesome than water wat-er and sewer systems. It was noted that if MX is built, there wold be fjont i money available from the Air Froce for extensions of the distribution system and additional power generation gener-ation if needed. This would be available only to municipal munici-pal systems, according to the Air Force, and not private pri-vate utilities. |