OCR Text |
Show In fl Eta r mrm r rm wna r n pm f f" jf two increases on to its customers by allowing Despite all of the problems and price in- LllI Oil wU9 i Mm ill I ill j fm h. 11 I fm rates to increase by 12.5 percent and 6.1 creases, C-PU and its customers have a firm, If J 1 II 1 a It 1 El I l I Iff 1 l t-3 lSj P percent respectively. reliable, power source by virtue of a firm I V I 1 J 11 I ff I J B 1111 Cm VI Ba While UP&L increased its wholesale rates purchased power contract with UP&L and we hi aiiiii Arll A AIIIITir A in 1975 it also succeeded in getting a provision are thereby assured of our future rriDTLJirrITI7rZllC flC IDflI A ft II MI A X hi I N fall IN I fHlfil ll known as a fuel clause adjustment. This is a requirements. Some of our neighboring rUll I NL ll I IaLLIiO Ul IllUll rtllU llttOlllllvMVMl UUUI1 I ILO provision whereby the wholesale power bill is municipally owned systems may not be quite adjusted monthly, upward or downward so fortunate when they exceed their depending upon the price the utility paid for allocation from the government. Some of pi xl i i i i j r jl i d d: cu,n lltok niulrlin Mononori(Urc;i its fuel to generate. In some states fuel cost them have already exceeded their allocations (This is the text of remarks delivered byJ.P. Paris, Southern Utah Division M anager at the Cedar City Jaycees adjustments are authorized on customer's and are womdiy talking with us about the Dublic meeting held on February 1 7 1977. Because notall of ourcustomers had an opportunity to hearthe bjiis; in utah, fuel cost adjustments are not possibility of delivering energy they pur- puuiiL meeting iiciu un rcuiuaiy i i , m i rr allowed on customer bills on a monthly basis. chase from UP&L when, as and if it remarks, we are re-printing them here foryour information.) Needless to say, because of that, by becomes available. December 1975 our wholesale power costs This is perhaps a good time then to tell you In order to understand how electrical owned. This ration was worked out after So far, this situation I'm describing sure had increased by another 11.6 percent but the a little bit about how C PU goes about energy reaches your homes and businesses evaluation the book value of the assets resembles what our company faces. Utah Public Service Commission allowed us providing for the power requirements of its you must first accept the fact that there are 3 belonging to SUP Company. Nevertheless, what would the rates be? You to only pass on 2.8 percent to our customers customers. fundamental things that must take place. It is from that time forward that we took don't know but you hope less than what after conducting public hearings in April I've already told you about our firm power First, of course, electricity must be the responsibility of doing those things you're paying now. How come? If the com- 1976. source from UP&L. By now you should have generated. You can't store electricity (ex- necessary to insure an adequate, reliable munity owned the system it wouldn't have to By that time the Company had seen even also concluded that its quite expensive. C PU cept perhaps by storing water behind an source of energy for this region. pay property taxes or income taxes or further increases in purchased power costs however, is blessed with some means of hydro-electric dam), so it must be produced In ,0 this company faced a similar franchise taxes. because of this fuel adjustment clause buying that purchased power in an the very instant it is required. Thus the first situation as we are facing today a heavy After all, California-Pacific Utilities paid causing us to request additional relief of 9 economical way. In order to do that we try to fundamental activity with electricity is investment in facilities for the future. At that the Iron County Treasurer some $89,000 in percent. Again the Public Service Com- reduce the peak demand we must pay for by Generation. time the company had just completed a new property taxes last year and some $14,000 in mission held hearings in August 1976 and operating our Steam, Hydro and Diesel In order to generate electricity efficiently it 138 m voit transmission line in order to bring franchise taxes directly to Cedar City. This in subsequently authorized an increase of 4.475 plants during peak periods. The plants aren't must be done by large plants which are often fi'rm source of power into this area. At that addition toa payroll of $613,000 spent in Cedar percent on your rates. big enough to generate all of our needs so located near a source of fuel. The next time it was also expected that power would be City. As you can probably begin to understand, they are used for what's known as peak fundamental problem with it then is to get the available from the Colorado River Storage Some of this type of expense could be the fuel adjustment clause could have the shaving. The energy produced by those power from the generating plant to the area Project (CRSP) The company soon learned, avoided if the City owned the system thus company before the Public Service Com- plants is quite expensive therefore, the idea is where it is needed. Again, in order to tran- however that the power from that project you'd expect lower rates. Moreover, the City mission requesting formal rate proceedings to shave as much demand as possible but smit large quanitities of power to distant would be allocated and restricted to may be able to disguise the power they almost on a monthly basis. You can probably operate the plants for as short a time as locations efficiently, it must be done at ex- "preference customers" that is, municipal purchase wholesale from Utah Power and also understand that frequent rate ap- possible. In that way we buy less KW of tremely high voltages. In our area, that is anH government owned systems To make Light as "government power" and have the plications are expensive to the company and demand from UP&L which right now costs done at voltages of either 138,000 or 230,000 mMrs more complicated the United States government pay Cal-Pac $4.20-KW for ultimately expensive to you the customer. $4.84-KW. This can hardly be compared with volts. Thus is born the second fundamental Bureau of Reclamation (USBR) made known delivering it. Why not, several other com- The company therefore, has proposed a the "postage stamp rate" from the govern- activity, Transmission. its pian to construct duplicate 138,000 volt munities in Southern Utah are doing it. system to the Public Service Commission ment of $1.32. Once power is transmitted to an area what transmission lines throughout southern Utah I might tel1 you now, however, that the whereby a set amount of surcharge could be Carl Palmer passed off thjs peak shaving can you do with 138,000 volts? Needless to to deliver that power and the inevitable result masquerade for those communities is fast added to a customers bill to recover the function as "possibly doing some good" say, all that you need at your place is 120 became apparent C-PU facilities would soon coming to an end. You may also care to ask fluctuating costs resulting from those during his performance a couple of weeks volts, poosibly 240 volts or perhaps 480 volts be rendered valueless Our generous who makes up for those taxes not collected changes in Purchased Power Costs with the ag0 Tne tnjth is the snaving function for your large motors. Thus the power must government however, offered a solution. from the City owned utility system. I don't surcharge amount being reviewed can save as much as $800,000 per year in be transformed to useable voltages and "We won't duplicate your facilities if you will think I need to tell you: you do. periodically by the Public Service Com- purchased power costs. Carl Palmer then distributed throughout a community. We aeree to deliver energy to preference Moreover, each time the utility loses a mission to determine if it is proper. went on tQ represent to you tnat the Steam have then, the third fundamental activity customers in your area for $4.20-KW-year." community, the heavy burden to pay for Similar surcharge systems are in effect in plant was "on the books" at some $1,800,000 known as Distribution. They said in essence. So with the "gun to unsubsidized service is shifted to fewer other states and help reduce the cost of and me diesd ,ant at some figure in excess Many companies accomplish all three of thejr temple" then our company's customers. That is precisely what is hap- frequent and expensive rate proceedings. So 0f $600,000. He was supposedly quoting from a the functions I just mentioned . Some com- management agreed The company dyf pening to us riSht now. We have a huge in- far, the Public Service Commission has not document from the Public Service Companies Com-panies purchase most of their power succeed however in acquiring firm power vestment in facilities designed to take care of ruled on that request which was proposed at mission. If he was quoting from the PSC files requirements and do only the transmission purchases from the CRSP for about 10 yars the needs for the Southern Utah area during an initial surcharge of 1.876 percent on your he would be referring to the Company and distribution functions. Others just untii the demands of the preference the next 25 years. The cost of delivering bill. Depreciation schedule and was representing distribute energy within a community. customers grew to their full allocation. As present power needs to C-PU customers over On August 1, 1976 UP&L once again the beginning balances which are original Regardless of which company accomplishes vou can see at the onset it wasn'i a bad that system is approximately $31-KW year. received Federal Power Commission ap- cogt values The truth iSj those plants are jn what fundamental activity each one requires arrangement Our company had an op- You might recall that the government pays proval to increase its wholesale rate. This fact depreciated to a balance at the end of an investment in some facilities. If a com- porturrity to receive some revenue for us only $4.20 KW-year to deliver its power to time our purchased power costs increased 40 1976 of $805,019 for the Steam Plant compared pany only generates electricity and sells it at delivering energy over its available system the preference customers. Is government percent. The PSC in turn authorized an off- with Carl Palmer's $1,800,000 (57 percent the generators, simple economics tells us to preference customers while enjoying power eight times easier to deliver? Frankly, setting increase on your bills of 18.62 percent. depreciated) $422,733 for Hydro Plants and that they can afford to sell it for less than if "cheap government power" sold to all 1 can'1 tel1 the difference between govern- Finally we requested an additional 22.87 $215,612 of Diesel Plants compared with Carl they had to invest in additional facilities to customers at what is called a "postage stamp rnent power and privately generated power. percent increase to offset $862,380 in annual Palmer's $600,000 ( 65 percent depreciated), deliver it to some distant point. The farther . During that time C.PU customers in 11 a11 comes down the same line- 1 think the charges from UP&L on their portion of the Please understand that all plants up through away the delivery point, the greater the ' ? ht different rate decreases time come for a11 of us who seem to new 230 KV transmission line. Carl Palmer 1976 had to be used just to keep the lights on in investment in facilities. Logically then, if During that same period loads in Southern champion the free enterprise system to stop tried to tell all of us that this request was for a Southern Utah because the existing 138 KV that same company only had to generate the Uten rom soe 13 MW in 1958 to ap placing the blame for high energy costs solely transmission line that was included in C-PU transmission line was loaded beyond its power and deliver it in bulk, it could do so at a proximately 70 MW in 1976 on California-Pacific Utilities. Take a look rate base. Let me make it clear that the 230 capacity. It is only now that the new 230 KV lower price than if it had to additionally build Prefprenre customers allocations beean to around, see who is contributing toward KV line between Sigurd and the Iron-Garfield line is in service as far as Parowan Valley, substations, transform the power to useable rrh the r mavinSum in so it became supporting your schools and other public County line was constructed by and is owned that the plants can be operated for a truly voltage and deliver it around to each home necessary for second class citizens served by services. Better yet, look at who isn't doing by UP&L. Because it is used exclusively by C- peak shaving purpose. It is now that we will and business. Pal Pacific to find a different source It was that . PU to deliver energy to southern Utah, we be able to fully utilize these plants as peak I believe you can now begin to understand a. c' " I lwn to Mlv iHe Just because some stupid federal law must pay the ownership costs. shaving units, that it doesn't matter who performs the ?h ?: f Z "nreference law" which which makes less sense t0 me than 0SHA' Those costs are $862,380-year. Here again, You've now heard me tell you how it was, activity, there is investment involved with all "?! n3 npnt nf the nnnnlatinn to says a government owned system gets a the Utah Public Service Commission granted how it should have been and how it is now. Let of it. The rates charged are based on the cost ,s Jr ?ri?l , fl , Jw , Iffitf hv the subsidized advantage over the system which a tentative increase of 12.349 percent on me wind up my part by telling you how it of doing each of these functions so you can see eov T P J l"e serves you, why should you tolerate that? September 29, 1976. No increases have been probably will be. that there really is no "middle man," in the percent. Wny should you eliminate the private owned authorized by the PSC since that time even First of all, we can indeed expect further delivery of electrical energy. Either one, two Through the years, those responsible for system you always thought you stood for and though additional hearings were held on this rate activity. By we, I mean everyone in- or three companies could be involved but providing your energy needs in this area kept replace it with an unregulated government controversial request during November 1976. eluding those subsidized government each of them has to accomplish at least one asking why? Why should customers of in- monopoly? In summary, the PSC approved rate in- systems. The days of cheap power are indeed vital function. vestor owned utilities be discriminated Price of the product you say! Why not take creases totaling 39.2 percent during 1976 and over. Our wholesale supplier is continually Now lets address the question of who owns against by being forced to sbusidize those action against those elements in our society has yet to render a decision on requests which evaluating its costs and rates and when the the facilities to accomplish the three fun- customers of municipally owned systems and that are getting the free ride at vour ex- could increase present rates by ap- need arises, you can bet they will seek further damental activities . It must be recognized still not receive any benefits of the govern- pense? Make them pay their fair share! I'll proximately 9 percent if everything rate increases. that any or all of the functions could be ac- ment power? My predecessor, Mr. Hanson guarantee you, if every power user in requested were granted. As far as C-PU is concerned, in all of our complished by private or investor owned took the matter up with Senator Moss and his Southern Utah was required to pay for the One of the most commonly asked questions rate activity we have only addressed the companies or they could,be accomplished by response was that to try to change the 1906 power he uses based on what it costs to get it by some of our customers is, "Doesn't C-PU increased costs of purchase power and line publically owned government systems. Once preference law was like ''tampering with to him, your rates would be lower right now realize or care what increased rates are charges from UP&L. Many of the same again, regardless of who owns the system, it motherhood." It is interesting that I took the and they would have been lower yet during doing to the elderly and fixed income factors that UP&L sees which justify their must first be purchased by raising capital. same issue up with his successor, Senator the past 10-12 years. groups,?" In response to that let's begin by wholesale rate increases are present for us The private corporation raises the capital by Hatch and he feels it is worth looking into. He We hear our elected representatives tell us saying", ."of course we care, we care about all too. For instance, we have our portion of the selling stock to investors or selling other needs only some pressure from someone to "get involved". Our Senator, Orin Hatch, of our customers." By now you should have new 230 KV line from the Iron County line to securities such as bonds. Government besides the utility company and I'm confident urges us to let him know whats bothering us. gotten the message from me that all Parowan to pay for. That investment was systems usually are limited to selling bonds. he would take action. We heard stirring remarks last Saturday customers are extremely important to us. about $2.3 million. There is also a need to At the risk of being repetitious, I will repeat; The most disturbing thing to me about this evening from Congressman Marriott at the We're not in a position to shed any one of further extend that line on to Cedar City soon, it doesn't matter who or how the needed entire situation is the lip service being paid Cedar Livestock banquet that we must get them. Other costs of operations such as labor and capital is raised, all securities require a to the private enterprise system by some of involved if our problems are to be even My heart especially goes out to those materials keep increasing also. Fortunately, "return" either in the form of interest or our critics. One individual who says he ad- identified, let alone solved and that free people who don't have a chance to get even by we have experienced a remarkable growth dividends. So when critics of investor owned vocates free enterprise in this town is enterprise is the system that really works. asking for a salary increase or raising the which helps to mitigate some of those inutilities in-utilities say, "Why don't the stockholders suggesting that the private owned utility has I agree we can recognize the disease and prices in their store or whatever creased costs. It's very doubtful however, take a cut in dividends?" They're actually no competition, therefore, it should be sup- tjme 'hag cQme q tnat disease otner measure is available to us in this in- that we have grown or will continue to grow making a request similar to a homeowner planted with a government owned system. instead of treating only the symptoms Lets flationery society. Most often the elderly on at a pace fast enough to offset all of our in-asking in-asking the bank to reduce the interest rate on Lets take a look at that briefly if you care to agitating those controversial issues that fixed incomes and some others can only creased costs. I think we have to accept the his home mortage. Both the stockholder and look for some logic m that solution. sere , Q djvjde our community at a time tighten whats left of their belts because the fact all commodities in general and utility the bank advanced the use of its money with First of all, it must be recognized that if you we should bg united To cnoose up sides Social Security payment remains constant. service in particular will be increasing in cost the expectation of receiving a return. In the tried to establish viable competition for a have an fasnioned "donny brook" The solution to that problem, however, fr0m now on. We only hope not in such big case of the stockholder, he additionally ex- utility system, it would be necessary to have problems becomes one that is serious and sensitive. To increments as we've experienced during the pects that his stock will increase in market two or more systems. I hope you can already Let,g pjck committees alrjght, but let's pick give this element of our society special and iast two years. My presentation has been an value and he can someday sell his stock for see -that such a situation would be quite un- unbiased committeemen and have them look perhaps deserved consideration through attempt to give you a look into the reasons more than he paid for it. Because most utility wieldy. There would be at least two sets of the entjre blem not just at tnose special rates would naturally shift more of why things are as they are. The story I've told corporation stock transactions are con- pole lines where one now exists and all other alternatives which may get us aboard the the burden toward other customers. You may you hasn't been pleasant nor the outlook very ducted on the open market such as the New facilities would also be duplicated. subsidy bandwagon agree that this is proper. But you must encouraging. There are however, some York Stock Exchange, the activites between I'm sure the inefficiency of this is apparent re al confused and realize that this places the utility in the things you can do. First, as I mentioned buyers and sellers and the price of the stock to you. You can probably further see that in tQ'know wnat you-re paying position of making welfare decisions. Do you earlier, You must become involved with our has no effect on the company unless the such a situation, one company would soon for and what you can expect Letmegiveyou really want that? Perhaps, but I happen to elected representatives in Washington, company itself decides tosell more stock as a prevail and drive the other out of business. an accurate status :t ontne rate activity believe that responsibility for those kinds of That's actually the medicine that will help means of raising additional capital. Then where would the competition be? since 1975 when it first became necessary to welfare decisions is best vested in our elected control the disease. There are, however, What happens then to the money we all pay Society has recognized this and regulatory purchase wholesale power from UP&L . public officials. some other things that you can be doing to to California-Pacific? Company wide during bodies have been set up. Those regulatory Qur company's wholesale cost of power at While all of this rate activity has plagued C- keep your electric consumption monitored 1976, approximately 87 cents of every dollar bodies assign territories to utilities and tnat tjme jumpecj 39 percent PU and its customers, we faced an equally and under control. We have customer after collected went toward paying for purchased substitute regulation for direct competition As j mentjoned earlier, the rates which a challenging condition during the Summers of customer call or storm into our office and power, gas, operation expenses, main- It is the duty of these regulatory bodies such uU1Uy cnarges jts retail customers are 1975 and 1976 when transmission lines were blame the company for the amount of energy tenance, depreciation and taxes. The as the Utah Public Service Commission to authorized by and fall under the jurisdiction loaded beyond their reasonable capacity and they use. Believe me, there is very little the remaining 13 cents out of every dollar was insure that rates are set at levels which are of the utah publjc Service commission. The right-of-way approvals from government utility company can do to control your con-used con-used to pay interest on bank loans, bonds and fair to both the consumer and the utility. That rateg thgt one utiJ. charges another for agencies caused undue delays in the con- sumption. Only you can control that. We can dividends. It might be interesting to note that responsibility is indeed a heavy one, par- wholesale power on the -Other hand, are struction of the badly needed 230 KV tran- only measure the amount you use and only 5 cents out of that 13 cents was used for ticularly now. f authorized by and fall under the jurisdiction smission system. I've already mentioned the compute a bill for it. dividends. Approsimately 22 cents of the 13 Let us however, look at the idea of a 0f the Federal Power Commission (FPC). portion constructed by UP&L and the cents was retained in the company and used community such as Cedar City substituting Accordingly, about the time we began pur- charges related with that. C-PU additionally f ) to pay for new facilities thus reducing the the utility company with a government chasing wholesale en.-rgy from UP&L they completed contiguously approximately 30 f IS -L-S need to borrow that much at higher rates of owned system. Several logical questions may had dj before thepc a rate increase. miles of 230 KV line from the Iron County line V interest. come to mmd. W here would we find a power That increase was granted on June 3, 1975, to Parowan Valley. No requests for rate relief Y Inasmuch as C PU stockholders seem to be source. How would we get it here. How and our Company's purchased power costs have been made concerning that portion a sore spot with many people, it might be would we pay tor it. jumped another 17 percent. constructed by C-PU even though Carl interesting to learn who they are. A recent The source men prorurPoweTL' As y0U may rememler, the Public Service Palmer and others have stated so following survey conducted by our company revealed Light Co Unless yofre vlX to build some Commission authorized Cal-Pac to pass those what they called "in depth studies, that our average shareholder is married, duplicate transmission line, there is but one XJpop ?SVI ( Following these remarks, two brief presentations by Company representatives explained further how customers per year. He also may live in any state in the fr0m the way it is right now could utilize information on their bill ad vantageo u sly a fi d also offered tips for energy conservation which could U; Remembering the three functions of help reduce your bill. Forthis specific information, please contact our District offices in either Cedar City or IO . ... -..ii providing electric service, that leaves but r ' Carl Palmer that some inpropr.ety took place distribution. A community could acquire Hurricane, in the merger between California- a distribution system but it would have to pScLor comPanyeSSouthernnL'tah PovS .0. How? . Probably a bond , J, ,, DotlL ,,, . . ,,,. , ,u issue, but remember bond holders require a Tm9"mmmsw Company. Perhaps the best source for the ' , , . ,. . . . ... , . ,, m T j . 1 t .v. . .u t-t v r. ul- payment of interest just like a shareho der Yl f 1 I Ml 9MSi3 xiKt".,, M Califorjvia-Pacific Utilities Company May 27, 1958 and June 4, 1958, author zing the . . b .. . . . vi $' . . , lL j 7 11 to each consumer then would have to be yil zrzpr tzszzzu: s&zjsz W pany received two-thirds of C PU stock for , . , . ,', V every one share of SUP Company stock he course' bond ,nterest and bond retirement- V 1 f I |