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Show Mayor's Message Etfl. Explains Stand. In WBdj Dispute There has been considerable discussion and controversy regarding re-garding the position which the City of Bountiful has taken with regard to the downsizing of the Intermountuin Power Project. Before the council acts on the proposed downsize contracts before us today for consideration, I would like to take a few moments to clarify the City's position and briefly review how we have arrived at this point. ON WEDNESDAY, Nov. 9, l'JK2. representatives of the In-termountain In-termountain Power Agency attended our City Council meeting and explained a proposal prop-osal to reduce the size of the Intermountain Power Project from four units to two units. Their request emanated primarily pri-marily from the adverse financial finan-cial impact that a four unit project pro-ject would have on Utah Power Pow-er and Light. There was even some concern that Utah Power and Light would have preferred prefer-red to see the project fold and go into default rather than pay the costs associated with a four unit project. REDUCING THE size of the Intermountain Power Project, as proposed by the Intermountain Intermoun-tain Power Agency, would allow Utah Power and Light to reduce its participation from 750 megawatts to 60 megawatts. mega-watts. Because Utah Power and Light had signed a "take or pay" contract, theirfull participation par-ticipation in a four unit project would have cost their rate payers an average of three hundred million dollars per year for the first ten years of the project, resulting in rate increases in-creases of maior proportions. Reduction to a two unit project pro-ject would lessen the debt to equity ratio on Utah Power and Light's financial statement, state-ment, save their rate payers hundreds of millions of dollars, and improve their ability to be rated favorably by bonding agencies. THE CITY of Bountiful, on the other hand, had nothing to gain and everything to lose by downsizing the Intermountain Power Project. Rather than a "take or pay" contract, the entire en-tire allocation of power to Bountiful was "laid-off" to the California cities participating in the project, with the understanding under-standing that Bountiful could recall the power as it needed it. Reduction to a two unit project would thus adversely impact the city of Bountiful in three ways: 1. The amount of power available from the project would be cut in half. 2. THE COST of the power available to Bountiful would increase resulting in a minimum mini-mum of one hundred and fifty thousand dollars per year increased in-creased cost and as much as one million seven hundred thousand dollars per year in additional power purchase cost. 3. The project would have become the property of the municipalities of the State of Utah when the bonds were retired re-tired under a four unit project, whereas under a two unit project pro-ject the California cities will keep an operating interest in the plant. IN SPITE of the tremendous disadvantages to the city of Bountiful, however, it should be pointed out that a two unit project would be easier to finance fi-nance and would result in advantages to other municipalities, municipa-lities, as well as to Utah Power and Light. On this basis Bountiful Boun-tiful City contacted IPA and stated that, while a four unit project would be preferable, we would agree to a two unit project providing that the economic eco-nomic disadvantages resulting from the downsizing would be offset to a reasonable extent by considerations needed by Bountiful in other areas. These considerations primarily pri-marily dealt with our relationship relation-ship with Utah Power and Light. We were instructed by the Intermountain Power Agency to meet with Utah Power and Light to resolve these differences. PURSUANT to that direction, direc-tion, the city entered into negotiations with Utah Power and Light. At the outset it was agreed by both parties that the negotiations would be treated confidentially. As a result, many times the city was brought under criticism critic-ism by those who did not understand the nature of the negotiations, nor the reasons for them. We kept our commitment commit-ment to Utah Power and Light, even in the face of unfair criticism critic-ism and statements by others involved in the Intermountain Power Project. We feel that Utah Power and Light treated us with the same consideration and respect. AS A result of the meetings with Utah Power and Light we have obtained a Memorandum of Understanding which sets forth terms and conditions for those items which the City sought from Utah Power and Light. A press release on the Memorandum of Understanding Understand-ing has been prepared by Utah Power and Light, with ourcon-currence. ourcon-currence. At this point I would like to acknowledge particularly particu-larly the fine spirit of cooperation coopera-tion we received from President Presi-dent Harry Blundell of Utah Power and Light Company, who personally involved himself him-self in the negotiations in an attempt to meet Bountiful's needs. WHILE THE negotiations did not produce all the results which Bountiful desired, they did set a positive framework for future relationships between be-tween our city and UP&L which we hope will continue. We appreciate the patience of the other participants as we worked through this process and hope that they understand the reasons behind Bountiful's position. IN CONCLUSION, I would like to say that the City of Bountiful is committed to the success of the Intermountain Power Project. As a participant partici-pant and as a part owner, we have every wish for its success and hope that someday all four units will be built and will be available to the communities and utilities which provide electrical services to the citizens of the State of Utah. |