Image provided by: North Santiam Historic Society; Gates, OR
About The Mill City enterprise. (Mill City, Or.) 1949-1998 | View Entire Issue (May 21, 1953)
May 21. 1951 I—THE MILL CITI ENTERPRISE ONE CENT POWER . • Symbol for Better Living his exorbitant rates down to that other yardstick for low cost power Bonneville's costs today include about Address of Pres. Owen W. Hurd 35% for interest, in the near future will be established. 1 level. before the 40% of every BPA expense dollar will Eliminating the Gap One Cent Power Is Now Northwest Public Power Association go for interest. At this rate a jurrp Technologically Possible May 7, 1953 On February 4, 1952 Congiessman in interest from 2’z% to 3'2% or a Practically eveiy urban household John Rankin inserted in the Congres gain of one percent would tesult in a Recently on a trip East I ran acro.-s in the Province of Ontario has avail sional Record a table which showed 16% rate increase. a newspaper advertisement which read able an abundant supply of electricity what the average residential rates It is interesting to note that when something like this: “Electricity is at an aveiage rate of about one cent would be in each state if the Tacoma | five private utility companies formed today’s biggest bat gain. While every ' per kilowatt hour. In fact 42 Ontario rate schedule were applied. Tacoma’s Electric Energy, Inc. to build a b g thing else is going up, your electric company is holding down electi ic cities have rates well under one cent residential average rate, of course has ' steam plant to compete with TVA for per kilowatt hour. Outstanding is the been under one cent for some years. an Atomic Eneigy Commission power rates. Use low co t electrictiy plenti city of Fort Willaim with its 35,000 Congressman Rankin found for 1950 . contract, they were very soon able to fully. Electricity is cheap. The more population. Power is sold at the a total electric revenue for residential ! sharpen their pencils and finance 95% you use the cheaper it gets.” spectacularly low figure of 0.669 cents use of »1,931,695,800 or roughly two ! of their capital requirements by issu So I looked up the rate schedule of per kilowatt hour or 2/3rds of a cent billion dollar'. If this power had been ing 3% bonds which were eagerly pur the utility and found to my utter for residential use. sold at Tacomas’ rates the saving chased by some insurance companies. amazement that the first step in the Within the United States there ap would have been »980,711,179 or a residential rate schedule was six cents pear to be nine urban electric systems rate cut of 50.7%. . The lates would The time may come when private util per kilowatt hour and the final or in the Pacific Northwest and nine be cut in half. This is one method ities will sharply reduce and perhaps in time completely eliminate the use lowest step was three cents per kilo more in the Tennessee Valley which of dramatizing at least statisically this watt hour. If you really go all elec qualify for what Gus Norwood calls gap between the present high electric of common stocks as a source of tric, you get down to the low-cost the “One Cent Club”. Thus on the rates around the country and what 1 capital. Obviously common stock does not serve any longer its traditional power rhte of three cents per kilowatt North American Continent we have | we mean by one cent power. Un hour. This is what people in many 60 utilities selling electricity for resi doubtedly an even more dramatic dem purpose of taking, the risks, at least in the electric utility business. Today areas are told is low cost power. dential purposes at average rates un onstration could be made by taking an the holder of private electric common How can the public be protected der one cent a kilowatt hour. individual household and showing how | stocks is merely raking in the divi against this technique of the BIG The nine northwest utilities are the standard of living can be improved dends. If and when the private com LIE? Our systems, by sheer hard Vera Irrigation District which in 1951 i at no additional cost merely through work and the most economical man sold energy for home use at 0.81 making available one cent power in panies may become a competitive fac tor in the electric utility business. agement have earned the legitimate cents, Monmouth at 0.82, Salem Elec place of the all too frequent what-the- A second element in one cent power reputations which are suggested by tric 0.83, Canby 0.85, Forest Grove market-will-bear-rates. is taxation. Not only are private such expressions as low cost power, Bear in mind the fact that the aver 0.89, Tacoma 0.94, McMinnville 0.94, cheap electricity and reasonable rates. Milton-Freewater 0.95 and Grand age American city household was pay electric companies subjected to a great many taxes, but so also the public and Several years ago a former president ing 2.77 cents per kilowatt hour last co-operative systems. High taxes on Coulee 0.96 cents. of this association, Ford Northrop, These 60 low cost power agencies year or 177% overcharge as compared profits of electric companeis are jus stated our ideal to be the furnishing have certain common characteristics: with what now appears to be techno tified. The federal corpoiate income of “the best possible electric service at in all cases is logically possible. tax is fair and we should always favor the lowest possible rates.” Who would (1) source of power chiefly hydro, (2) area served is ur Let me explain at this point that I it as a check on private electric com think that the advertising agencies ban, and (3) all systems are publicly- am not including in this study any pany profiteering. However, all other of the private elect: ic corporations owned. rural electric rates. Neither the Fed taxes on the electric business should would steal the idea of low cost power My purpose in citing these 60 sys eral Power Commission nor the Rural be questioned. In Ontario there are and apply it to the exorbitant rate tems is to suggest that their combined Electi ification Administration has no taxes on electricity. This is one schedules which they are imposing experience is conclusive evidence that done its duty in the field of rural of the basic elements in the achieve upon people in many areas. Yet it is the electric utility industry has electric rates. FPC publishes no rate ment of a one cent power rate on a a fact. The companies have stolen reached the point in its technological statistics for cities of less than 2,500 province-wide basis for urban areas. our labels. We do not have a monop development where we can safely ex- population. This leaves us without Some states do not tax rural co-opera oly on the expression, "low cost | pect one cent power for household use reliable rate data on millions of cus tives. Many public power systems, power.” We do have the goods which | in favorably situated hydro areas should go under that label. I think ' where the utility is publicly-owned tomers in the villages and rural areas. however, have permitted themselves to Unfortunately REA statistics lump all be heavily taxed. In some parts of the best answer to this problem is to fand serves an urban area. consumers of rural electric co-opera the country municipal systems permit find a better label. For this reason The next step is to explore where tives as one class. It would appear the diversion of electric system rev I suggest that we aim at and use a i it is resonable to expect that steam that in rural areas the national aver enues into the general fund. When new slogan or motto: ONE CENT j generation areas will also be able to age selling price of electricity in 1940 such diversions are made, it should POWER. get down to one cent. I am convinced was about six cents and had declined be recognized that the impact ulti By one cent power I mean the after seeing the excellent perform to four cents by 1950. The Bonneville mately results in higher electric lates supply of electric service to all resi ance records of the new TVA steam Power Administration statistics for to their own citizens. dents in the service area of a utility plants that we have also reached the 1951 indicated an average residential These two cost elements of money at an average rate of one cent per technological stage of development late of 1.87 cents for rural systems. | and taxation are of a general nature kilowatt hour. For the purpose of where w ecan expect one cent power these remarks I am omitting rural in certain steam aieas. Back in 1920 A similar record is revealed in TVA I which lie at the policy rather than rates, commercial rates, and industrial it used to take three pounds of coal and Ontario statistics. Until more the operating level. At the operating rates. The aim is one cent power in to produce a kilowatt hour. TVA led and better statistics are available I level are five main cost areas: (1) would suggest as a conservative objec the home. the way at the Watts Bar steam plant tive for systems serving only rural cost of wholesale power, (2) distribu- Anyone can steal the words “low by getting the rate down to 8/10 of j ateas a one and a half cent average cost power”, but no one can steal “one one pound per kilowatt hour. The household rate as compared to a one cent power” unless and until he cuts national average today because of the cent urban household rate. Neverthe- , many high pressure and laige size less I like the motto which appears | steam plants is about 1.1 pounds per every month on the cover of Rural kwh. Furthermore TVA has been Electrification magazine, “One Cent | locating the steam plants so as to cut Electricity For Every Farm”. This the cost of coal handling. Taking motto may sometime be achieved but into account the advantages which probably it will require a number of TVA has utilized in its steam plant years. program, it is interesting to note that The Ingredients of One Cent Power their cost of power at the bus bar I have now- stated the problem of ranges fom 2.3 to 3.9 mills per kilo the private power companies’ mislead watt hour. Last year the average cost of power to TVA distributors was ing claims about low cost power and I have a<h anced the one cent power 4.27 mills. You and I have often been told slogan as a solution. I have shown something like this: "Why of course the existence of a wide gap between you people in the Pacific Northwest the present national average home can sell power at low cost. You have rates and the one cent goal which is the tremendous advantage of all that technologically possible. My next task cheap water power. There is no fuel is to mention some of the elements or cost.” This expression will be changed I factors which help to make for lower as more and more people can study I cost electricity. The first element is the cost of the economics of TVA steam generat I money. The best answer here is to ing. In the next five years as TVA demonstrates its ability to sell great | pay off your debt and stop paying quantities of steam generated power I interest on it. The next best answer at average rates under five mills, an- is to get your money at 2% or a sim ilarly low rate. Obviously the private Think ol o kitchen where the ronge it o beovMvl port of the both detign . . . whore utility method of financing on a basis ALWAYS Oren ond cooking top ore teporoto to they of a six percent rate of return after Con bo imiolled of the moil convenient federal corporate income taxes height and location You con have it with not result in one cent power. Thoroadar and thot t not all-lor Thermodoe The cost of money has a great lev .59 qt giver you eaiy cleaning tlainleu tleel, o erage in the power business, especial telection of cooking topi ond the wonderful ly when hydro projects are involved. coolnoit, cleonlinett ond convenience ol tion expense, (3) customer collecting, billing and accounting expense, (4> general administration, and (5) sales promotion. It is not my intention to discuss these five operating areas in detail. In regard to sales promotion I think our systems err more in the direction of not spending enough. Some of the most progressive utilities spend up to 3% of gross revenues for promotion of power use. Certainly a minimum program with a budget of 1% of gross revenues should be a standard for the industry. One justification of this expense is the necessity for building load and improving load factor so as to reduce the unit costs in the remain ing four operating areas. This is readily measurable in regard to wholesale power rates, but actually the more important reductions in unit costs occur in distribution expense, customer service and general admin istration. A good working goal for our sales promotion departments might be to build up our aveiage home load to 10,000 kilowatt hours of use per year, starting with an energetic promotion of the water heater load. The Engineer Vs. the Manipulators The gap between electricity at 2.77 cents national residential average per kilowatt hour and one cent is entirely too gross to be ignored. Whenever there is a wide gap between what is ; technologically possible as against what we are accomplishing today, it is reasonable to expect that a pres sure will eventually build up to im prove our present mode of doing things and to advance toward the technologically possible. Of course, it should not be necessary for such public opinion or political pressures to develop. This great disparity Imagine a Kitchen THERMADOR the original bilt-in Electric Range 5PRED SATIN automatic • l•Ctrical cooking 1 1 should be a challenge to all utility op- erators and engineers and they should feel a deep sense of moral obligation to effect the economies necessary to get the average residential power rates down to whatever is technolog ically possible in each case. The problem in the private electric corporations is the conflict in the objectives of those who sincerely try to reduce cost and those who try to maintain a maximum of profit and provide the management and handle the financing. The manipulation at the top by management, by the fi nancial interests or by those who might have control aside from man agement or finance is never motivated by the objective of low rates. The aim generally is a maximization of profit by means of common stock divi dends or appreciation, by underwrit ing fees, by management or other service fees or by means of a cut on purchasing or contracting. There are many ways to milk an electric system. In the face of all these profiteering motivations and with a management staff loaded with men adverse to the basic objectives of low cost power, those who would lower rates and im prove service have an almost hopeless task in a private utility. What the electric utility industry needs is an emancipation of the en gineer. If only we could take the wraps off and let him go to work on the problem of slashing unit costs. The engineer is basically sympathetic to the objective of one cent power. I have said nothing about the per formance of our state public utility regulatory bodies. Perhaps they should be abolished as the wisest method of terminating a situation (Continued on Page 6) You don't have to b' a claustrophobe to appreciate the wide-open roominess of modern streamliners. Nobody likes to be cooped up, and on the train you have plenty of leg room and move-around- room. There are places to go on stream liners to the Dining Car or Coffee Shop, or to the Lounge or Tavern Car for refreshment or recreation. And. of course, there's plenty of room for your baggage. Remember, when you're go ing any place, that there are no finer streamliners than the Southern Pacific "name" trains listed below. Chair Cars on Southern Pacific's modern streamliners have been built with your comfort the first considera tion. Dust-free, draft-free air-condi tioning. No-glare fluorescent lighting. Soft - as - a - cloud foam-rubber seats. Extra large windows. Feather-touch doors. 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Only Shux Electric Phone 2961 You con easily do a room in houM with SPRED SATIN, th» most beau* Goodyear Tires & Tubes Tire Ö* Tube Repair Iho N«w Rich Lutter 100% loie» Enamel No-» do fine »nomohng in bo*, room», hifehen* o"d woodwork ir» holt rho rime p, or in minv*vt . • , tmoo'h Ol til*. «COM TO SHIR A CAT, TOO No matter what you pl move-from aardvark* to lynogefont we d like to remind you that for freight shipment*, too, you can't beat S.F. Wo hnve more mile* of line serving more Western citie* and town* than any other railroad. For fast. efficient dependable freight »er/ice-whether carload or I. «. I.-call our nearest agent. iiiiiiiiiiiiiiiiinmiimiiiti(^ Fomovt Welch’s | frozen GRAPE JUICE — n't tenor for You I = KSS THAR JC A GIRSJ = ^lllllll!IIIIIIIIIIIIIIIIIIHIIHII<lll>lil*l>l'll»lll<i< We give Green Stamps Bob and Dorothy Draper, Props. Santiam Farmers lo-op St ay ton. Oregon an aBBD s u a a & a a a c b b an KnOBJUOR A. E. ARMSTRONG. Agent Phone 1S05