11-22-1932 VCM SPECIAL
.
Special meetinG of the Village Counc~l, held in
the council room, Village P~ll, ~lk River, Minnesota,
November 22, lry32, fueeting called to order by the Pres_
ident, D.E.Davis at 2~30 P.M., with the following membeE
in attendance, C.E.Brown, J.D.Flaherty and Geo, Cornelius
The following int~rested citizens attended the meeting:
C.F.Robbins, Fred Pepin, Fred Ayers, Fred Shannon, Art
Bailey, L.A.Dare,
The President then stated that the purpose of this
meeting was to present a new Schadule of rates of our
own making to the power company, and at the request of
the power company~ who called upon Mr,Richardson, our
engineer, to subm1t the proposition,
This is the O~ficial Rate Schedule proposed by
Ralph Richardson, Consulting Engineer and approved by
Village Council, November 22, lQ32, to be put in effect,
either through New Franchise or by Council under ~unici_
pal Operation of Light and Power Plant, Filed November
22, 1q32~
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FOR COkPARISOfl WITH PROPOSED RATES AS PUBLISHBL BY THL
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EOWERU~OlvJ:'AHY SCH.r-,DUL~ OF RAT.c.S
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General lighting Service:
First 50 K.v'i.H.
Next 100 "
NE.xt 350 "
All over_
Discount 5~ if bills are paid
10 days, kinimum Bill: ~l,OO
$ ,08 per
.C65
,045
within,C4
net
K.W.H.
n
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n
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Optiona~ Residential Combination Service.
~!a11able for all residential service on one meter
~roV1Qed Cooking (2.K.W. or more) and, ~efrigeration
~~ used i~ ~onjunction with lighting. .
~1rst 50 K.W.H. $ ,08 perK.W.H.
l~ ext 1 00 n , 04 n
All over_ ..C25 'T
Discount 5~ if Bills are paid within
lY..inimum Bi.LI $1..00 net-----_~O days,
General Power Service: 1 H.P. anQ over:
First 200 K.W.H. $ ..~6 per K.W.H.
Next '00 " ,05 "
Next 5CO n ..04 n
Next lOCO n ,03 n
Kext ~4COO n ,025 n
Allover T1 .. 0 2 n
Discount of 5% if bills are paid with l~ davs,
l/Linimun Bill: 10R.P. and under $1..00 per' H.P. net
Allover lOR.P. ..50 per H.P. net
Street Lighting Rate_ $ ..025 per K.W.H.
Discount ~~ if bills are paid within 10 days,
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" The PowerC?mpan:-, represented b~r Iv.r. Foster, L.G.
1elson and Torn \~h1te, after some discu~Bion relative to
these proposed rates, asked until konday, November 28 1~3~
to check over our proposal and submit an answer 1 30' 9
ll.l.onday, the !8th, was fixed as the time of meeting: '
It w~s then moved by C.E.Brown and seconded bv
G~o. Corne11us that the rate report submitted b; 1X.~
R1chardson and the report submitted by H.W.koodv as spec-
ial attorney.for the village be approved and fiied and
ord~red pub116hed as a part of the official minutes of
the Village Council.
Upon vote the same was unanimously carried,
!"!01~ORAB1.r~ VILJ...AG1'. COUl~C 111
~LK RIV~R? kINb~SOTA,
Gentleman.
'You have re~uested that I report to you on
certain ~uestions which have artsen in connection with
the propoced election on the municipal light plant,
In the first place it is well to bear in mind
tha~ astheVillage Council and reresenting the citizens
of ~lk River you started to secure rate reduction appr_
oximately a year ago and to date ;70U have not in fact
secured an~ reduction, I know of no other business that
hao not voluntaril~T reduced its rates and chalges or
prices to a consideralbe degree within the last two years,
~xcept the telephone com,panies who al so enjoy a monopoly.'~
tow that the !ouncil has asked the ,people to give them
the necessar~ authority to deal ade~uately with the rates
the citizens have been given many figures as to other J
places and it is well to remember that through various
combinations of figures an~T desired result can be obtain-
ed by changing combinations,
However the Council has proceeded in an ordf.r~
and business like manner in the matter of rate reduction.
Many en;gineers were considered and after caI'cfully check-
ing reliable sources, the Council retained 1x, Ralph
Richardson, Consulting ~ngineer of St,Paul, who has had
years of industrial and munici~al experience and is qual-
ified ~o furnish sound advice as to the cost of a muni-
cipal plant, as to what it will cost to maintain and
operate the plant, and as to what the Village may expect
in the way of rates, He has given ~TOU a fair and unbias-
ed report and, if the citizens of Elk River are to!. "
receive the rates for electricity to which they are en_
titled, they must cooperate with the Council to carry
out the program arranged for rate reduction which the
Council gas set up after a caI'eful study of facts during
the past year,
On Page tJ of the Sherburne County Star }lews
of Nov. 17th, 1~32, the Power Company has an advertise-
ment headednn:Ow lY..uch Do You lay In Taxes", This shows
that the average 1?31 municipal taxes for all towns in
Kinneasota between1 cee and 2 000 population which have
municipally owned" eiectrical eenerating plants or distri-
bution systems was !21.10 per person,
I checked the figures in the League 0 Minnesoa
fuunicifali~ies leal' Book for 1~32, pages 142 to 14{, and
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found listed therc1n eleven ~owns between 1 ,000 and2,CCO
population which generate and distribute electric currem
One of these towns was Buhl, which is on the fron Range
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and anyone familiar with minicipal affairs in Minnesota
realiz.es tha tan~! comparison between towns in agricul tUlal
districts and towns on the Iron Range as to pEr capita
taxes is impobsible, Even the ~egislature acknowledged tj,
this difference when thay passed laws limiting the amount
of taxies which could be le.ied per capita, such laws
affecting only towms on the Iron Range, For this reason
I have left Buhl out of this calculation,
MUNICIIALITIES BETWEEN 1 000 and2 oeo GENERATING AND
DISTRIBUTING EL~CTRIC CURRENT.
NAME Iv.UNICIPAL lWNIClPAL FROilER TY LEVY
kILL RATE PER CAPITA
-rr:. 80 S 1 0 , ~ 1
3!) .. 60 11 , 9 7
17,64 ~,71
15, E,9 ~, 10
17,60 6,41
11 ,10 .5, 29
22.70 10.47
42,~O 9,71
19..40 6,'81
34,70 13,25
rr~~--- ---------
24,E6 9,16
-------- --------
28,So 11,66
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Adrian
AItkin
Blooming 1'rarie
Lakefield
Lanesboro
IJt~Suenr
Madison
Roseau
Warren
Wells
Average
Elk River
Note: These figures taken from the November, 1932 is~ue
of ~innesota Municipalities,
~ote: The 1932 League Year Book also shows the average
cost of 50KwH domestic light in these towns to be $5,25
as against$5 75 for E.lk River, and for 100 KwH an average
of $8.81 as against $10..75 for Elk River,
As to what mill rates, per capita levies and elec_
tric rates will be in these places when the next year book
is issued is purely a matter of conjectur~i b~t we do know
that the carefull study made cy the Counc~ and the ~on_
suIting Engineer for the Village show that subctant~al re_
ductions can be made in rates with a municipal pla~t . .
wi thout the neccessi t~r of lev~ring a bingle dollar ~~ mllm~-
cipal taxes, In fact, it is reported that ~eSueur w~ll pay
all municipal expenses for 193a from the earnings of its
light plant,
.
The ~ower Com~any also makes much of an ado by puttmng
in an advertising offering to pa~r $100 to anyone giving
certain information as to light plants which have been
paid for out of earnings with electric rates as low as
proposed by the Company, without help from taxes, I will
also give $100 to the power company if they will furnish
information as to anyone of these towns before listed
which levied last ~rear or will levy next year one dollar
of tax to pay for the light plant or to :pa~r any bOl!lds or
interest thereon, Both arc meaningless, as we all realiz.e
that it takesfrom fifteen to twenty years to pay for a
light plant and no such rates as proposed b~T the Power
Company have been in existance for that lengthof tmme,
The reason for this is that modern machinery and e~uip_
ment have made the difference,
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rhe 1-'o'Ner Company nlso calls ati~enticn to .he bavy
pe~ capita d~bt that.this bond issue would bring. All .
people who vall consl.der the matter will realize that they
~ow.have a.2er capita debt for a light plant even though
l.t l.8 not, l.n the form of municipal bonds and it is probabl'(
rn?stl~T water, As ~early as we can gather frow. the figures
gl.v~n in Mood~'s Utility Report, the Power Company figures
~rhel.r prop:rt~es at a value o~ approximately ~130,OCO~
!Ve are stt l.SflecL from the Englnecr' s rerort tha. t the
actual value of the properties is $25 COO..CC, The citizens
should also remember that municipalities do retire their
debts and that the interest item is annually decreasing,
whereas the Power Companies have never made it a practice
to retire a single bond or share of stock, but instead
to heavily overcapitalize their properties and to ask the
courts to permit them to charge rates sufficient to pay
7% on such over_valuation, l'40st of us have written clown:
the value of our homes business establishments and farms
by 50% or more in the iast few years amd the power compau-
ies have bcen one of thc fcw in(tustries which have not '
done this, Once the plant is paid for by a municipality,
rates can be further reduced and still the earnings of
the plant will be sufficient to aid in reducing taxes,
Another fact that the Powcr Company has not men_
tioned is that a town with a mmnicipal plant has a val_
uable asset and I am certain that not onc of the towns
listed in this article would sell their plants for less
than $1000,000 and from that up to $250,OOO~ Private
utilities arc only too glad to purchase municipal plants
an~ my past experience which extends over a period of
sevcnteen years inmmunicipal work makes me feel certain
that should Elk Kiver at any time decide it was wise to
sell its municipal plant, should one be bliilt, that it
can be readily sold at more than enough to pay all in~
dcbtedness against it, Bach ~Tear a town haG a municipal
plant, it is crsatin for itself a valuable asset, whereas
I'd th the service furnished b:y a pri vat e compan~r they are
always building for the compan~ and not themsclves.
This article ha~ been taken up with the advantages
of a municipal plant as it is the municipal plant idea 0li
which the Power Company has been attacking most strongly
in their statements, It should be remembcred by the
citizens of Ji.lk River when voting that they are cooperat-
ing with their Councilf elected to repr~sent thcm, in
protectin~ their own interests by securlng lowcr rates
and that the bonds when voted will not be a bur-den on any
tax paycr. Nhen the election has carried, the _ ~o';illcil 6--.
can accept lower rates in line with modern COnC1l.tlons,
FailinB to secure such proper rates, the Village can then
either build a distribution system only and purchase
current or can build a mO~Lcrn plant adE'iqnate to the neecls
of Elk River which will furnish this service at reasonable
rates. . t i' 1
The Villagc of Elk River constl.tu ea a mun c~pa
corporation with certain definite powers, and th: V111agc
Council consti~utes the Board of Directors of t~l.S cor_
poration. As such Board of Directors, the Councl.l has
freely spent of its time and effort to ~a!e money for the
citizens by reducing the cost of electrl.cl.ty and are go_
ing before the people December Eth for the necebsary
a~thority to proceed with their program, From the tabu~
lation of the ten towns betwcen 1000 and 2000 before gl.VBN)
t'h e y,;.-L-
-4_, "-Yl,ers can r~cc that
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The situation in Elk River is not ~#~~unlike others
in the state of kinnesota with the exception that in this
case the Power & Lieht Co, has a fr'anchise which still htE
about seven years to run,
A study of the last rates submitted would indicate
that they are in line with those charged b~j the Northern
States Power Co, in communities of about the same size
with exception that the Northern States Power Co, includes
special water h~ating and other rates, These rates are not
as low as those obtained in other' commUni ties in the state
which are opera 1,ing their own public utili ties, nor are
they as low as ~hose of some of the communities which are
buying current wholesale and redistributing it,
It wood seem , theref8~E, that these rates should
be scaled down to a point where they would appreximate the
rates which the Village would be in a position to apply
should they engage in the operation of a public utility,
We have had assurance from outside parties that they
would be willing to go into Elk River and operate a plant
in competition with the present owners or sell ~;ou whole_
sale that you ~ight redistribute in the Village,
Should you enter in an agreement with another powEr
company to furnish energy in Elk River they, of course,
would have to carry the burden of competition with the
present Co, but ~rou could approve for thema franchise whim
would contain clauses much more satisfactory to ~TOU than ..
the franchise with the preuent company,
The second arrangement is covered in a section of tht
r~port ~howing operaition figur~s where curI'~nt'is purchased
WhOlesale and iis!;r buted retal.l by ~roursel:r~s,
b oldoThe last alternate tOtvonside~ is the desi~nin~ and
, Ul. l.ng a power plant ror he man~.actu~l.ng or rou own
electricity, Comparatively recent developments in Diesel
engines have brought them to a point of efficiency and lastm-
ing qualities which give them preference over any other type
of power excepting exceptional cases of water power, for
communities of your size,
We,therefore,h~ve prepared in considerable detail
plans and estimates of the cost of constructing a distri_
bution system and white way lighting system with a Diesel
engine power plant and have set up operating statements
of anticipated earnings,
In general, yOU!' problem consists of det el'mining the
best method of procedure, This is es~entaillyan economic
problem and should be determined by a~plying economic
princi:p#les,
That there is a question in the minds of man~ citizems
in Elk River as to whether they are being served to the best
advantage by their electric light and power utility is
strongly evidenced in the "action of the Council in invest_
i~ating the matter, The question has recurred time after ti~
wl.th other communities for more than thirt years,From my con~
tact with Elk River, I feel that everyone concerned is in_
terested in an early and stisfactory solution of this prOblem
and the best interests of all are to be served by a fair and
unprejudiced consideration of the many ramifications of the
:problem,
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Dr. G, Page Care Tim Thomas 42..00
St.Barnabas H, " " n 15..00
Ivdller Davis Co Balnks for C I e l' k 6.29
E.R.Blacksmith repairs 3..00
Eklund Drug Co, Fumigating 2.. 20 e
Cemtral Lbr co. Coal for Blocker ~..88
E. R . !Ilea t !llarket lheats for Schultz 8..00
" " 'I " 'I " Decker 7.41
~otion by Geo Cornelius and second~d byJ.D.Flaherty that
report submitted by our engineer, ~~ Richardson, be in_
corporated in the minutes of this meeting and orQere4
Published alon6 with the minutes of this meeting, Motion
Carried,
The E.R.Power & Light Co submitted new rates'for
the approval of the E.R.iillage Council, The Council,
deeming these rates too high, engaged the servives of a
consulting engineer who has prepared an appraisal, report
estimated and recomEenda4ions for the council,
Following are excerpts from this report:
The object of this investigation appraisal and re_
port is to secure for the Village of Elk River a satisfa~
tory su~ply of electrical energy at the lowest cost,
A, study was made of the present operating company
involving an appraisal of their properties immediately
concerned, an examination made of their rate structure
and a comparison made with rates in other communties of m
comparable size, An investigation wa~ made of the PJss-
ibility of highline connection wherby the Village might e
enter into the busines3 of a public utili~t by purchasing
current wholesale for redistribution to its citizens,
A study was made of suitable generating equipment for a
municipally owned and 8R~tpted electric light and power
plant and a study of the passibility of securing real
competitive operation by another company,
Gross Revenue
Operating expense
Net Revenue
Bperating Ratio
Other Income
Total Income
The system now is serving in ~lk River 352 custom~
ers, 272 of which are two wire service and ~O, three wire
service, The monthly gross revenue for Elk River is appr_
oximately $2,637..00 and the yearly gross income is appro_
ximately $31.599..00,
Earnings report _ E.R.Power & Light Co, furnished
electric service to Dayton, Zimmerman, Elk River and ad_
joining territory in ~lk'River Vallgy, Approximately 4"
miles transmi8.~on lines, Population served about 5,000.
1 ~ 30 1 92') 1 ~ 28
$65..016 $65,619 $65..079
4C....Q~ .1L2J.3_ ~e. 3!(
~4,~77 20,3B6 30,7 ~
61 '" 5~ 6 t. 9 2 49. b .3
__. ._~ 1.942-LliL
25,870 21,428 31,957
Bond Interest, other
charges and depreciati~1 .qO~
Balance $13,970
Output KW hours
No of meters
966,271
1 . 137
11.900
$' 9,528
'19,270
1,075
11.661
$' 20 , 29 b
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97'8,522
1 , 1 00