University of California • Berkeleyp '1 w-.-vJ ^ * gaiypCh OHI cis po i i cis EL Pb wa I cis en pli in Co of be in| of sio bei BANCROFT librar* I SPECIAL SAN FRANCISCO, JUNE 12TH, 1923 REPORTS HETCH HETCHY POWER PROBLEM Majority Report of Special Committee Now Pending Before Board of Governors By order of the Board of Governors of the Civic League of Improve- ment Clubs and Associations, the several reports of the Special Com- mittee appointed by President A. P. Booth, to investigate the disposition of electric power when the same shall be generated at the City’s Mocca- sin Creek power plant, together with a study of the problem by the San I Francisco Bureau of Governmental Research were duly ordered printed June 12th, 1923. The members of the Special Committee, consisting of Messrs. Adolph Uhl, Chairman; R. M. J. Armstrong, John Henderson, W. W. Watson, James P. Sweeney, Percy L. Henderson and P. F. Ringole, have pre- sented majority and minority reports. The minority report will be printed as separate pamphlet, the majority report reading as follows, towit: MAJORITY REPORT , The majority report presented by Chairman Adolph Uhl respectfully rec- ommends: First: That the policy of San Fran- cisco be to distribute the Hetch-Hetchy power direct to Consumers. Second: That the City of San Fran- cisco acquire from the Pacific Gas and Electric Company their contract for sup- plying power to the Market Street Rail- way Company. Third: That the City of San Fran- cisco shall acquire from the Great West*- ern Power Company its distributing plant and its recently acquired interest in the Universal Electric Light & Gas Company located in the City and County of San Francisco. ♦Fourth: That a charter amendment be placed upon the ballot this fall, creat- ing a commission to handle the Utilities of San Francisco. That said Commis- sion shall be composed of five mem- bers, i. e.: 1. One Banker. 2. One Representative of Labor. 3. Ohe Engineer. 4. One Attorney. 5. One Business Man. Appointed: This Commission to be ap- pointed by Mayor. Term of Office: Rotation—4. to 5 years. Compensation: One Dollar a year. Confirmation: By the voters at spe- cial or general election. Fifth: Operation as well as construc- tion of all Utilities to be under the juris- diction of the City Engineer. Appointed: By the Mayor. Term of Office: Four years. Compensation: $20.000 a year. Confirmation: By the voters at spe- cial or general election. City Engineer’s acts subject to ap- proval of majority of the members of above Commission. (Signed) Adolph Uhl, Chairman. (Signed) fP. F. Ringole. (Signed) fPercy L. Henderson. (Signed) James P. Sweeney. t Signed with the reservation of the right to oppose any or all recommendations ofmajority report in the board of Governors if further enlightenment on the subject prompts them in their judgment to do so. *This recommendation was unanimous- ly adopted by the Committee with the elimination of all* details herein outlined; it being the sense of the committee that in the operation of public utilities by our municipality that such a commission, re- moved from any possibility of political influence, is absolutely necessary to so operate, maintain and construct such utilities to be owned, operated and main- tained by the City and Côunty of San Francisco or our municipal operations along these lines will most assuredly prove a distinct failure. POWER DISTRIBUTED IN SAN FRANCISCO IN 1921 Sierra & San Francis- co Power Company, now leased to Pacif- f ic Gas & Electric, sold Market Street Railway ........... 139,056,564 KWH. Great Western Power Company ............ 62,099,000 KWH. Universal Electric & Gas Co.............. 30,104,991 KWH. Pacific Gas & Electric Co. ............ ...146,148,047 KWH. To the Municipal Railway, 30,000,000; 5 eet LightingHJI 6,819,814; Other Consumers, 1 0 9,- 328,223 ---------— 337,408,602 KWH. Committee recommends that the City distribute power to the following, mak- ing necessary arrangements to acquire Market Street Railway contract and dis- tributing system ofl Great Western Power Co. and its intere&Lin the Municm pal Electric Light & Gas Co.: Market Street Rail- way ............. ...139,056,664 KWH. Municipal Street Cars.. 30,000,000 KWH. Great Western .......... 62,099,000 KWH. Vz Universal Electric 6 Gas Co............ 15,057,445 KWH. 246,213,009 KWH. Above is 90 per cent of the Hetch- Hetchy Power ready for delivery in San Francisco in sixteen months. WHERE WE STAND AND WHAT CONFRONTS US Forty-five million dollars bonds were voted for Hetch-Hetchy Water SuppldH Proceeds of $18,000,000 of these bonds have been used to construct the power plant, equipment, etc. Proceeds of $17,000,000 of these bonds to date have been used toward construct- ing water system. The water system will not be a revenue producer for ten years. (Reasons .following on Page 19.) Interest on this dead invest- ment oflj $171300,000 will, • therefore, continue for ten or more years at rate of, per year......................$' 850,000 Bond redemption to the amount of l/40th per year of the total $17,000,000, per year ........................... 425,000 Total, per year...........$1,275,000 City Engineer sets forth in his report to the Public Utilities Commissioner un- der date of April 14th, 1923: “If entire Hetch- H^hy power is sold to the Pacific Gas & Electric on basis of 8.825 mills the city will reali^gj a net profit of.... 216,586 Leaving annual deficit Hetch- Hetchy Water & Power of....$1,058,414 That means above deficiency must be met by taxes for ten or more years. Where- as, if the City distributes jWts power a net profit of $880,813.00 per year can be realized as per estimate. This would mean an annual deficit of onjp^.............$ 264,187 Deficit as above................$1;275,000 Hetch-Hetchy profit............ 880,813 Cuts, above deficit to.........$ 394,187 Pacific Gas & Electric Co. Distributed 116,000,000 K. W. H., with distributing plant valued at $17,000,000, serving 125,000 consumers. Great Western Power Co. Distributed 62,118,525 K. W. H., with a distributing plant valued at $4,000,000, ^rving 7.400jibnsumers. Fifty per d&rjt as much power distrib- uted by Great Western as compared to P. G. & Em with a distributing plant costing little over one-fourth that of P. G. & E. Above statement evidences the fact that at this time it is most desirable for the Cityv to start with the Great Western Power Co.’s distributing system NOW. The City should begin by distributing the largest quantities of power with the smallest possible investment in distrib- uting system. Ten years hence the City should ac- quire the distributing system of the Pa- cific Gas & Electric Co. It can be argued that the Great West-I ern distributing system duplicates the I P. G. & E. system. Why buy the Great I Western? The answer is that the City I should gain experience in operating this I utility by beginning with the smaller dis- I tributing system* We must pay for our I experience and it is better for the City I to acquire its experience with the small- I est initial investment. If we profit by I the experience in operating the Great I Western system, and, if in the end the I Great Western system is junked, the ex- I perience will be worth the cost. The I second answer is, that a bond election I will be necessary in acquiring the P. G. & E., whereas it is presumed that no bond election will be necessary to acquire the Great Western Power Co. Pacific Gas & Electric Co. is serving the Market Street Railway at 9.25 mills per K. W. H. On their other business in San Fran- cisco (not including the Municipal Rail- way) their average rate is 5 l-3c per I K. W. H. It will be most advantageous to the City to acquire the contract for serving current to the United Railways due to the fact that requires no outlay for a dis- tributing system. It has been suggested that the City sell all its Hetch-Hetchy power—270,- 000,000 K. W. H.—to the Paciifc Gas & Elec. Co. at 8.824 mil* There is no de- mand in San Francisco for this power at this time. The Power Companies must necessarily sell same elsewhere. The pre- sumption is the P. G. & E. and Great Western will divide this power between them, P. G. & E. taking at least 135,000,- 000 K. W. H. as its share at 8.824 mills. It would therefore seem perfectly nat- ural if the City will pay P. G. & E. the difference monthly between® *'the 9.25 mil0^f at which P. G. & E. is selling the United Railways and 8.824 which ^ the price covering sale of power recommend- ed by City Engineer, plus cost of deliv^ ering the current to the Market Street Railways, the P. G.. & E. will make a profit and thexS^Mj will undoubtemy be agreeable to turning the Market Street Railway contract over to the fjfnj| Fur- thermore, by this arrangement there will be no possible violation^ the Raker Act. Inasmuch as the City will eventually acquire the distributing system of the P. G. & E. it is absolutely essential from an economic standpoint that a close rela- tionship be established between the City and the P. G. & E. Company. For Example: At a great expense the P. G. & E. installed transformers and feeders to supply the Municipal Railway with power. The City Engineer estimates it will cost $1,350,000 to install the transformers and feeders necessary to supply current for the Municipal Rail- way. This would be a duplication of the P. G. & E. installation and, therefore, a total loss to the P. G. & E., as this in- stallation is special' equipment and can- not be used for any other purpose. The City should positively buy or rent this equipment from the P. G. & E. The P. G. & E. is constructing a new power line up the Peninsula. It would certainly be more advisable for the City to rent space on this tower for thie Hetch-Hetchy transmission lines from Newark to San Francisco < than to pur- chase rights of way and construct dupli- cate towers. For the benefit of all con- cerned it must be a matter of “give and take” between the City and the. P. G. & E. The City has the right of condem- nation now to acquire the distributing system of the P. G. & E., but it is inad- visable. Quoting from the City. Engineer’s re- port: “lg|s obvious that another bond issue would have to be authorized for the con- struction or purchase of such a distrib- uting system and that the existing bond debt limit of the City would have to be raised in order to permit this bond issue.” Following is an estimate based on the assumption that the City adopts the policy to distribute its Hetch-Hetchy power, purchases the Great Western distributing system and its interest in the Universal Light and Gas Co., ac- quires the contract to supply. Market Street Railway. Estimate based on data filed with Railroad Commission for year 1921—al- though 1921 rates have been reduced—in- creased consumption offsets reduced rate: Great Western Power Co. in 1921 sold 62,118,525 K. W. H....................... $1,727,180 140.000. 000 sold Market St, 1 Ry. at .008824 ......... 1,235,360 This figure is on basis of prices set forth in City . Engineer’s Report to Util- ity Committee. It practi- cally means filing half of the Hetch-Hetchy. out- put to the Pacific Gas & Electric. In order to avoid legaH technicalities re- garding sale to the Power Co. we overcome same by selling the power to the • Market Street Railway. 30.000. 000 K. W. H. to Mu- nicipal Railway ......!........ 383,139 50,000,000 K. W. H. Surplus...... 500,000 Total sold for 1921 $3,845,679City Engineer advises he has sufficient capacity to take care of Peaks, and will in reality have more K. W. H. than is set forth in report. Great Western Power Co. Dis- tributing System and Non- Productive Property, $6,- 000,000 @ 5V2...............$ 330.000 Depreciation—1.8, $6,000,000.... 125,000 Expense: Maintenance, Distributing System (repairs), $54,- 000; Operating Expense, $69,000; Commercial Ex- pense, Office, $74,000 cut to $50,000; General Mis- cellaneous Expense, $41,- 000; Total Expense....... 214,000 Plant Investment, $18,000,000: Interest, Depreciation, In- surance, Bond Redemp- tion, Operating Cost, as per City Engineer’s Re- port April 4th, 1923........ 2,165,866 Total Expense for 1921..$2,834,866 Net Profit from sale of Power to Market St. Ry., Municipal lines, Great Western Sys- tem and Univ. Lt. & Power Co............................$1,010,813 Rental from P. G. & E. Co. of Plant to Distribute Power to Municipal Railway .........$ 30,000 S. F. Stand-by Service from P. G. & E. Co. (estimated).... 100,000 $ 880,813 Power to railways sold practically at cost. Estimated Value of the Great Western .................. $6,000,000 Distributed in 1921, 62,118,- 525 K. W. H. The half interest of Municipal Elec. Co. Purchased by Great Western cost.......... 1,112,500 Distributed in 1921, 15,000,- 000 K. W. H. Total Estimated Value -------------- of Both .............. $7,112,500 By purchasing the above distributing systems and assuming the City secures contract to supply Market Street Rail- way current, the City will then have a total distribution of 246,000,000 K. W. H., and a distributing plant costing $7,112,- 500, and a surplus of approximately 30,- 000,000 K. W. H. Bear in mind someone is bound to get hurt when San Francisco brings in 270,- 000,000 K. W. H. The foregoing plan is presented with the view of doing the least amount of “hurt.” It has been a knowii fact for over ten years that the City would eventually bring in this power. There is no way of forecasting the loss to all concerned should the City set out to build its own distributing system and bid for business. It would spell disaster. It would require tearing up of City streets. It would be a tremendous eco- nomic loss to the power company. (In the end the City will win, no doubt at a tremendous loss.) The distributing sys- tems would become a total loss. Mr. Herbert Fleishacker is too deeply interested in the welfare of San Fran- cisco and the best interests of his com- pany to force the City into such a fight. CONDEMNATION PROCEEDINGS Mr. Gordon, of the Railroad Commis- sion, advises that one year from the date on which the Supervisors pass resolution to condemn a property would be the max- imum time to complete proceedings. Under the law the City has absolute right to acquire the distributing system. It is, therefore, inconceivable where the City is agreeable to paying an equitable price that a power company would pro- ceed with expensive litigation. Ten million dollars of Hetch-Hetchy bonds are unappropriated. These bonds are sufficient to enable the City to pur- chase the Great Western distributing system and the Great Western’s interest recently acquired in Universal Light & Power Co., at a cost of $1,112,500. This plan will eliminate a Bond Election. From an unknown quarter comes the cry, “These bonds cannot be used for that purpose; they were voted for a water supply.” Where is the person who has the City’s best interest at heart that would raise that cry? The Raker Act provides a minimum quantity of power that the City must de- velop. The act does not set forth a max- imum amount. The act makes it manda- tory that the City supply power for irri- gating purposes, which of necessity re- quires power, plants and equipment; therefore, to say that the City cannot use Hetch-Hetchy bonds for this purpose is a joke. Does anyone presume for a mo- ment that the people are going to lay down now and allow others to reap the benefit of a profit of $1,000,000 or more that can be derived from distributing Hetch-Hetchy power as against a profit of $215,000 if sold to power companies ? No! If a bond election were suggested, the next cry to be heard would be: “Oh, you are up to your bonding capacity.” Very well, to meet that situation the voters should take the Utilities out of the 15 per cent bonding limit and in place of voting $7,000,000 for purchase of Great Western, make one job of it by225,000 voting $20,000,000 to purchase the Pa- cific Gas & Elec. Co., and let the Great Western purchase wait the City’s pleas- ure. You can’t blame the power companies for using every means to hold on to their best market in California for the sale of power and the business is very profitable. San Francisco would be the laughing stock of Los Angeles were we to turn our Hetch-Hetchy power, representing a plant investment of $18,000,000 over to the power companies for a net return of 1 3^.10 per cent. In 1920, $500,000,000 in ten years was the budget of the power companies for building power plants and equipment to take care of the increasing demands for power. That is how fast the demand for power is increasing. The City Engineer has built Hetch-Hetchy plant so that it can be enlarged to meet further demands. Following estimate is abased on 100 per cent increase iiWpower consumption in San Francisco ten years hence and at which time it is assumed we will acquire the distributing system of Pacific Gas & Elec. Co.: Sale of 225,000,000 K. W. H. at .05 1-3 ............,....$12,025,000 (Figures based on P. G. & E. 1921 sales with 100 per cent increase in ten years.) Distributing System, estimat- ed to cost by 1933, $25,000gPP 000, at .05% ................$1,375,000 Non - Productive Properties, $1,000,000, at .05%........... 55,000 Materials and Supplies, $600,- 000, at 5y2.................. 33,000 Depreciation, - $25,000,000, at 1.8 ............................ 450,000 Bond redemption to amount of l-40th per year of total cost of P. G. & E. distributing system, costing $25,000,000.. 625,000 Expense (estimated): Maintenance .............. 237,000 Operating ................. 308,000 Commercial ................ 264,000 General ................. 181,000 Plant Investment: $9,000,000 addition to Hetch-Hetchjr plant nec- essary to develop 225,- 000,000 additional Kilo- watts Sint. $9,000,000, 5% ....................... 495,000 Depreciation on plant and equipment .................. 134,000 Maintenance cost, plant and equipment .................... 25,000 Additional operating cost ....... 25,000 Bond redemption to the amount of 1-40 per year. Total Expenses and Costs..$4,432,000 Net Profit on Extension of Plant .....................$7,593,000 Net Profit on First Ten Years’ Operation, per year....$l,029,063 Net Profit on Extension of Plant, per year.................. 7,593,000 Total Profit, per year......$8,622,063 This tremendous profit is dazzling, but positively a fact. If the City does not reap the benefit of distributing the power, the power companies will. WHAT WILL STOP THEM? From the foregoing you will realize the huge profits are only possible from very large power plants. Hetch-Hetchy is capable of further developing an addi- tional 500,000,000 K. W. H. above the 525,000,000 set fofth in above figures. The conservative element in our com- munity feel Municipal operation of Util- ities is a failure. Provided you cannot take operation of Utilities out of politics, I will agree with them. The people must be educated to know successes 'impossible under presentf&on- ditions. Huw^mubh does the public know of its Utilities, their operation and finan- cial conditions ? Absolutely nothing. Our Utilities are strangers to it. The public has been told Municipal operation is profitable; therefore, when it sees the cars running it thinks we are mak- ing huge profits. It’s*a foregone conclu- sion, that the City will become rich on Hetch-Hetchy power. The public must be educated to know more about these things and just what it can expect. We are so deeply involved in the Hetch-Hetchy power investment that we cannot turn back now. Why should we, with such fabulous profifs obtainable ? The City has looked forward to Munici- pal operation for years and now that the goalH in sight the suggestion to sell all Hetch-Hetchy Power Company for a profit of $25,000 would be positively ab- surd. ‘Why? Because of the fact that 100 per cent increase in consumption of elec- tricity is anticipated in San Francisco during the next ten years. The power companies by that time will become so deeply rooted that the ^feverance cost” will make it almost prohibitive for San Francisco to acquire distributing sys- tems. We Will not be better off ten years hence on ponding ability. We . Will not have acquired any expe^ rience in operating an electrical system. We Will lose a profit of $750,000 a year for the next ten years.W© Will lose an additional profit of $7,593,000 ten years hence, at which time City’s growth will necessitate 100 per cent more power. DISTRIBUTE THE POWER TO CONSUMERS NOW Amend Charter Now! Don’t forget unless the Utilities are removed from politics and placed into the hands of a Commission, Dollar-a-year men, making the position an honorary one and by which means you will secure such men as Senator Jas. Phelan, A. P. Gianinni, Ru- dolph Spreckels, Hon. C. C. Moore, Wm. H. Crocker, Marshall Hale, R. B. Hale, Jos. Tynan, John Galloway, Grunsky, Schlessinger, and a dozen others who could be mentioned—men of big affairs who have been eminently successful— men who love San Francisco and would serve her in an honorary capacity, whose ability would insure the financial success of operating the Utilities. This Commis- sion would be just as democratic as the Dollar-a-year men who served the gov- ernment during the war. How else are you going to get the brains necessary to make operation of Utilities a success ? Los Angeles has a decided advantage in the matter of Power Contracts. Los Angeles has not raised the rates of power to large industrials as has been done by the Power Company through surtax charges, ranging from 20 to 40 per cent. It is most essential that San Francisco should be on an even footing with Los Angeles in order to compete in securing large industrials. The following data is keenly interest- ing: Los Angeles secured 600 industries in the year 1922 and erected during this year industrial buildings costing $18,- 532,220. Oakland secured fifty industries in the year 1922 and erected during this year industrial buildings costing $1,618,000. San Francisco secured 205 industries in the year 1922 and erected during this year industrial buildings costing $5,592,- 038. No doubt the cost of industrial sites and labor conditions are the chief reas- ons why San Francisco makes so poor a showing, but low priced power to large industrials will help some. The power companies are largely fi- nancing new plant construction by sale of 7 per cent preferred stock. Assuming the power companies had constructed the Hetch-Hetchy plant, costing $18,000,000, with money realized by sale of 7 per cent preferred stock, the annual interest would be: $18,000,000 at 7 per cent....H....$l,260,000 Whereas the City Engineer in his report to Public Utility Committee (April 4, 1923) in his estimate of costs based his interest figure on $18,000,000 plant construc- tion at 5 Vz per cent............... 990,000 Loss to City if power is sold on basis submitted by City Engineer...........$ 270,000 Most certainly the City and not the power company should have the benefit rqf the difference between the 5^ per cent and 7 per cent interest pate. It’s absolutely giving the power company $270,000 a year the best of it. San Francisco is fortunate in having one of the ablest engineers of the coun- try He will leave a monument in the Hetch-Hetchy dam, to be named after him, which will be second to none any- where. San Francisco will have one of the most modern, best constructed and equipped power plants in the United States. Wouldn’t it be a joke to turn the oper- ation of this plant over to men who have never had any experience in operating a power utility ? It is absolutely; essential that the City Engineer should have com- plete jurisdiction over the operation of not alone the power utility, but of all utilities, water and street railway. En- gineering skill, combined with practical experience are necessary if our utilities are to be a success. Our combined utilities will eventually cost over $100,000,000. A charter amendment in order that the City Engineer has jurisdiction of con- struction and operation over all utilities with a salary of $20,000 a year should be presented to voters at this fall’s election. City engineers to be appointed by Mayor for four year terms; confirmation by voters at following election, special or general elections. The next and most necessary step in order to take Utilities out of politics and assure their absolute success is a Commission—Which will act as a Board of Directors with the City Engi- neer. To be composed of a merchant, engineer, banker, attorney and laborite, the City Engineer to vote in case of dead lock. Appointed by the Mayor. Term—One to four years. Compensation—One dollar per year. Confirmation by voters at subsequent special or general election. Street Lighting: City Engineer has had installed conduits over the high pres- sure mains for streets lighting purposes, splendid foresight on his part. A street lighting plan covering a five000 >00 •00 ;he fit per t’s my ng m- ;he ter iy- of nd ;ed 3r- ,ve a ial n- of all !n- :al es ly he n- es be m. or >y or in id a i- t, e, id it is 3- s, e I to ten year period should be outlined and I adopted. First steps should be to displace the I antiquated gas lamps. Many districts in I San Francisco are very poorly lighted. I These sections should have first consid- I eration. The downtown retail district in San I Francisco is the best lighted district in I the world. Let’s make the residential I section the best lighted residential sec- I tion in the world. Your Committee called on the City En- I gineef Since the date of his report to the 1-Utility Commission (April 4, 1923), and I suggested the purchase of the Great I Western distributing system; Also acquiring from the Pacific Gas & I Electric Co. (lessees of the Sierra I Power Co.) contract for furnishing power I to the Market Street Railways. Under date of May 31st, 1923, the fol- I lowing letter was addressed to City En- I gineer by the League: “. . . 3rd: As per our conversation I of recent date relative to the City pur- I chasing the Great Western Power Com- I pany’s local distributing system, would I you favor its purchase, if agreeable to I its owners, or its purchase under con- I demnation proceedings if owners were I averse to selling? “4th: In case the City brought its I Hetch-Hetchy power within the City and I County limits, would you endeavor to se- I cure the contracts for supplying the pri- I vately-owned street railway systems, I thus immediately providing a market for municipal electric power?” Under date of June 1st, 1923, the fol- lowing reply was received by City En- gineer: “. . . If the price of the Great I Western Power Company!^ local distrib- I uting system were reasonable I would I consider its purchase favorably. “I explained to your Committee ver- Kpally in detail the conditions governing I the control of the power load supplying I the Market Street Railwajtein the con- troversy over the contract which is now in the courts, supposed to run until 1953. This contract was made between the Sierra Power Company and the old United Railroads. The Sierra Power I Coinpany has leased its properties for I over fifteen years to the Pacific Gas & I Electric Co. The Market Street Rail- I way Company i s the new corporation I evolved from the old United Railroads I and the question of the validity of this I contract is in the courts for determina- I tion. It would be a very fortunate pro- j ceeding if the City could secure this contract for its power crop.” Members of your Committee stated if the City Engineer replies that he favors purchase of the Great Western Power Co. and acquisition of the United Railway contract, they will vote in favor of the policy for the City of San Francisco dis- tributing its power. It will certainly be a most difficult position for any person to recommend selling the entire Hetch-Hetchy power for $251,000 a year, when the City, by distributing same as provided by charter is able to realize $1,000,000 a year for same. Hetch-Hetchy Water: City Engineer advises Hetch-Hetchy water supply will not be needed for ten years. This is due to the provision in the Raker Act, whereby San Francisco cannot take water from Hetch-Hetchy until the present available supplies aro exhausted. Spring Valley Water Co. is building the Calavaras Dam, which will impound sufficient water to meet San Francisco’s estimated increased growth for the next ten years. Spring Valley maintained it could develop further available supplies and has done so, and in consequence, con- struction thus far done on the Hetch- Hetchy water supply, amounting to $17,- 000,000 becomes a dead investment for ten or more years. City Engineer advises it will cost $30,- 000,000 more than was estimated to bring the Hetch-Hetchy water to San Fran- cisco. That construction work on Hetch- Hetchy Water System can be slowed down for the next six years sufficiently to merely protect our valuable water rights and that $1,500,000 per year will cover cost of that construction work. In 1918, Mayor Rolph did not grant the City Engineer’s request to sell the $45,000,000 Hetch-Hetchy bonds in one lump, City Engineer advising Mr. Rolph by so doing he (City Engineer) could let all his contracts, build the water and power system within his estimated cost of $45,000,000 and have Hetch-Hetchy water in San Francisco within four and one-half years. Had Mayor Rolph acted favorably on City Engineer’s request: It would not be necessary to vote an additional $30,000,000 bonds to complete the system; Rate of interest would not have been raised from 4Vz to 5^ per cent; That $2,000,000 lost on the bond option would have been saved. Some Losses! ADDITIONAL INFORMATION In response to a request from several members of the Committee, the secretary procured the following information on the subject: SAN FRANCISCO BUREAU OF GOVERNMENTAL RESEARCH Holbrook Bldg., 58 Sutter Street Telephone: Sutter 3288 San Francisco, June 11th, 1923.Civic League of Improvement Clubs and Associations, 807 Mills Building, San Francisco, California. Gentlemen: Attention Mr. George W. Gerhard. We beg to acknowledge receipt of your letter of the 5th instant, in which you re- quest such figures as we have affecting the disposition of Hetch-Hetchy power. The Bureau has not made a technical analysis of this problem, but we are very glad to give you the opinions we have formed from the data before us. There are three plans to be considered: (1) Distribution of this power by the City through its own distributing system. (2) The sale of the power to the private power companies., and (3) an agreement for the distribution of the power by some public service corporation acting as the City’s agent. Before there can be any definite answer to thisl problem, we feel it will be necessary to ascertain whether the private companies would be willing to enter into an agree- ment with the City for the purchase or distribution of thisjpower and whether such agreement would be profitable and satisfactory to the City. In view of the information we have to date, however, BE would seem that distri- bution by the City, at least for some time, is out of the question. According to the report of the City Engineer, the power from the Moccasin Creek power house will be available in November, 1924. It would probably be impossible in the remaining eighteen months for the City to finance and construct the necessary sub-stations, build a transmis- sion line to San Francisco, acquire a dis- tributing system, and acquire or con- struct a steam standby plant. To dupli- cate the present privately-owned distrib- uting systems in San Francisco would be an economic waste, which, in our opinion would, and should, never be contenanced by the people. Such duplication would probably bring about ruinous competi- tion between the City and the private companies, and the necessary tearing up of streets incidental to such construction would put the citizens and business firms of San Francisco to great and unneces- sary inconvenience. The City is within $9,000,000 of the limit of its bonded indebtedness, under official interpretation, and within $29,- 000,000 under the broadest interpretation of the Charter. The acquisition of a dis- tribution system to cost seventeen to twenty millions, and perhaps a much larger . sum, at this time would practi- cally exhaust the City’s credit and would imperil other improvements to which the City is committed. The City Engineer has pointed out the need of an additional $30,000,000 to complete the construction of the Hetch-Hetchy water system. The Railroad Commission fixes the price of approximately $38,000,000 for Spring 1 Valley, and other possible large amounts 1 for Municipal Railway extensions and 1 traffic development will be needed. In 1 this connection the proposed Market I Street purchase need not be considered, 9 as it is outside the Charter limitation. That the heavy tax burden occasioned I by Hetch-Hetchy debt charges may be 1 lightened, it is considered imperative that | the system be placed on an income pro- ducing basis at the earliest possible moment. Bond interest and red^jjyjtion charges on this project will {fmount to _ approximately $2,300,000 net for^Mlffl next fiscal year, about 36c on the tax / rate, and will increase as idle funds available for reinvestment decrease. To July 1, 1924 the total interest charges will amount to approximately $7,000',00Q. In regard to the report of the special committee appointed by your organiza- tion to consider this subject, knowledge I of which we have from the press only, and which we understand recommends the acquiring by the City of the contract for furnishing power to the Market Street Railway Company, and the pur- chase by the City oL the Great Western Power Company’s distributing system, we understand that the contract existing between the Pacific Gas & Electric Com- pany and the Market Street Railway Company has many years yet to run, and it seems hardly possible that the City, if it becomes a competitor of the private company, could induce the private com- pany to turn its contract with the Mar- ket Street Railway Company over to the City; the doubtfulness of securing this I contract makes it advisable to leave it 1 out of our calculations at this time. According to the City Engineers’ re- 1 port, the Moccasin Creek plant will pro- 1 duce 270,000,000 K. W. H. in San Fran- cisco. The Municipal Railway uses ap- 1 proximately 30,000,000 K. W. H. and ap- 1 proximately 7,000,000 K. W. H. are nec- essary for street lighting and other mu- nicipal purposes. Therefore, after sup- j plying the municipal wants, power to the extent of 233,000,000 K. W. H., or 86 per cent of the entire output, would have to be disposed of; and if the City should purchase the Great Western Power Com- pany’s system with sales reported as 62.000. 000 K. W. H., there would still be 171.000. 000 K. W. H., or 63 per cent of the total output, to be disposed of by some other method. It is the Bureau’s intention to make an exhaustive study of this problem as soon as our engineer can be released from other indispensable work, at which time we will be glad to supply your organiza- tion with any additional facts or conclu- sions which we may develop. Very truly yours, W. H. NANRY, Director. (Signed) By M. H. GATES, Acting Director. SI BANCROFT LIBRARY 4é LUI of IMPROVEMENT/^ÍlíBÍ^ arid ASfötlÄTIONS SlÜAL SAN FRANCISCO, JÈNE 12TH 19TM REPORTS HETCH HETCHY POWER PROBLEM Minority Report of Special Commitee Now Pending Before Board of Governors Y of- fi-ov^jgnAfej. omfreft Vö.mmit. Clubs and Associations, the several repo rtflithe Specia 1 Co111mittee ^^ointed fijy PnHSait A. P|3'üotl], to investigate tlie dispcgstien of e^Hic power when the same .shall be f'encrated at the City’s Moccasin Creek plant, to- Eet§I^EffiM^^dyYdf Franöi8(*Ä^rejpf)P Gpfern- mei||^p|fe|^^^'iTe' duly ordered jointed June 12th 11)23. The members of the Special Committee, consisting of Messrs. Adolph Uhl, pgjairman; R.\M. J. Armsl8|i§^oli n Henderson, W. W. Watson, P. Slgppily, Percy L. Ändert®and P. F. Ring^j have presented;'majority and ®inoi|fey repoht^vp ^ra^pna|nrity gPSort ha Ab®n ifSiifljP as a separate ^mphlet;'the minority MÖort rlidina^j^llows. Itp-wit: MINORITY RBJf)RT OF SREiT^L COM- MITTEE OpgElVIC LEA$®g&Ç)F IM- PROVEMMT cj||Ê^Aή^SSO- CIATIOr§|ON HETCH HOTCHY POWER PROBLÉlM In considepi§g| the ;d;|sppsal of the efec- mm which will beS^ailable from Moccasin Cr|ejk Plant of the HetchY, HetBy Pr&^P^of theSoM^jS County of ■|s|g| FrancM^i it m not ^^£paj58^3ry to in^the availahl^ffl|^BpfhuFinto ^SSiftanner o^pSlrketing Several scheme^ have been sr^BsMivnamely: 1. The disposal of^i^^ower in a*, block toH^Mic E^^^^mpany. of power by a utility-company for Sale toBtimate con- V sumer^the utHfiffl- company^^^g as the ^jlpis ag|JiH| Sfc^^The of the Kr by^e Citys^MIlf thro)^^B§ own distribution iJB^^Kty Enginee|^Ay®b& of^April 4, l|S^ito the Public Utiim^aCthnmitte^ Board of Supervisors of the i^^Band County of San Franms^^tfegbihmendation was made p|at. the City learn wh^^Hrais Big power comparff|Mwould agree to if it sho^l be decided to ^mr^f^he^^tric energJ|fhrou|g| them. Thi^pinterpreted to mean disSSsaliSplier schemb* or 2. This appi^K|s. not bela^’ctM upon, and «rafto g|e present tim^Erivate utility com- /»panie^frave no®f$M asked to make prop- ositions for the d^nMBi the fi^power. As Bthe third plan, no comprehensive estii^a^dl^e been madje of whate|| would cost theK^; to ent^g^hto the Power busi- ness. of ImprofmSInt Clubs Bnd Afegifatioife anpoinf&rl a special com- mit^Sg&^^^ire a^eport upon thlfeitu^g tion tffif PB^sgt^abto Tcs Board of Gov- ernors. This ;Fe|jart mfevi^fraDrepared, signed with fe^rvaMpns, nopBped upon, ?h|B| ordel^^prin0g^;|yAhe Civic League Offlje 12, 1923, to^hfher wjfiph letter di- jjj^^ed to the Ci^ic League by the' San Francisc^- Governmental Re- search, covering a briMjEffitTl of the problem. The|^§^Uaf||fe spe^fial committee of the Cpvyd^£^ue:lihtitlA^yg^,^i^ Re- port,” Ubcom0ftnc^^^m^M^^ally thati the Citjloo^Aa^^^ndilcQ: should b^|pn |g£ dis- trib&ng povg|r to dir^M^Emimers, this to be P^eYMiro^h the a||||isition of the g^Sem of th^Great Western Power Com- pany ana.pne ccntravtkfbf |j£e Pacific Gas and Ei^tric Con^,n^^hrongh the^Sierra and San Fran(M^ Power Cfpnpany, and by distributingrpower to the MunicipalRailway and by the sale of certain other power, the aggregate of which is calcu- lated as within the capacity of the Mocca- sin Creek Plant, the idea being to even- tually acquire the entire distribution sys- tem of the Pacific Gas & Electric Company. On the other hand the San Francisco Bureau of Governmental Research feels that the distribution by the City of the power is out of the question, at least for some time, and proposes, however, to make an exhaustive study of the problem. . ,The Chamber of Commerce forwarded a communication to the Public /Utilities Committee of the Board of Supervisors stating that they were making a survey of the power question; and now the Real Estate Board has appointed a special committee for the purpose of making an exhaustive study of the issue of power disposal and reporting back its recom- mendations to the Real Estate Board. The following covers Minority Report of special committee of Civic League. This committee, in order to get a picture of the problem has assembled some of the salient facts concerning the power situa- tion of San Francisco. San FraiMsco is now supplied with power by the Pacific Gas & Electric Company, Sie^puiand San Francisco Power Company and the Great Western Power Company. The total power supplied in 1922 was 516,000,000 kw.-hrs., this being the total of input to the substations from f|$b main transmis- sion lines, and output of tbHsteam plants within the city. If the quantity of energy which was used in each hour of the 8,760 of the ye^r had been the same, the load would have averaged 58,900 kw. As a matter of fact this was not the case, as there were a great number of kw.- hours used in some hours than others, which brought the peak actually to 123,- 500 kw.; or, in other words the facilitieH had to be sufficiently large to supply 123,500 kw., and these were, so to speak, used but 47.7% of the time. This il shown in tabular form in. [Table 1. In any plan for supplying power to a great community, consideration must be given not only to the situation which ob- tains at the time but that which is likely to obtain as time goes on. The combined annual growth in San Francisco of the several companies engaged in supplying it has been 6.3% annually. This means that in 1927 the demand will be 50% greater than that which obtained in 1922. Table 2 shows the anticipated power re- quirements for the next five years based on 6.5% growth and a load factor of 48%. It will be noticed that the peak increase is 8,000 to 10,000 kw. per year and this amount of new plant must be added to keep abreast of the needs of power con- sumers. If San Francisco is to be supplied by power from the Moccasin Creek Plant, this plant must operate in a way which will suit the needs of the power users just as the several power companies now oper- ate to answer the demands. The Moccasin Creek Plant will have an average con- tiralous output of 52,500 kw. At $fP'0% load factor this would amount to 460,000,- I OOOkw.-hrs. per year. The equipment is 1 sifeji that it can operate at a peak output I of 70,000 kw. which would require the energy to be sold on a 75% load factor if all of it was to be marketed. On the basis of 8% loss, the power available in San L Francisco on a 75% load factor is 423,200,- 000 kw.-hrs. and 64,400 kw. peak; and on | a 48% load factor, which obtains in San Francisco, 270,480,000 kw.-hrs. and 64,400 kw. peak. Table 3 framed from data ob- I tained from the City Engineer’s office gives this in detail. The point of interest with respect to 1 the information shown in Table 3 is this: If the power were wholesaled by the City of San Francisco the entire 423,200,000 kw.-hrs. could be delivered to the Pacific i Gas and Electee Company at% say its I Newark Substation, owing to the fact that | it, with its steam plant operation, could 1 absorb in its entire syptem which operates on a total annual load factor of 65%, hy- dro-electric power every day, with the pos- j sible excepticHof Sundays and holidays, on load factors high perhaps as 85%. This is made possible because the utility operates steam plants over the peaks, so that with th^Bxeeptions noted it is able to employ hydro pc^^| on a high load factor. On the other hand, considering that the load factor of the San Francisco load taken separately is but 48%, the City itself coiH market but 270,480,000 of the 423,200,000 kw.-hrs. of deliverable Hetch Hetchy energy unfess it built an expensive steam plant or increased its hydro p^^H capacity. In order for the City to utilize all of the 460,000,000 kw.-hrs. annual Moccasin Creek output, whicn is 70,000 kw. peak on a 75% load factor, it would be necessary for the City to install a steam plant in San Fran- - cisco capable of delivering a peak output equal to the deliverable Moccasin i&feek peak in San Francisco of 64,400 kw. Such a steam plant taking approximately half | of the maximum load would operate on a load factor of approximately 20% md would supply 113,000,000 kw.-hrs., and the hydro plant would furnish 70,000 kw. at I the switchboard, 64,400 kw. at th^ster- minal substation, and operate on a -75%) load factor supplying 423,200,000 kw.-hjnf., I making the total steam station outnnripgffjd hydro substation input 536,000,000 lj&o| hrs., approximately sufficient to have plied the 1922 load of 516,000,000 k and 123,500 kw. peak. This neglects consideration of standby service. I«covei^|l steam plant operation sufficient only to ef- fect the best economy and to that extent which would be necessary to utilize aljlSf I the output of the Moccasin Creek Plant as now proposed. It is estimated that if the CityKf San Francisco, with a complete Municipal Sys- tem now serving the entire pttjjjic were to give the consumers the same sorvmeffi|ev now have, it would be necessary to acA^SSH or build a stesj^ plant of a capj|c|2lj®f some 100,000 kw., which will furnish some64,400 kw.. of peak and standby for ap- proximately ¿half. of the hydro capacity. ’This with the Moccasin Creek Plant will about care for. present "needs, but the . city would immediately have to construct, its other .hydro .developments on Tuolumne River above Moccasin Creek and add to the steam plant installation to provide for the growing load.. .. The requirement, of the municipality it- self is now being met by the Pacific Gas and Electric Company for the Municipal Railway, municipal buildings and street lighting, this being for 1922 about 15,000 kw. inlet substation maximum and the total energy sales being 40,000,000 kwvhrs. and the substation input about 47,000,000 per year. Table 6 gives the energy con- sumption, revenue and price paid per kw.- hr. for the energy sold to the City for the years 1917 to 1922 inclusive. The Market Street Railway requirements for 1922 were 164,500,000 kw.-hrs. at the inlet substation and about 39,000 kw. peak. This indicates that if the City of San Francisco supplied itself and the Market Street Railway there would be required a total substation input of about 212,000,000 kw.-hrsj and 54,000 kw. peak, which, except for standby, could be met by the Moccasin Creek Plant. Any planHor the City to serve railway and municipal needs would require a steam plant, the purchase of a distribution sys- tem for municipal needs and a feeder and converter system for railway purposes. Table 4 has been prepared to show the total salH in San Francis® to ®ect «ptower consumer^.. Th®covers the period 1920-1921 and 1922, and includes the four power compani® whi® were operating during this^^^^K Tl® excludes sales of irae Sierra and San Francisco Pow®Co. to the Universal Co. The total of 1®2 was ®9,528,330 kw.-hrs. To supply this, till total of input from transmission line, and output from steam plants was approxi- mately 516,000,0® kw.-hrs. Table 5 shows electric energy revenul collectedJjw the four companies from^H rect consumers. The Sierra and San Francisco PoWeni.Q®pany revHue does mpt ,includ^^A revenues received from the Universal C®p^^| By dividing this (yearly rqyenuql by the corresponding yearfof' sales as given in Table Hthere is indicated a resulting low averai®revenue per kw.-hr. in.*i935®1921 and 1922 of 2.63, 2.6 and 2.63 cents kw.-hrs. respectively. The proponents of the idea of the dis- posal,jof HetchlHetchy power direct to the consumer by the municipality have taken the 1922 '^oss revenue of over $10,0®000 and considered that if this, had been paid to the City the total in ten years would be over $100,000^,0^.00, which would pay Jffir theePOhstruction of the entir^Hetch Hetchy system. Such reasoning is absurd. This gross revenue of the set^Jl power tympanies was -paid oh$ just as it would have to bo^uf received by the 0|gH for operfftion, maintenance, depreciation and fixed charges, ¿¿t was not profit; to the contrary it is the utility companies’ ex- pense accpunt. It ® gross return and not net. Report of the special .':'coihmit.t6eV.''hp- . pointed by the Citlc League'recommends, acquisition-by the City of the contract of the Sierra and San Francisco Power 0bhi- pany for furnishing power to the Market Street Railway, the purchase by the City of the Great Western, Power Company’s distribution system, and $uggests that-the City supply the Municipal Railway"'‘with power, and'on this basis makes a fotbc&st of revenue and expense which is given on Page 4 of the majority report. Under this plan, had the City been operating in 1921, there is shown a revenue of $3,845,- 679.00, and a total expense of $2,834,866.0.0, showing a net profit from the salehof Hwer of $1,010,813.Ob, which is reduced to cover certain rentals to the Pacific'Gas and Electric Company for facilities to supply the Municipal Railway and for.the standby service front this company to a net of $880,813.00. Quite apart from'the fact that the contract which exists be- tween the Market Street Railway and the Sierra and San Francisco Power Com- pany (of which the Pacific Gas and Elec- tric Com])any is the Lessee) has many years yet to run, and neglecting considera- tion of the fact that the Sierra and San FranciH) Power Company could not give B its market to the City and remain in business, the forecast referred to shows Hipossible profits. Several of the expense items are too low', no account has been taken of certain required capital expendi- tures; n®has the damage occasioned the Sierra and San Francisco Power Com- pany for taking its market, been Hlowed for. This is shown in Appendix 1. To July, 1923, the total of outstanding Hetch Hetchy bonds after giving effect to 1922 retirement, is about $36,000,000. To July®923. Here has been paid out’.in in- terest something over $5,000,000 and re- tirement has been $4,000,000. There re- mains in the treasury about $5,000,000 of bonds. The total which has been sold is close to $40,®^yt)0 as shown in Appen- dix The iftijHual charge for the fiscal year enmy^®92^-for interest and redemption is $«£0^ will■ gradually re- duced as the annual rA^m^nt of $1,000,- reduHs the total outstanding bonds. It is report^. th4t the bond interest and Hdemption charges on the Hetch Hetchy pi®ect will amount to approximately $2,- 300,000 net for the ,next fiscal year, which al^^B36 cents on the tax rate and this will^^^Hse as City funds available for '-reinvestment, decrease. To July 1, 1924, the total interest charges will amount to approximately $7,000,000. From Hformation obtained from the C® Engineer’s office, the conditions of the Hetch Hetchy-bond fund as of June 15, 192^-iM as follows: There is on hand in therjigich Hetchy bond fund $10,284,- 000;. and the unsold bonds amount to $5,- 2&k#O0, which if sold at par, brings the total of the Hetch Hetchy bond fund toThe Cfppts oblij^$d bylgm- tragS®-warded to the jgp0mt of ^plo,- OOO'^eayfng a%5^anCb in the bond fund ^ of $l(|b6KThoffice %g^mates ||if extfenditur^k to carry uc^ on®> r Remember §sL1924,^iill a§greg^^P^0,- ^^ffij^hich^mi^rther rpdilue the bMmce, leaving $3,1^$® as an estimate of what willM^iiain out of the $45,000,000 of Hetg^ Het^v bonc^' Tfys disposes of the 4>yo- f^gal thaiy^vbefore the Public Utilities Commit^^(’|hat the City use $5,000,000 of thejPfne^pended Hetch Hetehy funds for plhe puj$hase of tj£i Great Western Power Companj&g distribution system and the ac- quisition or construction of a steam stand- by plant^and other facilities necessary to supply thea&ower needs of a portion of San Francisco consumers. Appgnldix 3 is a rough forecast of what UriKSfi be expected if the City of San Fran- HrauPl should undertake the various pub- l^^P^tions which have been proposed, as for instance the purchase of Spring Valp^properties, the Street Railway Sys- * tem^ and complete electric! -distribution sftjem, ^Hand the brfinging in of Hetch HetchJ^water and indicates a total addi- tional inTOBfetlnesr. of pi 50,000,000. By the ’last election th^1 debt to be».ifteurred for R&iSpjP CompiBr purchase was excluded , ‘from th ¿¿charier limit; deducting BO.OOO,- Ejlg&ir this there remains $110,000,000 as °f bonds which would I ve d|^S(issued under the charter provisions unl&fg the voters exclude other bonds from t*the charter limit. The assessed valuation for . 1922 was $615,000,000, 15% of which is $92,200,000. As of the year mentioned Hire rafts $88,000,000 outstanding, of which $21,900,000 is excluded from the Hebt iypa.it, indicating that there has been M&m under the 15% charter provision bonds to the amount of $66,000,000. This leav&s!*a balance of $26,000,000 which may j|£&ugpied toward the $110,000. There is an l^cess of $84,000,000 not provided for, wMf|j under the 15% provision would re- quire an'lnjjtease in valuation of $560,000,- 0(M wdii^t* indicates that the assessed val- 1 d have to be increased 90% -61® $615,000,000 of 1922. ^^^^^^Klightly changed as of present date.. It is stated that the City is within $9,0^0()Q^P.the limit of its bond indebt-; ednffiggjUnder official interpretation, and within $0y$O0,000 under the broadest in- terpretation of the charter. Owpp to tWS#eady growth of the elec- ►^^•iTidustry, it is imperative that a util- itj^^&iether municipal ^^Hvate, he in a condition to effect ready extensions. With *a«|j5ak. of approximately 125,000 lews, and an annual ¡Ih'bwth of 6% %, there is an annual iMrease in leak capacity of a minimum ofv&OOO kilowatts, which, at $4pm)(l per kw| to allow for generation, tran^Lp^n and ^isti iPiition, means an HHHgSj in iu^atment of $3,250,000 pel year, ^iid, this in itself is also growing, so tha^^s ten years if the growth con- tinu||ta the increase in capacity and the v'hnnual jB^stment at that time will be Anjj|!l^^ric s«|i«i y Fran- cisco would have to expand toifiSejet this, hutifi i|^;^j^^^^ii|tpJ^fflfiation could cared I^Knder municipal Ig&pdiip because of tile >Jond issues out at int^ajgjo As is now, pubii irn’kim^extensions to their s^em^asflj|st^ e s s a r y^^H i ^St;any ¿'sfail in this the Railroad Commissions^; authority to force development^ wi^glas may be necessary to . meet' thea^Mgffl^ ments of consumers. This, fljj ccJJ^HBld not obtain under City control hec^M'thei- Railroad Commission has not amhdffiirB over the City government. For infHLnce, the Municipal Railway can notjfjfSiven- iently make extensions to its systamg&x- cept out of profits of the existingJ^HSpi; if the profit is insufficient, extensions are not built, and new bond rgsues jfgbist he resorted to, which in turn must m4|^^ Hpproval of the voter. And, tjjb(j|j]l is- sues are to he avoided, rates for el^QB energy will have to be higher than now prevails in order to create functor new construction and extensions. ItgSfe diffi- : alt to see how the City of scflfi under present conditions, can eijra@HsSl the public utility business and^ndffljBit with the same ease as is now had, and u^v less the same facilities for givingj^tft^l and meeting the growth are oMml it could hardly be considered a sdgpfemlEl undertaking. The Cit^gvill have to ¡¡pin a situation to meet the growing demand^ at all times. At the present time the only,.’ municipal utility that has been attemj$|d is tiie Railway and this is serving a ited area. The City can hardly *be said to be in the watel business and if it could enter the electric busi nes^H 8|&\ ing service to part of the commi|mfe, it will be the same in this undertaking ¿aPM is with the Municipal Railway. ThgBBSB in undertaking the utility business,, will have to conduct it in that aggressj®ffiJB|| that has been so noticeably the case Jffithe privately owned concern, and & munic- ipality to he complete will have to take the outlying and unserved territory vSJhin the City as well as business of greateuajj density. From the foregoing brief summary of the power situation in San Francisco, it is readily apparent that the City of San H'ancisco should proceed very there are many serious problems in- volved in the owning and operation of "a power distribution system for a great cD|H As a matter of fact, it appears fi?jHR29 showing that distribution by the Cit^SBa plan to be carried out as a last resort|^^pE It is idle to speculate on the sHfigpionlB made that the power companie^mQS .hH induced to give up their busmess,^ thaO some would sell out in order to put th!S City in business. ThesgSare m^^ers tn^B alone can be det^mined ■SE%e^^w^S companies themselves, .and apewe never been consulted as to the feagbility of the several notions which have beenth|pchlyjef by di^^yHiat tendo^ j^Bj°l|pRI from ex^iifi^itilltf^ fc^^ile ypy proceeding to the a&k qnisitiori w||^bndeMm^Oon df' suchjpati^i- ti^^i the City^an^jyen consider» undertaking Jifetask of or acqiiiri|^!ia system, it shOutm lHW^BermineSj^B ther^^lany other plan Btefeh tlffiPHHght. f|ow wit®profit, a§, for wholif1 an asTfet ^£n MpraW. With to a ^^RKg^ompauK^t, say,'^^100.cg^^flper kw.-hr. (Msj|j^hWbad factor irKorder tw d^^pe ofj^Eje! maximum amount, it ap- pears thatyBlbre possible'maximum ^inua jjS'o .gffi!B^f $2,“27,GOO, which will SfS^r a||g of HJ{? fixed and ¿derating ^^EgS^and depreciation $6?set forth JCity Engin|S&’ in l^l\r^Pbrt to Pjpnic Utill ties Commf^Te. Ther$43fcftll INKS something to spare and above all, no fur$ml| cHital BfflEnditures are necessary until itvfe. de- ^degfcfc bring in Hetch Hetchjl wj^ter. And^vhat is of paramount importance, the City toul|qjbe relieved of the condu« of a (SBfoiplex t&bhnicaj business whici Bm^^nrhsanm^onditibn^B cannot safel$| undertake. In fc (S^Engb^^’s report to th$. HBBRBtilitilllSCommittee, which has not tate:I that it is MtofiBtmitiallv rofie ,6# the t&fistin&i ^^^rl^^pah^^^^ght &||ree to buy the erS^BBtput t'lipSH^^^ln'Creek Plant, Mle City such portion thereof as^^eqMR^^th|^Sfv itself, for ulfes tollfflpSBOTiow putsHowerl paying for th^^||pnc|, ¿£j^iftnable |Hce. The fol- lowihg t^f^S^^m the City Engro^’k re- port H^gK^^mLion: “It iaK^babBs that initially one of yj|^0ffif^;ing p dared poll c-.yj ■ of ou^»m unicipal charter. Ip^^ptonhl proye^impossible tolaltain satisraci^j^^terms through with ¡mS^pov/or companie^dlt may ,be necessary for us ^o^il^^ake ^l^solu- tion of the entire problem ^p||stribn- tion through municipal chann^S If satisfactory terms span |b^|C®tai^^^R may pfpV^t.he^fibtter pojpy to|^mke temporary arrMigements for distribS tion of the pow^jt thi^S^i p^mteffl owned channels and ag^t^pful finaM^B and construction BrcH to th^ttiolhp^B tion of the wat&|£ si&ny enqBof the project. The peopipof Safi FranqisQ^ ’ . m,^f not forget th;^ is prinn|^r;; a water sn^BB ])^(^jt; M^fln order o.ur valuable water righ^Ei t|^Puolumne River it will be put them to use with reasonable dijBatch and con- tinuously construct wor® ^designed to that end. pft will not.Mb for ^q^i-tn turn the water loose at the tailrace b£||S^ c c c a sfn^^egkjpower plant and it always to remain for the future use offfche Ci» for domest&’Sh- poses. If San pr^^^e these -water ^^Shts fora^le ufe the cHt must cc^iti^ue the ^instruction . prograui on iE^^qneduj^-B^B^Bfrw to bring wfe A^ter This in turn wigR involve anf^4itional bon^l^B^lof ap- p ro x im atS^. i! i qj|f^a3iill^i ^K^0PlI b^^^^|ha^this siclered byiy&8t^l^KMB^^^ldiining wh eit is tl^^mw;er distrintit!^ bus3^ms: fir^t, c^! to t ei^R^lyjj^jatrust that to i0||i while we ^akJflBompMRthe ^E^h. Het^r a(jueduBM|raBsan Fran- cisco.” The m^^^p^f th^E^^^ffldSfiamittee signin|?OTffl e ¡^^piiinot statement made in the OgBprity Repoi^ that municipai opd^^^gof public ut^Bjs is a*ailure, for tiie^w^^ion (^oufenu- ui^al^tibvay liR^nthjgcf stro^feslW^bosition, theBfcsult^feff been anything but a failife-' It is"^|^|^ that some better scheme !p%-gg^^ting utili||qs under municipal own^^f^^md c(OT:rol should be cfbvised and put into °p||§§ffon, not so much as sug^ted ijflth^ljtojurity R^^^Ho take the oi>erat®. of utili^^; out of ^^|tics as to facilitate eco'nomical management, 'Rblitic^has played very-little part in the management and operation of our municipal rai&vay. It is the belief of the minority that the safe- guarding of the charter declaration for municipal ownership of utilities will he better subserved if the municipality is pre- vented from plunging ¡into the ownership and operation of utilities without prepara- tion and without proper consideration of and provision for the financial necessities of the venture. It is obvious that the City is in no posi- tion to engage in the business of distritl uting power to answer the needs of San Francisco either wholly or in part. Funds are not available, and furthermore, it would he impossible to either Hiuire or construct a distribution system bHthe Fall of 1924, when according to the report of the City Engineer, the Mocci^^^y^eek Power Plant will be completed; and, con- sidering the imperative necessity of put- ting the 'letch Hetchy System on incomB basis immediately upon completion of the plant |n order that the fi^pHharges on the Hetcli Hetchy debt be met alar as thi* is possible by the earnings of the |>bwer, it is recommended that, the CitB ascertain, as suggested H the City En- gineer, if the power companies are in a position to absorb the He^B Hetchy power either wholly or in p&rHand if^^tlie terms &id conditions Hider which they will take such power. It is further recommended that in any negotiations had for the disposition of the Hetch Hetchy power through the existing power companies, it be definitely deter- mined that such an arrangement is but a temporary one, and that when the city is in a position to properly and conveniently finance municipal direct distribution the agreement for distribution with the exist- ing power companies shall terminate; in ■her words, the members signing this re- port, in view of all the information before it, as set forth above, have reluctantly ar- rived at the conclusion that the only sen- sible solution of the power distribution problem is a temporary arrangement with the existing power companies for the dis- tribution of the Hetch Hetchy power upon the best terms and conditions possible, and for such time only as the city may re- quire to put itself in position to distribute the power itself. Respectfully submitted, R. M. J. Armstrong, W. W. Watson, John Henderson, Committee. Approved by: ^^Harles T. Phillips, |wnsulting Engineer. July 2, 1923.o ^ os p m crq ct> ví table nó. 1 SAN FRANCISCO POWER REQUIREMENTS—1922 Load **Annual Supplied by: Peak kw. Energy kw.-hr. Factor Growth ÏSierra-San Francisco Power Co. 48,000 200,368,175 ' 47.7% 2.1% ■ Pacific Gas and Electric Co... 65,000 229,714,011 40.3% 8.2% Pjâreat Western Power Co 21,900 85,976,461 ' 44.8% 11.3% Total 134,900 516,058,647 43.7% 6.3% Simultaneous , 123,500 47.7% includes Universal Gas and Electric Company. **Based on average increase for last two years. TABLE NO. 2 ANTICIPATED POWER REQUIREMENTS OF SAN FRANCISCO Based on 1922 load with 6.5% increase and 48% load factor. 1923 1924 1925 1926 1927 Energy kw.-hr.........550,000,000 586,000,000 624,000,000 665,000,000 708,000,000 Peak kw. ............. 131,000 139,000 148,000 158,000 108,000 TABLE NO. 3 POWER OUTPUT OF MOCCASIN CREEK PLANT At Plant 75% L.F. 48% L.F. At San FranRco Sub., 8% Loss 75% L.F. 48%) L.F. Energy kw-hr.. Peak kw 460,000,000 ^^^^■0,000 294,000,000 - 70,000 423,200,000 ^64,400 270,480,000 64,400 , 1 ■ TABLE NO. 4 KILOWATT-HOUR SALES—SAN FRANCISCO Utility 1920 1921 1922 Pacific Gas and Electric Company . 145,051,771 146,148,047 143,999,998 62,118,525 Bo, 104,991 158,668,336 147,301,400 71,787,762 v. 81,770,832 feierra & San FrancRo Power Co... fcreat Western Power Company ■Universal ............ 146,446,424 58,124,726 27y049,763 I Total 376,672,684 382,371,561 409,528,330 TABLE NO. 5 ELECTRIC REVENUE—SAN FRANCISCO Utility Pacific Gas and Electric Company... Sierra & San Francisco Power Co.... 1 Great Western Power Company I Universal 1920 $6,179,918.00 1,410,303.00 1,666,068.00 647,781.00 1921 $6,120,848.00 1.378.233.00 1.728.181.00 725,300.00 1922 • $6,512,478.00 1.285.842.00 2.204.405.00 745,383.00 Total .—$9,904,070.00 $9,952,562.00 $10,757,108.00■ ; TABLE NO. 6 CITY AND COUNTY OF SAN FRANCISCO USE OF ELECTRIC CURRENT, KW.H. CONSUMPTSON AND REVENUE 1917 1918 yCents ¡Cents I Servient Revenue Per R^r^Kie Mv.-Hr. if^Dollars Kw.|gf Kw.-Hr. r^^Pollar|^ j Kw.^l Mun. R.R *31,792 $23&fc.47 1.00 $282,940.69 Lt. and Pr 2,205,93« jgfp2>y.2:il 2.68 2’C3illiÈ ' 6^48.46 StHTiLtg | 6,327,684 gff4,862.46 4.34 4,619,936 28jg|05 (•'•6.07'j ^yCài | 32,265,415 | $571,395.76 1.77 $62^^.5° !Zi’M&M 1919 1920 Gents Cents I Revenue Per tRewenue p3 * * &i§i Service Kw.-Hr. ! Dollars K^Hr. K w.dTrfgj Dollars Kw.Hr. | Mun. R.R 28,858,860 $317,514.82 1.10 29kjâô,4&&g $35^81^^ Lt. and Pr 2,319,068 72,633.11 3.13 2,3 7 Sf| 2' [80,742.20 1 -■3:30 St. Ltg 5,511,418 280,894.55 5.10 5,265,705 332,661.25 ^§6?32 1 Total 36,689,346 j $671,042.48 1.83 37,533,815 $^-1 2.05 1921 1922 Cents ‘ I Service Revenue Per Revenue Pej%,': Kw.-Hr Dollars Kw.Hr. Kw.-Hr. j K^Sï-1 Mun. R.R J | 30,196,540 $359,453.57 1.12 j 31,7^,5151® $370,330.03 l.l3V. Lt. and Pr | 2,640,222 | 81,346.98 [ 3.08 2,929,758 | 2.66 St. Ltg 5,064,695 | 337,790.65 6.67 1 5,698,34^1 ["1^,867® v -6.54 ! Total 37,901,457 $778,591.20 ! 2.05 | 40,406^8 | $821,180.27 | APPENDIX 1 Setup on Page 4 ol' .Majority Report shows impo^fexnei^^itemsB are too low and no^^Smt'.lias been taken of certain reauig^^Sfeital expenditures, J nor has damage occasioned Sierra and San Francisco Po^SEjSaanpigjB'^pr market fen allowed profit given as.... .......................... ■ (1) Plant (j^acitaSttpiquirement. The energy proposed to be sold is............ This is an average consumer load of............ 32,200 | ypwgph^on a£!&% load factor will occasion a peak of ®7,000 “ HBfequiring a .substation peak input of (.86)-.. 78,000 “ Required aMoutput at Moccasin Creek of “ There available at Moccasin Creek............ Dell^ncy in output at Moccasin Creek.......... 19,000 “ An additional unit required at Moccasin Creek....----$U03gR(P B^P^ual cost in additional plant investment, 1 duced from city engineer’s report of April 4th, 1923, $1,00^® at m|05% ...........................................-........ (2) Substation jilif San Francisco not allowed in City Engine^jSXeport of H^pril 4th, 1923, 78,000 kw. substation will cost........$1,0^00&| Some of this capacity could be supplied by buying sferap^ shore Substation. Annual (^^$1,000,000 at .12,05%..... ............ $120^00.00 1 (3) a. Rental of- Pacific Gas and Electric facilities t^^HjMun^^ Rs^j®y; pbwer. i-A$ip0,m at 10%, $135,000 less $30,000 alio b. Construction of necessary feeder system for sjfaply ii&j^eat-' ‘Eras t- era Power jjfefsystem with HetclHletchB power. 20,000 kw. $250,000.00 at 11%.... ..... ...............'...„If-:,I$ 27,500.00 Iits H Hr IPa H its r 9 (f) a. Standby Charge. i -Assume-that sl|ipdby oWP^SOw kw. M|ms would be cifrom a s^anl'plant# plamfi will 3mhst kw^Snnu^^^^gof ’'wmchJ^^Hld or kw. ¿I^Senrabd Srfflfoiil at $1.5(^^fti^)l. Ipl^Skw. at ..........$1,222,500 b. Phis; cesSgif fuel ^S^fer^^mki|p might be Implied. On basis,-of lOOOfikw. mvera^^fK-ifch is the very minimum, the energy ^supplied wo^td be 9,000,000 kws. per year. At 333 kw-hrs. p]|p7)bblyfef $l>S|§2oil, cost wbuld be .45c per kw-hr., or for 9,000,000............................... 40,500 Ljgife allowance' in^eport.. $ 1.4S 2,0 00 - 100,000 ^HiS2,oH —' SSpM, S an F'nan c i s c o Power Co. r S- 7 ■ 4 9 msl ■esi all mm m ,00 00 00 bDari$age for market of 140,000,000 kw-hrs. at ......................................$1,330,000 :>sl|ierraj|cM would have for sale about 100,000,- W0 kw-hrs. of this, which is hydro. Pacific ¿^Electric Co. could absorb this amount of enef^y by postponing Pit development and Bread paipfor such power what i.^vould cost to d&8yer Pit power at same point, namely 55c per kw-hr. 116,000,oHkw-hrs. on high tension gsjg| of substation at 55c.--................... Kehj^S'ifft^e'^ihe____________ _________________ 638,000 ..$ 692,000 ■g§Lts might be reduced by the revenue Sierra Co. would H^^SgMpsupplied a portion of the required standby ||1]rough p|p8Torth Beach Plant. jlffiOO kw. at $20.90 as above.. ..............$ 564,000 Palana#of discit in revenue............................. $ !K8,000 Tmfe balance! isjfefost to city for which it could put to its use the 30,000 J|^S9®ierra Fe®er System supplying Market Street Raft^aMj^ Balued qHsbffl^p|^^00.0®togetli^C; with certain Sierra Company; rotary equiprjl^^nlued at approximately $650,000^00 now Blized b$|p[j Market sS R. R. I Total further annus^expeiise (Items 1, 2, 3, 4 and 5). AnnuMfmaseit ........................ ................ Tffi dj^ciBEmild be reduced about $100,000.00 by making rate for Railway power, thAf which is now being charged in- stBd ¡¿1 .‘.SSKiB-as taken__________ $r,5«gooo $ 702,687 100,000 Bnnual de^y»is estimated on basis of plan proposed in report..... $ 602,0009 T^BBBption resultsappm a poor plan of operation, namely, that of PurcbsSgfflgBfan(|0^gT0wc r for the block of load which it is con- B^platecl to carry. A more practical plan would be to operate a plant inS^p^^tion with; the hydro plant. This, method of ^liberation ugluld about^^B best economy. a (micron 1 capital inquired: Great ,Western Ppft-er ComuMy distributing system as given in report .................... .................................. $6®0,C®^ to Include one-half of Universal B'opertyBlthough ma.iorifeB^pbrt places the total at $7,1J2|500. 9>he awBual cjKrges on tfifl additional capital will increase the deficit at lBt'BfflH3|^^0.00®riigS8' it to......... .................... $ |$2,(3H| AdditifflH| PlanjijgSHc t <* 11 H^lghy . ..................... $l«fl^Ql^ san Francisco substation............... Umamm Feeder ^jitem toBppIy Great Western Power Co.............. $ 250,000APPENDIX 2 HETCH-HETCHY BONDS—CITY OF SAN FRANCISCO |A ‘ " ' ' ’ J - Par-Value Authorized ..................................................................v.........$45,000,000 P .Total Sales.................*.................................................—- 39,719,000 Disco unts ‘......- - -,.... - -, —- .....—........$ 2,898,536.55 Premiums ...................-...................... 11,348.00 Net Discounts .....................................$ 2,887,188.55 Received .......................................... 36,831,811.45 Unsold: Under option of Const. Co. of N. A. at price not stated.........$ 5,281,000 Retired: As of July 1st, 1923, by fund of $1,000,000 per year which began to operate in 1920............................................. 4,000,00) Outstanding: After giving effect to the 1922-23«tirement................$35,719,0^0(3 Interest Rate: 4%%, but a charter amendment passed in 1920 provided bonds could be discounted to yield 5y2%. Maturities: Serial, 1920 to 1965. SALES—RETIREMENT AND INTEREST PAID Fiscal Year Sales Retired Oustanding at Approximate July to July Par Value Par Value End of Fiscal Yr. Interest at 4 y2 1910-1911 ... $ 135,000 $ $ 135,000 $ 3,000 1911-1912 990,000 1,125,000 28,000 1912-1913 1,125,000 51,000 1913-1914 147,000 1,272,000 54,000 1914-1915 334,000 1,606,000 65,000 1915-1916 2,579,000 4,185,000 18^,000 1916-1917 1,640,000 5,825,000 225p)0 1917-1918 340,000 6,165,000 270,000 1918-1919 1,059,000 7,224,000 ■01,000 1919-1920 7,931,000 1,000,000 14,155,000 £§04,000 1920-1921 2,738,000 1,000,000 15,893,000 699,00i| 1921-1922 ... 21,826,000 1,000,000 36,719,000 -sil06,00l 1922-1923 1,000,000 35,719,000 -:^.52,000 Total $39,719,000 $4,000,000 $35,719,000 $5,188,000 Condition of Hetch-Hetchy Bond Fund, As of June 15th, 1923 There was cn hand in Hetch-Hetchy Bond Fund.............................$10,^14,000 Unsold bonds if sold at par..................................... 5,281,0Hj Total............................................................ $15,565,0® Obligation ............................................................. 5,500,000, Balance ................................................................$10,065,000 Additional Expense to carry Hetch-Hetchy Construction program to December 31, 1924................................................. 6,900,000 Balance of Hetch-Hetchy Bond Funds...............-A-.....................$ 3,165,000 F F APPENDIX 3 APPROXIMATE CAPITAL REQUIREMENTS OF CITY OF SAN FRANCISCO TO CARRY OUT VARIOUS UTILITY FUNCTIONS Present Situation: Assessed valuation in 1922 was......................$615,000,000 Bond limit 15% ..................................... $ 92,200,000 Outstanding. Bonds, 1922............................ 73,664,000 Additional Bonds authorized to he sold largely for Schools and a Relief Home...........................14,335,400 Total outstanding or authorized.....................$ 88,000,000 Excluded from debt limit: Exposition bonds ......................$ 3,200,000 Schools ............................... 18,700,000 21,900,000 Total issued under 15% Charter provisions if school bonds are excluded ......................................................... 66,000,000 Balance which may be issued under the most liberal interpretation of the Charter as of 1922..................—....................... 26,000,000 If School bonds are included within 15% limit the balance which may be issued as of 1J2..........................................7,000,000 Future Needs if City Engages in Various Utility Which Have From Time to Time Been Proposed: Completion of Hetch-'Hetchy as estimated by City Engineer............ $ 30,000,000 Spring Valley Properties................................................ 40,000,000 .Market. St. R. R. and other Railroad Properties...,................. 45,000,000 Kj|mctric Distribution System ............................................. 25,000,000 ||eam Plant .to carry 64,400 kw. of steam peak and to 'furnish approximately 34,000 kw. of standby—98,400 kw............................ 10,000^)0 Total additional indebtedness neglecting several odd million for jjiÎ^^iaUs purposes .............................................. $f|o,000,000 This PS over 24% of the 1922 assessed valuation of—.......$6lj^|00,000 Adding tdghis: Hlie|pwent debt of..................................... 88,000,0(gj ThaBBf^jj del^ffiill be......... ........... $238,000,000 wajljffpluded froiîi the ChaiHr Liruft of 15% of the assessed valuation the bonds necessary to effect MarkH St. Railway pul'b chase. Allowing $40,000,000 for this, the^additional bonds which it would be nefe^sary to issue under the charter Provisions will be $110,000,000 Ronds wl^mSmay be issuj&khnder Charter provisions as above rioted-.jpSL-.$26,000,000 Required for plan^fponds for which muStybe issued under Charter provision^p^oadly*Jmterpreted............................j.iiasL..........$84,000,000- ^^^ffiary indBUie in Huation to permit issuance of bonds to this£mtent..$|g0,000^)0 Which indicates that the assessed valuation should hav&lo be increased over 909«APPENDIX 4 SELLING WHOLESALE Sale of 64,400 kw. 75^ daily load factor C^ipany at end of transmission, at say, Newark. 423|||3p00 kw-hrs. at .55 cents*.;—.^...$2,327,800 Plant in\^tment $1®00,000.00 as given in City Engineer’s report April 4th, 1923. Annual-charges covering 990,000 Depreciation on plant and equipment..... .........—.......... . |/K,292 Insurance on power house..:.'.....—........................... 70,000 Maintenance cost pf_power plant and eauinmen^^^^^^^*^;^^$;j67 Operating cost •............................................. 221,500 Overhead 5® of above............................................81,707 Bond redemption 1/40 per year........................ .....—. 450^?OO Total cfiarges, operating,^Maintenance and fixed...............$2,165,866 (The^^ve is^l^jSon $18,000,000.00, which is suffici^E^ high to ......cover all annual costs.) Balance Ngt Pr|Sit whiffi&rill increa^fe as additional bonds are retired out of pow|| revenue............................................. .............$ 161,734 This|Brofit_ to go toward meefflig interelBj on and redemption of $17,000^0 balaifcl of HgtcIfiMmchy investment. This will sta$® with: Interest ..................................$ 660,000 Redemption ....................—...........i^>J5^B)J50 Total —>w^.:..............................$1,210M0 whic^S^HmAs -iehs as bonds are retired j^rough tax proviggin. N.B.SlJnder above plan no further capital p|pendiihres are nece'sfflry.U.C. BERKELEY LIBRARIES C117234238