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PROVINCE OF BRITISH COLUMBIA Progress Report of the Rural Electrification Committee As of January 24th,… British Columbia. Legislative Assembly 1944

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Full Text

 PROVINCE OF BRITISH COLUMBIA
Progress Report
of the
Rural Electrification Committee
As of January 24th, 1944
PRINTED BY
AUTHORITY Off THE LEGISLATIVE ASSEMBLY.
VICTORIA,   B.C. :
Printed by Chaki.es F. Banfield, Printer to the King's Most Excellent Majesty.
1944.  Rural Electrification Committee,
Victoria, B.C., January 24th, 1944.
The Honourable John Hart,
Premier, Parliament Buildings.
Sir,—We beg to submit a progress report setting out the results of our studies to
date on extension of rural electrification in the Province.
This progress report sets out as fully as possible the factual information called for
in your instructions to us, but contains no recommendation on methods of supplying
electrical energy to areas not now served, and no estimates of probable rates within
those areas.
During the course of our studies, it has become increasingly evident that the
supply of electrical energy to farms not now served cannot be made self-sustaining as
a separate enterprise and that expansion of service must be made by extension from
more densely settled areas, most of which are now supplied by existing plants.
These existing plants are operated by some sixty-five different organizations, and
a further intensive study of the capabilities of those organizations will be necessary
before any specific recommendations can be made as to the methods and costs of
extending service. These studies will involve an investigation of the sufficiency of the
generating capacities of the existing organizations, of their financial ability to expand,
of their extension policies and possible modifications thereof, and of their willingness
to co-operate in the scheme. It has not been possible for us to complete these investigations in the time available.
The co-operation and assistance of the various organizations furnishing electric
service and of the staffs of the Public Utilities Commission and the Water Rights
Branch in securing basic information for this report are gratefully acknowledged.
Respectfully submitted,
RURAL ELECTRIFICATION COMMITTEE.
W. A. Carrothers, Chairman.
J. C. MacDonald, Member.
E. Davis, Member.  AUTHORIZATION.
ORDER IN COUNCIL No. 560.
Approved and ordered this 19th day of April, a.d. 1943.
W. C. WOODWARD,
Lieutenant-Governor.
AT THE EXECUTIVE COUNCIL CHAMBER, VICTORIA.
To His Honour the Lieutenant-Governor in Council:
The undersigned has the honour to report:—
That, in order to secure reliable information in connection with the electrification
of rural areas, it is deemed necessary and expedient to appoint a committee with powers
to survey and report upon the extent and condition of electrical services in the Province,
with particular reference to the servicing of rural areas.
That, the said committee be instructed to survey and report upon the following
subjects:—
1. Rural areas in which electrical service is now available:—
(a.) The source of electrical energy and the terms and conditions under which
the service is furnished:
(6.) Numbers of consumers presently served:
(c.)  Numbers of potential consumers not presently served and the reason
therefor:
((_.)  Methods of improving the supply and availability of electrical service.
2. Rural areas in which electrical service is not now available:—
(a.) Number of potential consumers:
(_.)  Potential sources of electrical energy for such rural areas:
(c.)  Proposed methods of furnishing service.
3. The feasibility of supplying numbers of presently isolated communities from
" grid " transmission systems and central production plants.
4. Preliminary estimates of the capital cost of works proposed for increasing the
supply and availability of electrical service.
5. Estimated rates under which electrical service may be furnished under proposed plan.
6. The financial problems involved in furnishing electrical service, including:—
(a.) Whether financing of extension projects can be handled by existing
utilities:
(6.) Whether rates pursuant to extensions could be carried by new consumers
without concurrently increasing unduly costs to existing consumers:
(c.)   If projects cannot be on a self-sustaining basis, how could they be
financed ?
7. Any other technical and economic information in respect to rural electrification
within the Province.
And to recommend:—
That a committee of three be appointed for the aforesaid purpose, to be composed
of Dr. W. A. Carrothers, chairman; Major J. C. MacDonald, member; and E. Davis,
member.
That the necessary and incidental expenses in connection with this survey, for
the fiscal year 1943-44, be charged to Vote 110A of the Department of Lands.
Dated this 13th day of April, a.d. 1943.
JOHN HART,
Minister of Finance.
Approved this 13th day of April, a.d. 1943.
JOHN HART,
Presiding Member of the Executive Council.  TABLE OF CONTENTS.
Summary of Findings-
Method of Procedure—
Page.
...    9
.__ 11
PART I. INTRODUCTORY.
1. The Development of the Central Electric Station Industry	
2. The Important Functions and Characteristics of the Central Station Industry.
3. Ownership and Control of Electric Utilities	
4. Rural Electrification.
13
14
15
20
PART II. FACTUAL DATA.
5. Sources of Information..
6. Ownership and Control of Central Electric Stations in British Columbia  21
7. Areas in which Electrical Service is Available as of 1942  24
8. Electric Rates in British Columbia  36
9. Sources of Electrical Energy supplied by Central Stations in 1942  44
10. A Measure of the Capital Investment in Central Electric Stations  46
11. Revenue of Central Station Industry as of 1942	
12. The Effect of Taxation on the Efficiency of Electric Utilities	
13. Summary of Important Facts related to Central Station Groups, 1942_
14. Areas in which Electrical Service is not now Available	
15. Preliminary Estimates of Capital Cost of New Works required to serve 80 per
Cent, of 9,778 Potential Consumers in Rural Areas	
16. Water-power Resources of British Columbia	
PART III. RURAL ELECTRIFICATION IN OTHER
CANADIAN PROVINCES.
48
48
52
53
57
58
17. General Observations     _
*
        71
18. Nova Scotia___       _ 	
72
19. New Brunswick      	
_ 73
20. Quebec                    	
      _    __74
21. Ontario
  75
22. Manitoba
  76
23. Saskatchewan              	
  78
24. Alberta         ._      	
  79
25. Resume	
PART IV. RESUME.
  81  SUMMARY OF FINDINGS.
1. British Columbia is a close second to Ontario in percentage of farms to which
electrical service is available—35.8 per cent, to 37 per cent.    (Pages 55 and 56.)
2. Except on the Lower Mainland (including the Fraser Valley), the cost of
electric service throughout the rural areas is relatively high, and quality of service is
relatively poor.    (Report, page 36 et seq.)
3. The average use in rural areas is relatively low.    (Pages 28, 29, 30, and 31.)
4. Average use and cost of service are closely interdependent.    (Page 31 et seq.)
5. Sixty-five separate organizations are engaged in providing central station service in the Province.    (Page 21 et seq.)
6. For statistical purposes service in the Province may be divided into 112 distribution systems.    (Page 25 et seq.)
7. There are 206,723 customers of electric service in the Province, of whom 38,227
may be classified as rural.    (Page 27.)
8. Many of these rural customers could not be served at existing rates but for their
proximity to, and assistance from, more densely populated areas.
9. Within practical distribution distances from central stations there are approximately 10,000 potential customers who might be served with central station energy.
(Page 53 et seq.)
10. Few, if any, of these potential consumers can sustain separate enterprises at
rates that will induce them to take service.
11. Farm electrification will have to be developed by extensions from the local
centres of population, some of which are quite small.    (Pages 20 et seq., 56 et seq.)
12. The limit of extension from such centres depends on the size of and use in such
centres and on the suitability of the local supplying organizations.
13. A number of the organizations providing service have insufficient capacity for
a material extension and have not the financial resources to provide additional capacity.
(Page 82.)
14. The cost of administration of the industry as at present constituted is unduly
high and is an important factor in the cost of service.    (Page 81.)
15. Taxation (Dominion taxes alone approximate 20 per cent, of revenue) is an
important factor in the cost of service.     (Page 49.)
16. The practice of some municipalities of collecting electric revenues in excess of
cost of service is a definite hindrance to increased use and consequent reduction of unit
costs.    (Pages 17 and 49.)
17. The average charge per kilowatt-hour in the Province under municipally operated systems is higher than under those operated by private companies and industrial
organizations.     (Page 35.)
18. The underdeveloped water-power of the Province is not an important factor in
the extension of rural electrification.    (Page 58 et seq.)
19. The sparsity and distribution of population in the Province makes a general
Provincial grid system impractical.    (Page 56.)
20. No material extension of rural electrification can be made on a self-sustaining
basis without a reorganization of the central station industry.    (Page 82.)
The diagram on the next page illustrates the relative output of hydro-electric,
steam, and Diesel generated power distributed to the general public through central
stations. This diagram indicates also the proportions of the central station business
conducted by the respective operating groups. As 97 per cent, of the energy produced
by West Kootenay Power and Light Company is used by the Consolidated Mining and
Smelting Company at Trail, this study includes only the 3 per cent, which is distributed
to the general public. The investment figures for this company refer to distribution
plant only and exclude the generating and transmission plant. The investment figures
for East Kootenay Power Company, Powell River Company, Pacific Mills, Limited, and
Canadian Collieries refer to distribution plant only; production and revenue figures
apply only to energy supplied to the general public.
9 Z 10
PROGRESS REPORT.
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1 METHOD OF PROCEDURE.
The survey of the extent and condition of electrical services in the Province has
been made during a period when it has been difficult, due to war-time conditions, to
obtain technical staff to expedite the work. Consequently, the services of the engineering and clerical staffs of the Water Rights Branch and of the Public Utilities
Commission have been used when available in addition to personnel engaged by the
Committee.
The statistical information respecting the utility survey has been assembled under
the direction of Mr. S. R. Weston, Chief Engineer of the Public Utilities Commission,
and has been summarized in Part II. of this report, sections 5 to 15. Information on
the available water-powers of the Province, section 16, has been obtained from the
Water Rights Branch. In reporting the basic facts Mr. Weston, by way of introduction, submitted comments on the development and functions of the central electric
station industry and its relation to rural electrification in general. These are considered pertinent, and are included under Part I. of this report.
The statistical data on existing services have been compiled from official records of
the Public Utilities Commission and from information supplied directly to the Committee by the operating utilities. -The number of potential consumers in rural areas was
determined by actual count from automobile surveys. Field-notes recorded the speedometer mileage opposite each set of buildings. The notes were later transferred to
maps and charts to show the location of the various groups in respect to existing or
possible central sources of energy. These maps, charts, and supporting data have been
indexed and filed to comprise a useful record of existing services and of the location
of potential consumers.
The Water Rights Branch Engineers have investigated several small water-power
sites and have assembled valuable information in respect to a number of potential
developments.    (Part II., section 16.)
Information regarding rural electrification practices and trends in other Canadian
Provinces has been obtained directly from responsible officers of the principal electric
utilities from Alberta to Nova Scotia and is reported in Part III., sections 17 to 24.
11  Progress Report, Rural Electrification Committee.
PART I. INTRODUCTORY.
1. The Development of the Central Electric Station Industry.
2. The Important Functions and Characteristics of the Central Station Industry.
3. Ownership and Control of Electric Utilities.
4. Rural Electrification.
1. THE DEVELOPMENT OF THE CENTRAL ELECTRIC
STATION INDUSTRY.
" In San Francisco, on June 30, 1879, was incorporated the California Electric
Light Company. George H. Roe was the organizer, and William Kerr sold the electrical equipment, holding Brush territorial licence for California, Oregon, Washington,
and Nevada.
" This pioneer company proposed to sell electrical illumination to cash customers,
something never before attempted. The few commercial installations of any inventor's
apparatus then in existence had been solely for private use. Individuals, merchants,
hotels, and theatres had purchased plants and arc lamps; they had had their premises
wired; and the lights, supplied from their own private generating plants, were utilized
for private benefit on their own property. These were designated as ' isolated lighting
plants.'
" The San Francisco Company was the first in this country, if not in the world, to
enter the business of producing and selling electric service to the public. Its generating plant was in the rear of what is now the Pacific Building, and modest indeed was
the equipment first installed. It consisted of two Brush dynamos, one supplying six
lamps and the other sixteen. In December two dynamos of the larger size were added.
Customers were not lacking, though the rate was high. A flat rate of $10 per week
per lamp was charged, as metering of the current was quite unknown. As the system
was improved, rates were reduced, until eight years later it was $3.00 per week for
current furnished up to 9:30 o'clock in the evening (11:00 on Saturdays), $4.00 for
current up to midnight, and $6.00 for all-night service. No current was furnished on
Sundays and holidays. The city and county of San Francisco were eventually among
the customers of the plant, setting up a street lighting system of 21 masts, 50 feet in
height, each having four 4,000-candlepower lamps."
Thus, in his book "Men and Volts," the late John Winthrop Hammond has
described the first central electric station, and the beginning of a business that is
variously referred to as the " Central Electric Station Industry," the " Electric Utility
Business," or the " Electric Service." In sixty-four years this industry has reached
huge proportions and is still in a period of growth. It has done much towards improving the standard of living through its direct contact with the homes of millions and
through the distribution of electrical energy to all sorts of industries, which in turn
have provided useful employment for labour and capital.
It may be said to have begun a new industrial revolution, the ultimate effect of
which is not yet measurable. In the earlier industrial revolution the steam-engine and
the water-wheel provided the mechanical energy which had to be belted or geared to
productive machinery. As belts and gears could transmit mechanical energy for but
short distances, industries were concentrated near coal-mines and water-power sites,
and were limited in size. Now the electric utility can deliver energy to industries in
widely separated communities, though they be hundreds of miles from the coal-mines
or the water-power sites; if the nature of any industry requires a vast plant, there is
a wider choice of locations, for the energy can be delivered to it and to all its component
13 Z 14 PROGRESS REPORT.
operations even though they cover hundreds of acres; smaller industries can be established in the most desirable locations with respect to transportation, markets, and living
conditions for their employees, etc., and no longer have to be grouped around a coalmine or a water-power site. The decentralizing effect of the centralized electric utility
business upon industry and population has had and will continue to have an important
influence on the standards of living.
Before discussing the conditions of this industry in the Province of British
Columbia, and particularly in its application to the rural and agricultural areas, it may
be helpful to consider some of the important functions and characteristics of the
industry in general.
2. THE IMPORTANT FUNCTIONS AND CHARACTERISTICS
OF THE CENTRAL STATION INDUSTRY.
The business of producing and selling electricity to the public is only a part of the
great electrical industry which stems from the invention, development, and manufacture of equipment for producing and utilizing electricity. The fact that the utilities
have had direct contact with the public may have led to the impression that they have
been the creators of the electrical industry, when in reality their function, however
important, has been secondary. The inventors, designers, and manufacturers of
electrical equipment have created the industry by their development of equipment for
the production, transmission, distribution, and utilization of electrical energy.
The assembling of production and distribution equipment, and its operation, and
the sale of electrical energy comprise the function of the central station industry.
Whether that function is performed well, badly, or indifferently is a matter of great
importance to the general public, for upon the efficiency of the utility may depend the
people's opportunity for useful employment and for improved living conditions. The
construction of a generating plant and a distribution-line, and the installation of a
number of customers' meters do not necessarily constitute an electric utility which will
permit the public to make the best uses of electrical development. In the description
of the pioneer electric utility company in San Francisco, it was stated ". . . the
rate was high . . . As the system was improved, rates were reduced ..." and
other uses developed.
This first undertaking showed evidence of the three essential factors which must
be present and constantly operating, each upon the others, in the electric utility
business if it is to render the highest standard of service. These three factors are:
improvement in plant; reduction in rates; increased use of service. The necessity for
improved plant arises from and is financially supported by increased use of the service.
Increased use of the service is promoted by improved plant and by reduced rates.
Reduced rates are made possible by increased use and improved plant. All three of
these factors will be found active wherever the utility furnishes the highest quality of
service. Rate reductions are not necessarily effected by revisions in rate schedules,
for it is the average unit cost which measures the rates for service, and sound rate
schedules are promotional in character, being designed to lower the unit cost with
increased use.
The utility business requires experienced, technical management, capable of
maintaining a nice adjustment between the three factors—plant improvement, rate
reductions, and increased use. Sir Adam Beck (who was a manufacturer), regarded
as the founder of the Hydro Electric Power Commission of Ontario and for many years
its chairman, upon being asked how the hydro was operated, replied, " By Providence
and the engineers." He was stating simply that the power potentialities had been
provided by nature and the engineers had developed the power-sites and distributed the
energy for general use by the people. A self-sustaining business is itself a criterion of
management, and utilities continuously supplying high-grade service are financially
self-supporting and efficiently managed. RURAL ELECTRIFICATION COMMITTEE. Z 15
Under the existing economic system the establishment of an electric utility
property requires a large amount of capital as compared with most other industries.
Electrical properties comprise many and varied items of equipment representing a
great deal of high-grade labour and material. It may take $5 to $10 worth of property
to produce $1 of annual revenue, whereas in other types of business the annual turnover
may be equal to many times the original investment. An electric utility to serve
10,000 consumers may require a property costing from $2,000,000 to $5,000,000. Such
an amount of money is usually beyond the means of any one person and must be
assembled from several individuals.
The planning of a utility property and its operation require specialized technical
skill. That type of professional skill and great wealth are not found in a single individual nor in a single group.
An important function of the utility business is to bring together the private
capital and the technical management, both of which are essential to the establishment
of an efficient service. All utilities in this country are financed by private investors
and the efficient ones employ technical management. The slight difference in the
methods of assembling the capital of private investors has led to the loose classification
of utilities into "privately owned" and "publicly owned" groups. The methods of
financing as well as the more important differences in control and policy will be discussed in the next section.
3. OWNERSHIP AND CONTROL OF ELECTRIC UTILITIES.
The electric utility business on this continent operates under two general types
of control, namely:—
(1.)  So-called private ownership.
(2.)  So-called public ownership.
(1.) In the private ownership group the capital is obtained from individual
investors through the sale of shares of capital—common and preferred stock—or
usually in part through the sale of bonds and in part through the sale of stock shares.
The proportions of bonds and other senior securities to common stock varies, but it is
not unusual for a company to raise as much as 60 per cent, of its capital funds through
bond issues and 40 per cent, through sales of common stock. Whatever the proportion,
the funds are obtained from private investors or from other companies, and in both
cases represent individual savings.
The bondholders, as such, have no control over the policy of the utility, nor over its
management, so long as the contract conditions of the bond are fulfilled. Only the
common shareholders exercise control through a Board of Directors elected annually
by them. The directors employ the management. As 51 per cent, of the common
stock shares can elect a directorate, the management and policies of a company may be
controlled by 20 per cent, or less of the total capital invested. Under such circumstances a company is not operated by the investors but by a minority of the investors.
If the management is competent and conducts a self-sustaining business, maintaining
the most effective adjustments between expansion, increased use, and unit costs of
service, the ownership is unimportant, for the investors receive the interest on their
money and the public receives good service. If, however, the general policy of a
company is dictated by common shareholders whose primary interest is in annual
dividends, or in building up a large shareholders' equity in the property, the management, be it ever so competent, is handicapped in providing service. The industry may
be self-sustaining and may pay only reasonable dividends on the common shareholders'
investment, but its policy may prevent expansion through inability or unwillingness to
provide the necessary capital, and its service may be mediocre on account of failure
to adjust rates and volume of service.    Under such circumstances, the undertaking Z 16 PROGRESS REPORT.
becomes first static and then deteriorates, with unfortunate results to the community
and to the investors.
The operation of privately owned utilities is now generally subject to some form of
governmental regulation. The bona-fide utilities, which have been wisely planned and
operated under competent management and under policies aimed at the highest efficiency of service, have done much to develop standards for the regulation of the whole
industry. Other utilities have improved their services through the adoption of similar
standards established by regulatory bodies. Examinations and inquiries by regulatory
bodies have led to remedial measures in many cases where utility projects have been
ill conceived, inadequately financed, or badly managed.
Where the electric utility industry is privately owned and operates under regulation, it is important that both the operation and the regulation be conducted under
similar broad policies aimed at a self-sustaining industry capable of furnishing adequate, efficient, and economical service. There is, generally, a disposition on the part of
local interests to seek immediate apparent advantages—in rate reductions or improved
service or in availability of service—without full consideration of their effect upon the
future of the service. For this reason it is not always possible for a directorate
responsible to shareholders to adopt a long-range policy. For example, they can hardly
forego or reduce dividends for a period of five years in order to expand service or otherwise to increase the volume of business if in the succeeding five years they may be
obliged to adjust revenues to the cost in the later period. Unless the regulatory and
operating policies are in accord, the utility company management must place year-to-
year dividend requirements before service. This has led to the superficial view that
privately owned utilities are operated for profit, while publicly owned utilities are operated without profit. Utility companies operating under regulation, as now generally
applied, are permitted only a fair return upon their investment; so also must a publicly
owned utility earn interest on its investment if it is to be self-sustaining and continue
to give service. Whatever the interest on the invested funds be called it is an important item in the cost of electric service and its name does not affect the efficiency of the
service. The amount of interest is the main consideration and this depends upon the
policy and the management rather than upon the type of ownership.
A certain amount of electric service is furnished by industries and institutions,
primarily engaged in some other activity, for which an electrical plant is required.
Organizations of this kind sometimes furnish service to their employees and others in
their own townsites, not necessarily at rates to produce revenue equal to the cost of
service. Frequently as a matter of general policy industrial companies furnish such
service at less than actual cost, the deficiency in revenue being absorbed in the costs of
their primary products. The furnishing of electricity under such conditions is not
usually classed as a public utility, and is not defined as such in the " Public Utilities
Act" of British Columbia.    Section 3 (2) of that Act provides:—
" Where any industrial corporation generates electric power or diverts or pumps and
uses water primarily for its own industrial purposes, such corporation shall not be a public
utility in respect of water or electric service furnished to others if the furnishing of that
service is wholly incidental to the industrial business of the corporation and is not in competition with a public utility which is capable of supplying and willing to supply that service,
and if the service furnished to persons other than employees and tenants of the corporation
does not, in the case of electric service, utilize more than fifteen per centum of the electric
power generated by it, and does not, in the case of water service, utilize more than fifteen
per centum of the water diverted or pumped by it."
(2.) The so-called public ownership group of electric utilities fall into two divisions
—the municipal and the regional systems.
Municipal properties are controlled and operated by incorporated cities, towns, or
districts, their service being limited to a single incorporated area and the immediate RURAL ELECTRIFICATION COMMITTEE. Z 17
vicinity. Capital for the construction of plant is obtained through the sale of bonds to
private investors and,, where the utility is operated on a self-sustaining basis, the
interest on the bonds is as much a part of the cost of service as the fair return on all
investment is in the case of a privately owned utility. A well-planned and efficient
municipal utility performs the functions of bringing together the necessary capital and
management in a manner slightly differing from that of a company. Municipal plants
are financed wholly from the proceeds of bonds to the exclusion of common stock. A
community with a high financial standing can secure the capital on as good or sometimes better terms than a company. Any resulting equity in the undertaking belongs
to the community, and eventually contributes to a reduction in rates if the utility is
operated on a self-sustaining basis. In many cases utility operation is intermingled
with other civic services to such a degree that it is difficult to determine its efficiency.
There are frequent changes in personnel of municipal governments, resulting in
changes of policy, or, what is sometimes worse, sheer neglect of directive policy. However competent the management may be, it must be given a long-range policy if it is to
develop an efficient utility service marked by expansion of service and facilities and by
reductions in rates. If the utility is so mingled with other services that the management cannot know whether or not it is self-sustaining; if its surpluses are used to pay
for other civic services instead of reducing rates; if its policy is fixed to produce
excessive revenue in order to reduce local taxations, it cannot attain a high standard of
service. Under such conditions the average use of the service, the unit cost of service,
and the facilities for supplying it become fixed and eventually the service deteriorates.
Whatever burdens in excess of the cost of service are imposed retard the development
of the utility, whether it be privately or publicly owned and controlled. If, on the
other hand, the electric rates are fixed on an unscientific basis so as to prevent the
collection of the whole cost, the service can be maintained only at the expense of the
local taxpayers. It then ceases to be a dynamic utility and becomes just another civic
service to be kept in operation somehow by the taxpayers. But an electric utility
cannot stand still for long;  it must be growing or dying.
The regional systems under public ownership serve areas including several communities, as in the case of the Hydro Electric Power Commission of Ontario, and the
Provincial Commissions of Nova Scotia, New Brunswick, Manitoba, and Saskatchewan.
There are some regional systems operated by private companies, but while these possess
some advantages in the matters of organization, financing, administration, etc., they
have the same general characteristics as private utilities operating in a single city.
But there are more significant differences between a regional system and a municipal
system under public ownership. Both are financed by private capital assembled
through the sale of bonds. Municipal bonds are secured by the assets of the municipality, while the regional systems are financed on the proceeds of Provincial bonds or
bonds secured by all the property of the larger systems. For this reason, the interest
rate—always ail important item in the cost of electricity—is usually lower than in the
case of municipally owned utilities.
There are no regional electric systems in Canada operated directly by Government.
In all cases the plants are constructed and operated under special commissions appointed
by the Government. These commissions perform 'administrative functions similar to
those of the directors of a private utility; they see to it that the required amount of
capital is assembled and they employ the technical management for the construction
and operation of the properties. The commissions do not have the same latitude in
respect to general policy as do the directors of a private utility, or as do the city councils in the case of municipally owned properties. The legislative Acts under which
such commissions and their works are established lay down the general policies for the Z 18 PROGRESS REPORT.
regional systems. These Acts provide for electrical service to be provided at cost,
including administration, management, operation, maintenance of property or depreciation, interest on funds invested, and all other legitimate costs connected with the
business. The general policy is determined by the Legislature and expressed in the
enabling Acts. The undertakings are of sufficient scope to warrant the employment of
the necessary executive management and skilled operating personnel. This is important, for under any type of control the conception of a public utility project and the
selection, assembling, and efficient operation of electrical plant require specialized technical skill, co-ordinated into an organized management.
The regional systems in Canadian Provinces generate and transmit electricity both
for distribution by municipalities and by other persons and corporations. They also
distribute directly to consumers in some areas. As the general policy requires the
service to be provided at cost to the consumer there is no advantage but considerable
disadvantage in having local distributing commissions. In all cases their rates have
to be supervised by the central commission and they serve only to increase the total
administration cost to the ultimate consumer.
In addition to the three well-known types of utility control, some reference should
be made to the outstanding Federal power schemes in the United States of America.
The Tennessee Valley Authority and the Bonneville Power Administration have constructed extensive works for the production of electricity and for other purposes,
including navigation improvements, irrigation, and stream run-off regulation. These
projects have been financed by the Federal Government, and energy has been sold mostly
for redistribution by other organizations. They have no counterpart in Canada, where
the electrical utility industry is under the jurisdiction of the Provincial Governments.
The Rural Electrification Administration (R.E.A.) of the United States Department of Agriculture was established in 1935, at a time when considerable rural electrification had already been provided in several Canadian Provinces. "What R.E.A.
Does—A Thumbnail Sketch " is contained in the 1937 R.E.A. report, pages 5 and 6.
" Primarily, the Rural Electrification Administration makes loans to build distribution lines to take electricity to farmers who are able to pay for service but have
been left without it. Electricity makes possible running water systems and a host of
electrical conveniences and devices that save labor or increase income, or both. Thus
R.E.A.'s program provides an indispensable aid to modern farming and farm living.
" Twenty-year loans are made at 2.88 per cent, interest, chiefly to farmers' cooperatives, but also to public power districts, private utilities and other agencies, for the
entire cost of building electric distribution lines. These lines bring energy to the
farms from the nearest source, usually a private utility or municipal generating plant
or transmission line. Additional loans, where they are needed, help to finance the
wiring of the farmsteads and the installation of plumbing systems. These latter loans
are on a five-year basis."
The R.E.A. is not a public utility but is a branch of the Federal Department of
Agriculture, and has been established by the United States Congress for the purpose of
financing electric utilities all over the country. It may be noted that in addition to
providing funds for plant construction at extremely low rates of interest (2.88 per
cent.) the Administration "examines the proposed rural distribution line projects for
economic and engineering feasibility. When loans are made to cooperatives or other
newly formed agencies, it aids in perfecting an adequate organization both for construction and operation. It makes allotments for approved projects and controls the
disbursement of funds from the United States Treasury. It helps borrowers to find
engineers, contractors, and sources of power. And its engineers review construction
plans and contracts. RURAL ELECTRIFICATION COMMITTEE. Z 19
" After projects go into service they are assisted with their problems of management and operation. R.E.A. specialists help the farmer-members to make the fullest
and most effective use of electricity. Field auditors examine books and give counsel
on financial problems. These last three functions—management assistance, utilization
or 'load building,' and field auditing—not only help the farmer-users but serve more
particularly to trim expenses and build revenues to pay out the loans.
" More generally, and within the limits of its authority and resources, R.E.A. acts
as a coordinator of national effort in its field, as a clearing house for principles and
practices, and as a catalytic agent.    Its influence is exerted in many ways."
By June 30th, 1940, the R.E.A. had allotted funds to 617 co-operative utilities in
all parts of the country. By the same date allotments had been made to fifty public
bodies and to twenty-four private utilities. The co-operative undertakings thus
financed and managed are not self-sustaining utilities in as much as part of the
financing cost and very important management costs incurred by the Administration
are paid by the general taxpayers of the United States, a small proportion of whom
are customers of the co-operatives. To what exact proportions the services are subsidized is impossible to determine as the administration and general management costs
are not included in the R.E.A. reports.
There are in Canada, the United States, and other countries examples of self-
sustaining electric utilities, distinguished by progressive expansion of facilities,
increased per customer use of electricity and reduced average unit costs to the public.
Such examples are to be found under private ownership and public ownership controls.
There are too, under both types of control, examples of so-called electric utilities that
are more or less than self-sustaining, and are marked by no expansion of facilities,
a limited per customer use of electricity and high average unit costs to the public,
none of which is rendering the highest standard of service.
In this day when both types of control have been tried and both found wanting in
some cases, and when both have proven highly efficient in other cases, it has been amply
proven that the success of a utility does not depend upon any inherent qualities of
public or private control. The success of a utility depends upon the efficiency of the
administration and the zeal of competent management, and to conclude that these are
to be found exclusively under either private or public forms of ownership is to betray
ignorance of the utility business or a personal interest in the one or the other form.
The type of ownership or control is not the first "but the final consideration in the
establishment of an electric utility business. The important matters are, in the order
named:—
(1.)  The purpose and scope of the utility project.
(2.) The general policy adaptable to the accomplishment of the purpose within
the scope of the project.
(3.)  The type of control or administration best suited to carry out the policy.
The purpose may be to provide electrical service to the largest number of people
at the lowest possible cost by the intelligent co-ordination of capital, management, and
labour, or the purpose may be to establish a capital asset by supplying some degree of
electrical service to a chosen number of people with a limited amount of capital combined with management and labour.
If the purpose is clearly defined the choice of policy will depend upon the actual
conditions in all the areas within the scope of the purpose. The type of control or
administration will be that which can most economically bring together the private
capital and the management required to implement the general policy in the most
efficient manner. Z 20 PROGRESS REPORT.
4. RURAL ELECTRIFICATION.
The Rural Electrification Committee has been instructed by the Lieutenant-
Governor in Council to " report upon the extent and condition of electrical service in
the Province of British Columbia with particular reference to the service in rural
communities." Nowhere has rural electrification been accomplished as a separate and
distinct business. Even under the R.E.A. the rural co-operatives have become possible
only through being able to purchase wholesale energy from existing utilities at an
average price of 1.09 cents per K.W.H.* Private companies and publicly owned regional
utilities have been able to furnish electricity in rural areas because their organizations
have been developed first to supply urban areas. Having established a sufficient
volume of business they have been able to extend their areas of service to rural communities wherever the new consumers can provide the increment cost of the service.
The utility, once established as a going concern with the necessary volume of business
to make it self-sustaining, and with the administration, management, and engineering
organizations essential to this type of work, can extend its facilities without addition
to these important general expenses. The utility business is operated on averages;
for example, the largest individual consumer receives better electrical service from
a central plant and at a lower cost than he could from his own plant, but he pays more
than the actual cost of serving him from the central plant. The numerous small consumers receive service below the actual cost, but because the general costs are allocated
over many consumers, large and small, the cost to all is less than it would be from an
individual plant for each. Rural electrification is not a distinct brand of utility business; it is the outgrowth of the central station industry—the widening of the areas
to which certain average costs are applied. In a single city the utility applies average
costs over a large number of consumers, large and small, to the advantage of all users.
There is thus an element of internal subsidy in all electric utilities whereby certain
groups of consumers subsidize other groups in order that the volume of business will
produce lower average unit costs, and yet permit the whole to be self-sustaining. An
electric utility to serve rural areas alone cannot be self-sustaining and provide service
at reasonable rates. All rural electrification is in some degree an expansion of the
established central station industry and is made possible only by the "internal subsidy
element operating within the utility enterprise, supplemented in some cases by governmental subsidies. Methods for improving the supply and availability of electrical
service to rural areas of British Columbia will depend therefore upon the condition of
the central station industry in the Province. Consequently a general survey has been
made covering all the existing electric utilities and the results of that survey are set
out in Part II. of this report.
* Report of the Administrator of the Rural Electrification Administration, 1940, page 11. PART II. FACTUAL DATA.
5. Sources of Information.
6. Ownership and Control of Central Electric Stations in British
Columbia.
7. Areas in which Electrical Service is Available as of 1942.
8. Electric Rates in British Columbia.
9. Sources of Electrical Energy supplied by Central Stations in 1942.
10. A Measure of the Capital Investment in Central Electric Stations.
11. Revenue of Central Station Industry as of 1942.
12. The Effect of Taxation on the Efficiency of Electric Utilities.
13. Summary of Important Facts related to Central Station Groups,
1942.
14. Areas in which Electrical Service is not now Available.
15. Preliminary Estimates of Capital Cost of New Works required to
serve  80 per cent,  of  9,778  Potential  Consumers  in  Rural
Areas.
16. Water-power Resources of British Columbia.
5. SOURCES OF INFORMATION.
The basic factual data herein reported have been obtained from the following
sources:—
(1.) Official reports to the Public Utilities Commission as filed by utilities
within the scope of the " Public Utilities Act."
(2.)  The files of the Public Utilities Commission and of the Water Rights
Branch of the Department of Lands.
(3.)  Statistical returns made by the distributing agencies  in response to
questionnaires submitted by the Rural Electrification Committee.
(4.) Surveys and personal examinations made by members of the Committee's
staff.
Of the sixty-five organizations engaged in the distribution Of electricity only the
thirty-one public utilities are required under the " Public Utilities Act " to make
complete reports to the Public Utilities Commission. Consequently information in
respect to the nineteen municipal and fifteen industrial distributers had to be obtained
by a direct appeal to each of the thirty-four agencies. With very few exceptions the
latter have given the fullest co-operation and have supplied all information requested.
The utility companies reporting to the Public Utilities Commission have supplemented
their routine annual reports with additional information as required for the purposes
of the Committee. It has thus been possible to prepare complete statistics on the
central electric station industry as it exists in 1942 with the exception of a very few
cases involving a comparatively small number of consumers. In order to round out
the figures for the whole Province, estimates have been used where the requested
information has not been supplied. The proportion of such estimates has been too
small to result in any distortion of the whole picture.
6. OWNERSHIP AND CONTROL OF CENTRAL ELECTRIC STATIONS
IN BRITISH COLUMBIA.
In British Columbia electricity is distributed to the public by:—
31 persons, companies or groups of companies operating as public utilities.
19 municipal corporations.
15 industrial organizations or institutions supplying electrical service to their
  respective employees or townsites.
65 total number of distributers.
21 Z 22
PROGRESS REPORT.
Some of the utility company groups comprise several associated and subsidiary
companies, under a common management, who own plant used in the service. These
associated and subsidiary companies number fourteen, so that there are in all forty-
five corporate entities engaged in the privately owned electric utility business in the
Province.
For statistical purposes the consumers served by these sixty-five organizations
have been grouped under 112 " distribution systems." Some of the distribution systems serve less than 100 customers while only two supply over 10,000. Because the
unit cost of furnishing electrical service usually varies inversely with the number of
consumers, the statistical data are presented in respect of four groups of distribution
systems, namely:—
Distribution systems with over 10,000 consumers.
Distribution systems with 1,000 to 10,000 consumers.
Distribution systems with 500 to 1,000 consumers.
Distribution systems with under 500 consumers.   .
Immediately following is a list of sixty-five organizations furnishing electric ser-
. vice and the respective distribution systems operated by them.    The Roman numerals
indicate the group classifications of the distribution systems.
Group I.
Group II.
Group III.
Group IV.
Privately Owned Utilities.
Distribution System.
Group.
1. Ashcroft Water, Electric and Improvement Company, Ltd...
2. Barkerville Light and Power Company	
3. Boyd, F. T., and    1
4. Clinton Motors      ( " "	
5. British Columbia Electric Railway Company, Ltd.    Group
including:—
(1.)  Bridge River Power Company  '.	
(2.)  B.C. Electric Power and Gas Company 	
(3.)  Burrard Power Company _   	
(4.) Columbia Estate Company 	
(5.) National Utilities Corporation	
(6.) Royston Light and Power Company..
(7.)' The Victoria Electric Company—	
(8.)  Vancouver Island Power Company	
(9.)  Vancouver Power Company 	
(10.)  Western Power Company of Canada..
. Carlin Brothers, Ltd 	
7. Columbia Power Company, Ltd.    Group including :—
(1.)  Columbia-Vanderhoof Power Company	
8. Crow's Nest Pass Electric Light and Power Company, Ltd..
9. Cumberland Electric Company, Ltd _	
10. Denver Light and Power Company, Ltd   	
11. Dominion Electric Power Company, Ltd	
12. East Kootenay Power Company, Ltd..
13. Gowan, J __ —	
14. Invermere Contracting Company	
15. Kitanmax Water and Power Company..
16. Lake Cowichan Electric Company	
17. Larsen, C. G -	
18. Lytton Electric Light Company, Ltd...
19. Mirror Lake Electric Light Co 	
20. Nanaimo-Duncan Utilities, Ltd...
21. Northern British Columbia Power Company, Ltd-
Ashcroft	
Barkerville.
Clinton..
Alberni	
Bridge River Valley..
Kamloops 	
Lower  Mainland   (not  including   Fraser
Valley)
Lower Mainland (Fraser Valley)	
Newcastle-Nanoose (Parksville, Qualicum,
Dashwood)
Royston   — 	
Vancouver Island South (Urban and Suburban)
Vancouver Island South (Rural)	
Chase    	
Golden	
Nakusp - 	
Sechelt	
Smithers	
Vanderhoof	
Williams Lake-
Coal Creek and Michel -
Cumberland, Minto	
Silverton, New Denver-
Dawson Creek, Pouce Coupe..
f Bull River _	
I Crowsnest	
i Elko _ 	
I Wardner	
Burns Lake.	
Invermere	
Hazelton   	
Lake Cowichan..
Canal Flats	
Lytton _	
Mirror Lake	
Duncan	
Nanaimo..
S_ltspring Island-
Prince Rupert	
IV.
IV.
IV.
II.
IV.
II.
I.
II.
IV.
IV.
I.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
III.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
II.
II.
IV.
II. RURAL ELECTRIFICATION COMMITTEE.
Z 23
Organizations furnishing Electric Service—Continued.
Privately Owned Utilities.
22.
23.
24.
25.
26.
27.
28.
29.
Princeton Power and Light Company, Ltd 	
Sandon Waterworks and Light Company, Ltd	
Spences Bridge Light and Power Company, Ltd..
Union Estates, Ltd  	
Vancouver Island Utilities, Ltd. ..—. 	
Wells Light and Power Company  	
Wells Townsite Company, The _ 	
West Canadian Hydro Electric Corporation, Ltd.
including:—
(1.)  Alert Bay Utilities, Ltd—   _	
(2.)  Hope Utilities, Ltd  	
(3.)   Quesnel Light and Water Company...	
Group
30. West Kootenay Power and Light Company, Ltd..
31. Westside Utilities, Ltd..
Distribution System.
Princeton .
Sandon	
Spences Bridge—
Bowen Island	
Campbell River	
South Wells	
Wells 	
Vernon and North Okanagan Valley-
Alert Bay	
Hope  	
Quesnel	
Rossland   	
Trail  	
Benvoulin, Black Mountain, etc...
Bonnington, South Slocan	
Casino	
Castlegar, Robson. 	
Crescent Valley 	
Creston, Wynndel, Erickson	
Fruitvale 	
Grand Forks, Cascade, Laurier..
Greenwood	
Hedley, Ellison 	
Kaleden 	
Keremeos _  .....
Kinnaird 	
Naramata 	
Okanagan Mission	
Oliver _. 	
Osoyoos	
Salmo, Sheep Creek..
Waneta _	
Ymir 	
Westbank..
Group.
III.
IV.
IV.
IV.
IV.
IV.
IV.
II.
IV.
IV.
IV.
II.
II.
III.
IV.
IV.
IV.
IV.
III.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
The municipally owned and operated electric utilities are as follows:
Owning Municipalities.
32. Courtenay, City of-
33.
34.
35.
Cranberry Light, Power, and Waterworks, District of _
Cranbrook, City of  —	
Fernie, City of - _ 	
Grand Forks, City of..
Kaslo, City of...	
Kelowna, City of.	
Ladysmith, City of 	
McBride, Corporation of the Village of-
Merritt. City of.	
Nelson, City of —  	
New Westminster, City of 	
Peachland, Corporation of the District of..
Penticton, City of  -	
Prince George, City of.	
Revelstoke, City of-
Summerland, Corporation of the District of 	
Westview Light, Power, and Waterworks, District of...
Wildwood Light, Power, and Waterworks, District of..
Distribution System.
Group.
( Courtenay—	
) Comox	
Cranberry Lake	
Cranbrook	
Fernie 	
Grand Forks City...
Kaslo 	
Kelowna 	
Ladysmith 	
McBride -	
Merritt	
Nelson 	
New Westminster._
Peachland	
Penticton— ,	
Prince George	
Revelstoke 	
Summerland	
Westview— 	
Wildwood	
III.
IV.
IV.
II.
III.
IV.
IV.
II.
III.
IV.
IV.
II.
II.
IV.
II.
III.
III.
III.
III..
IV. Z 24
PROGRESS REPORT.
Organizations which are primarily engaged in some other business and which
incidentally furnish electrical service to their respective employees and townsites are
also recorded. The following list does not include an unknown number of logging,
sawmill, and mining companies.
Industrial Organizations and others distributing Electricity
to their Employees and Townsites.
51. B.C. Packers, Ltd..
52. B.C. Security Commission _ —	
53. Britannia Mining and Smelting Company, Ltd...
54. Canadian Collieries, Ltd  	
55. Canadian National Railways  _
56. Canadian Pacific Railway Company..
57. Christian Community of Universal Brotherhood, The	
58. Consolidated Mining and Smelting Company, Ltd:, The..
59. Dominion Government    	
60. Granby Consolidated Mining,  Smelting and Power Company, Ltd.
61. Harrison Hot Springs Hotel Company, Ltd	
62. Pacific Great Eastern Railway Company _
63. Pacific Mills, Ltd. — __	
64. Powell River Company, Ltd  	
65. Province of British Columbia  —	
Distribution System.
Bella Bella	
( Rosebery. _
) Sandon _
Britannia Beach...
Union Bay	
Blue River	
Albert Canyon.
Field—	
Glacier	
I North Bend	
Brilliant _
( Kimberley	
) Pinchi Lake	
Radium Hot Springs	
Allenby, Copper Mountain..
Harrison Hot Springs	
( Lillooet 	
i Squamish  	
Ocean Falls 	
Powell River	
Tranquille	
Group.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
IV.
III.
II.
IV.
IV.
IV.
IV.
IV.
IV.
III.
III.
IV.
7. AREAS IN WHICH ELECTRICAL SERVICE IS AVAILABLE
AS OF 1942.
Electricity is supplied from central stations in more than 100 distribution areas,
some of which comprise several municipalities. The term " distribution area" as
used herein refers generally to the respective communities of consumers served by
continuous primary distribution networks. The Lower Mainland operating area served
by the British Columbia Electric Railway Company, Limited, has been divided for
statistical purposes into " Lower Mainland, not including Fraser Valley " and " Fraser
Valley " and " Bridge River Valley." The first comprises Vancouver, University of
B.C. Lands, Burnaby, Barnet, North Vancouver, West Vancouver, Richmond, New
Westminster (as served by B.C.E.R. Co.), loco, Coquitlam, Port Coquitlam, and Port
Moody. Fraser Valley includes Mission, Maple Ridge, Pitt Meadows, Surrey, Langley, Delta, Matsqui, Abbotsford, Sumas, Chilliwack City and Municipality, Kent,
Dewdney, and Nicomen. Bridge River Valley includes the group of consumers from
Seton Lake to Bralorne and Pioneer. For statistical purposes the Vancouver Island
South operating area of the British Columbia Electric Railway Company has been
divided into two distribution areas, namely, " Urban " and " Suburban and Rural."
The first comprises the consumers of Victoria, Esquimalt, Oak Bay, and those of
Saanich within the 3-mile circle from Victoria City Hall; the latter comprises all other
consumers of this company south of Cowichan Land District. The customers of
Nanaimo-Duncan Utilities, Limited, have been grouped under three distribution systems—Duncan, Nanaimo, and Saltspring Island. The customers of West Canadian
Hydro Electric Corporation, Limited (North Okanagan Valley), have been divided into
two groups. The first includes consumers of Vernon and vicinity who are supplied
under the Vernon rate schedules and conditions of service; the other customers of this
company in Armstrong, Enderby, Salmon Arm, Sicamous, Grindrod, Lumby, Lavington, RURAL ELECTRIFICATION COMMITTEE. Z 25
etc., have been included under a rural distribution system. The divisions into distribution areas or distribution systems have no significance other than to facilitate
the presentation of statistical information. It has been impracticable to adopt a hard-
and-fast definition of a distribution area for the reason that statistics have not been
prepared by all distribution agencies in respect to similar divisions. However, subject to the foregoing qualifications, the locations of the distribution areas or distribution systems adopted herein are fairly identified by their names.
The survey covers 112 distribution systems which include all consumers served
from central stations, with the exception of a few industries which would add less than
one-half per cent, to the totals. No information has been obtained in respect to isolated
individual electric plants of which there are an unknown number in the Province.
It will be apparent that the distribution of electricity to a small group of consumers involves a set of conditions which are not comparable to the conditions of
distribution to larger groups. For this reason the survey data have been prepared in
respect to four groups of distribution systems, namely:—
Group I.      Distribution systems with over 10,000 consumers, of which there
are two.
Group II.    Distribution systems with 1,000 to 10,000 consumers, of which
there are fifteen.
Group III.  Distribution systems with 500 to 1,000 consumers, of which there
are fourteen.
Group IV. Distribution systems with under 500 consumers, of which there
are eighty-one.
These 112 distribution systems operated by sixty-five distinct organizations had
206,723 consumers or connected electric services in 1942. The survey discloses that,
in areas where the population figures are known and where electricity is available, the
1941 population was approximately three times the number of electric service connections. Applying the same ratio to all consumers indicates that upwards of 600,000 of
the British Columbia population have some degree of electric service from central
stations. Complete information on each of the 112 distribution areas has been tabulated to show for each class of consumers, namely—domestic, commercial lighting,
industrial power, and street lighting—the following information:—
Number of consumers.
Total annual consumption in kilowatt-hours.
Total annual revenue.
Average annual consumption per customer.
Average revenue per kilowatt-hour.
The significant summaries which indicate something of the adequacy and efficiency
of the service are given in Table 1 (page 26) for each of the four groups of distribution systems. It should be noted that revenues and kilowatt-hour charges do not
include the 8-per-cent. sales tax which the utilities are required to collect on all
domestic accounts. Z 26
PROGRESS REPORT.
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9
I RURAL ELECTRIFICATION COMMITTEE.
Z 27
It has been impossible to make a reliable classification of urban, suburban, and
farm consumers for the reason that very few of the distributers have made such
distinctions in their records. The classifications submitted by some of the companies
have been based on their respective rate zones. However, accepting their classifications for the three groups with over 500 consumers and classing all of Group IV.
customers (under 500) as rural, the 206,723 consumers in the Province may be grouped
approximately as follows:—
Total.
Urban.
Rural.
Class of Service.
Number.
Per Cent.
Number.
Per Cent.
Number.
Per Cent.
Domestic.— —	
173,930
27,740
4,979
74
100
100
100
100
140,746
23,391
4,323
36
81
84 .
87
50
33,184
4,349
656
38
19
16
13
50
206,723
100
168,496
81          1           38.227
19
Some of the important facts in respect to each group of distribution areas are
Group I. (over 10,000 Consumers) .
There are only two distribution systems with over 10,000 consumers—Lower Mainland (not including Fraser Valley) and Vancouver Island South—Victoria, Oak Bay,
Esquimalt and that part of Saanich within 3 miles of Victoria City Hall. Both these
systems are operated by the British Columbia Electric Railway Company and associated companies.
The Lower Mainland system (not including Fraser Valley) retails industrial
power in New Westminster and the B.C. Electric group sells energy to the City of
New Westminster for redistribution by the city for domestic and commercial service.
The Lower Mainland system served 88,684 domestic consumers with an average annual
consumption of 1,068 K.W.H. producing an average revenue of 2.45 cents per K.W.H.
The Vancouver Island South (Greater Victoria) distribution system had 18,868
urban domestic consumers who used on the average 895 K.W.H. per year at an average
charge of 3.12 cents per K.W.H.
The total number of consumers (all classes) in this Group I. is as follows:—
Lower Mainland (not including Fraser Valley)  105,507
Vancouver Island South (urban)     22,332
Table 2 compares average domestic consumption and average K.W.H. charges with
Ontario distribution systems of over 10,000 consumers. Z 28
PROGRESS REPORT.
Table 2.—Average Annual Domestic Consumptions and Average K.W.H. Charges,
'British Columbia Systems in Group I., compared with Ontario Distribution
.Systems with over 10,000 Consumers.
Distribution Systems.
British Columbia Group I.—■
Lower Mainland,* excluding Fraser Valley (Greater Vancouver)       (P)
Vancouver  Island   South   (Victoria,   Esquimalt,   Oak   Bay,
and Saanich within the urban rate zones) (P)
Ontariof—
Ottawa-
London.—
Windsor..
Hamilton..
Toronto.	
Total Number
of all
Consumers.
105,507
22,332
16,837
21,373
29,702
48,024
178,956
Average
Annual
Domestic
Consumption.
K.W.H.
1,068
895
4,761
2,952
2,064
2,004
2,400
Average
Charge
per K.W.H.,
Domestic.
Cents.
2.45
3.12
0.86
1.03
1.36
1.15
1.15
* The Lower Mainland distribution area includes suburban areas adjacent to Vancouver in which areas the
rates are slightly higher than in the city; consequently the average charges above are somewhat higher than for
the City of Vancouver and University Lands.
t 1942 Report of the Hydro-Electric Power Commission, pp. 304, 305. The reported average monthly consumptions have been multiplied by 12 to obtain annual figures.
(P)= distribution by privately owned public utility.
Group II. (1,000 to 10,000 Consumers).
The following distribution systems, with their respective numbers of consumers
(all classes), are included in this group:—
(P)
(M)
(P)
(P)
(M)
(I)
(P)
(P)
Alberni   2,226 (M)
Cranbrook   1,091 (M)
Duncan   1,853 (M)
Kamloops   2,393 (P)
Kelowna  2,029 (P)
Kimberley   1,479 (P)
Fraser Valley  14,923 (P)
Nanaimo   4,085
Nelson  2,734
New Westminster 6,557
Penticton  1,996
Prince Rupert  3,011
Rossland   1,028
Trail   3,604
Vernon  3,891
(P) _= Privately owned public utility.
(M)=- Municipally owned.
(I) = Industry.
While Fraser Valley contains 14,923 consumers, the conditions are those of rural
rather than urban distribution. As the rates are the same for the whole area, excepting Kent, the total area is included for the present purposes in Group II.
The highest annual domestic consumption per consumer and the lowest average
K.W.H. revenue in this group, and indeed for all the public utilities in the Province,
are in Prince Rupert where the average domestic use is 1,636 K.W.H. at 2 cents per
K.W.H.    In the Fraser Valley the average domestic use is 756 K.W.H. at 3 cents.
Table 3 compares average domestic consumption and average K.W.H. charges in
five typical areas of this group with five Ontario typical systems of comparable size. RURAL ELECTRIFICATION COMMITTEE.
Z 29
Table 3.—Average Annual Domestic Consumptions and Average K.W.H. Charges,
Typical British Columbia Systems in Group IL, compared with Typical
Ontario Distribution Systems with 1,000 to 10,000 Consumers.
Distribution Systems.
Total Number
of all
Consumers.
Average
Annual
Domestic
Consumption.
Average
Charge
per K.W.H.,
Domestic.
British Columbia Group II.—-
Kimberley    _ 	
Prince Rupert  _	
Trail ___ -....	
Nanaimo    _ _._	
New Westminster 	
...(i)
-<p>
..(p)
-<p)
-(M)
1,479
3,011
3,604
4,085
6,557
Average for all Group II.*..
Ontariot—
Bowmanville..
Brockville	
Sarnia. _.	
Oshawa ...
Kingston..
1,381
3,491
5,650
7,392
8,877
K.W.H.
1,098
1,636
1,196
609
724
907
1,716
1,884
1,380
2,292
2,256
Cents.
3.5
2.0
3.0
5.4
4.3
1.58
1.10
1.45
1.51
1.12
* Urban consumers only, except in the Fraser Valley.
t 1942 Report of the Hydro-Electric Power Commission, pp. 304, 305.    The reported average monthly consumptions have been multiplied by 12 to obtain annual figures.
(P), (M),  (I)  indicate distribution by private utility, municipal utility, and industry or institution respectively.
Group III. (500 to 1,000 Consumers).
The following distribution systems, with their respective numbers of consumers
(all classes), are included in this group:—
(P) Benvoulin, Black (M)
Mountain, Glenmore, (M)
South-east  Kelowna, (I)
etc.  511 (I)
(I)  Brilliant  (1,250) (M)
(P)  Courtenay   940 (P)
(P)  Creston, Wynndel, (M)
etc.   712 (M)
(P)   Cumberland   594 (M)
Fernie   926
Ladysmith    657
Ocean Falls   515
Powell River   511
Prince George   751
Princeton   570
Revelstoke   875
Summerland   688
Westview  665
The lowest average K.W.H. costs for domestic purposes and the highest average
consumption in the whole Province are reported by the Powell River Company for
Powell River. But as the supplying of electric service at nominal rates to its employees is incidental to the main business of this company the results are not applicable
to the present study and are omitted from all computations herein, except the number
of consumers. For similar reasons which apply to a lesser degree Ocean Falls is
omitted.
Of the other systems in Group III., Revelstoke enjoys the highest domestic average
consumption—1,285 K.W.H. and the lowest average K.W.H. revenue, 3.3 cents. In
this group Prince George has the lowest consumption—357 K.W.H., and the highest
average K.W.H. revenue, 12.1 cents.
Table 4 compares average domestic consumption and average K.W.H. charges in
five typical areas of this group with five Ontario typical systems of comparable size. Z 30
PROGRESS REPORT.
Table 4.—Average Annual Domestic Consumptions and Average K.W.H. Charges,
Typical British Columbia Systems in Group III., compared with Typical
Ontario Distribution Systems with 500 to 1,000 Consumers.
Distribution Systems.
Total Number
of all
Consumers.
Average
Annual
Domestic
Consumption.
Average
Charge
per K.W.H.,
Domestic.
British Columbia Group III.-
Princeton    	
Westview     	
Revelstoke    	
Fernie     . 	
Courtenay     	
Average for all  Group  III.* —
Ontariof—
Caledonia..  	
Acton  	
~(P)
-(M)
-(M)
.(M)
_(P)
Delhi..
Penetanguishene..
Prescott  _
570
665
875
926
940
557
647
750
857
959
K.W.H.
530
883
1,285
522
483
633
804
1,932
1,044
912
2,196
Cents.
4.3
3.7
3.3
4.8
6.2
5.3
1.9
1.3
2.0
2.0
1.28
* Urban consumers only;   exclusive of Powell River and Ocean Falls.
t 1942 Report of the Hydro-Electric Power Commission pp. 306-311.    The reported average monthly consumptions have been multiplied by 12 to obtain annual figures.
(P),  (M),  (I) indicate distribution by private utility, municipal utility, and industry or institution respectively.
Group IV. (under 500 Consumers).
This group comprises eighty-one small distribution systems as follows:—
(I
(P
(I
(P
(P
(I
(I
(P
(P
(P
(I
(P
(P
(P
(P
(P
(P
(P
(P.
(P
(M
(M
(P
(P
' (P
Albert Canyon  8 (P
Alert Bay   129 (I
All en by,    Copper (P
Mountain   90 (I
Ashcroft   142 (P
Barkerville   23 (M
Bella Bella  11 (P
Blue River  68
Bonnington, etc.   85 (P
Bowen Island   146 (I
Bridge   River   Valley   395 (P
Britannia Beach ____(220) (P
Bull River   7 (P
Burns Lake   60 (P
Campbell River ______ 299 (P
Canal Flats   43 (M
Casino   16 (P
Castlegar, Robson._ 332 (P
Chase   82 (P
Clinton   26 (I
Coal Creek, Michel 617 (P
Comox   242 (M
Cranberry Lake _____ 305 (M
Crescent Valley _____ 19 (P
Crowsnest   16 (P
Dawson    Creek, (P
Pouce Coupe   308 (P
Elko   14
Field  97
Fruitvale   285
Glacier   20
Golden     130
Grand Forks (City) 438
Grand Forks,  Cascade   116
Greenwood   164
Harrison   Hot
Springs   51
Hazelton   45
Hedley, Ellison  181
Hope   118
Invermere    43
Kaleden  55
Kaslo   303
Keremeos   106
Kinnaird   35
Lake Cowichan  106
Lillooet  106
Lytton   67
Merritt  321
McBride   81
Mirror Lake  13
Nakusp   242
Naramata   135
Newcastle-Nanoose 333 RURAL ELECTRIFICATION COMMITTEE.
Z 31
Group IV. (under 500 Consumers)—Continued.
(I)
(P)
(P)
(P)
(M)
(I)
(P)
(I)
(I)
(P)
(P)
(P)
(P)
(P)
(P)
North Bend  76
Okanagan Mission- 99
Oliver   462
Osoyoos    113
Peachland 7  118
Pinchi Lake  228
Quesnel   252
Radium Hot Springs 14
Rosebery (225)
Royston  52
Salmo, Sheep Creek 177
Saltspring Island __ 191
Sandon   16
Sechelt   252
Silverton, New Denver   183
(P)   Smithers  298
(P)   South Wells  (40)
(P)  Spences Bridge  21
(I)   Squamish  :____.. 188
(I)   Tranquille  51
(I) Union Bay  86
(P) Vancouver Island
South (rural)   4,601
(P) Vanderhoof   96
(P)  Waneta   3
(P)  Wells   163
(P)  Westbank  85
(P)  Wardner   29
(M) Wildwood   190
(P)  Williams Lake  165
(P) Ymir  51
The suburban and rural consumers of the Vancouver Island South operating area
(British Columbia Electric Railway Company, Limited) have been classified under
Group IV., for while there are a large number they are dispersed over wide areas and
distribution is under rural rather than urban conditions.
With few exceptions the areas in this group have low average consumption and
high average K.W.H. revenue. Table 5 compares the average domestic consumption
and average K.W.H. charges in five typical areas of this group with five Ontario typical
systems of comparable size.
Table 5.—Average Annual Domestic Consumptions and Average K.W.H. Charges,
Typical British Columbia Systems in Group IV., compared with Typical
Ontario Distribution Systems with under 500 Consumers.
Distribution Systems.
Total Number
of all
Consumers.
Average
Annual
Domestic
Consumption.
Average
Charge
per K.W.H.,
Domestic.
British Columbia Group IV.-
Lytton   	
Williams Lake    ._
Quesnel   	
Oliver,  North and South,  e
Grand Forks, City of 	
Average for all Group IV.
Ontario*—
Kirkfield..
Cottam	
Elmvale ...
Colborne _
Elora	
~(P)
~(P>
-<P)
~<P)
-(M)
67
165
252
462
438
53
159
251
348
429
K.W.H.
249
541
368
600
435
583
600
828
912
1,092
1,248
Cents.
16.8
8.8
9.7
6.7
7.1
5.9
4.6
2.6
2.2
2.1
1.9
* 1942 Report of the Hydro-Electric Power Commission, pp. 310-313.    The reported average monthly consumptions have been multiplied by 12 to obtain annual figures.
(P), (M),  (I) indicate distribution by private utility, municipal utility, and industry or institution respectively.
Figures 1, 2, and 3, pages 32, 33, and 34, show the average annual domestic consumption against the average K.W.H. charges in distribution Groups I., II., and III.,
and in a typical number of Group IV. These curves illustrate in part that where high
average costs are found the average consumption is low, and conversely that where
average consumption is low average charges are high. Average consumption and
average unit costs are symptomatic of the general condition of the utility service. Z 32
PROGRESS REPORT.
In Table 6, page 35, the total number of consumers, 206,723, has been arranged to
show how many are served by privately owned utilities, municipally owned utilities,
and by industries, institutions, etc. There is shown also the average consumption and
average K.W.H. charge in 1942.
Domestic  Lighting.
AVERAGE    YEARLY   CONSUMPTION.
AND
AVERAGE  CHARGES   PER A WH.
134-Z .
Group
a
0/STR/BUT/ON   AREAS kV/TH OVER
/.OOO   CONSUMERS.
\
\
0)-/.OW£rZ MAINLAND. VANCOUVER, gXCjLUJ/irE Of ERASER y/UJLCY.
(Z) " ERASER   VALL.E.Y.
FJIQ.t RURAL ELECTRIFICATION COMMITTEE.
Z 33
DOMESTIC    L/GHT//SG.
AVERAGE   YEA/tX-Y   CONSUMPTION
AND
AVERAGE   CHANGES PER   XWH
194-Z.
G~/?OUP JJJ. 0/ST/ZI0LIT/ON AREAS MTU SOO TO /.OOO CONSUMERS.
\
I
FIG. Z Z 34
PROGRESS REPORT.
DOMESTIC    L/GHT/HG.
AVERAGE     YEARLY    CONSUMPTION
AND
AVERAGE   CHARGES   PER    KWH.
19+2.
Group JY. distribution areas with under soo consumers.
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Z 35
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Se.0,3 Z 36 PROGRESS REPORT.
8. ELECTRIC RATES IN BRITISH COLUMBIA.
In the larger distribution areas of the Province rate schedules are of the promotional type; i.e., the K.W.H. rate drops as the quantity of K.W.H. increases. In many
of the smaller distribution areas while the rate drops somewhat with higher consumption the reduction is insufficient to promote any significant increase in use. In some
few areas there are no steps whatever in the rates. The rate schedules of all the
thirty-one utility companies, and some of the municipalities, are filed with the Public
Utilities Commission. Other municipalities and industrial or institutional organizations have for the most part submitted their rate schedules upon request of the Rural
Electrification Committee. The various rate schedules would comprise a voluminous
report which seems unnecessary for the present purpose. It is assumed that domestic
service rates are of the greatest interest at this time and these have been analysed for
each of the 112 distribution systems in the Province to show the cost of domestic
service at various monthly consumptions from 20 to 200 K.W.H. per month. The
results are tabulated on pages 40, 41, 42, and 43.
Figures 4, 5, and 6 immediately following illustrate the comparable costs for
various monthly consumptions from 20 to 200 K.W.H. in distribution Groups I., IL,
III., and in typical distribution systems of Group IV. RURAL ELECTRIFICATION COMMITTEE.
Z 37
Monthly Sills soa Domestic light/no 20 to zookwh.
G/ZOUP I.     distribution areas with over 10,000 CONSUMERS.
G/ZOUPII.      DISTRIBUTION   AREAS   WITH  /.OOO   TO J0.000 CONSUMERS.
4
Group I.
300-
8-0O-
7-c
500-
200KWH*
4.-00-
ISOXrVH.'
300-
JOOKiTHy
Z-OO-
SO fCWMA
20KWH*
= ^
/■do
M
rWii
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5
FIG. 4- Z 38
PROGRESS REPORT.
Monthly Bills fog Domestic Lighting. ZO"toZOOkwh.
Group" III, distr/sut/on areas with soo to /ooo consumers.
IJ.OO-
IS-OO-
14-00-
l3-oo-
/zoo-
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9-0O-
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-O-OO
Fie. 5 RURAL ELECTRIFICATION COMMITTEE.
Z 39
typical Monthly Bills eor. Domestic Lighting. 20to200kwh.
Group IV. distribution areas ivith under soo consume/zs.
50-00-
9-0O-
700	
6OO—2O0XWH-*
S-OO -ISOKWH-m
4-oo—loOKWH-
300— SOKWH-
20O-   ZOKWHm
200 KWH— So- 00
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I
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1
t
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S-Nt
8
S
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FIG. 6 Z 40
PROGRESS REPORT.
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PROGRESS REPORT.
9. SOURCES OF ELECTRICAL ENERGY SUPPLIED BY
CENTRAL STATIONS IN 1942.
The number of K.W.H. delivered in 1942 to consumers in the 112 distribution areas
was:—
Group I.
Group II.
Group III.
Group IV.
Urban—
111,622,206
80,277,368
358,710,032
13,477,697
24,690,539
19,983,451
29,778,266
2,833,735
3,196,977
1,698,844
1,343,609
452,795
564,087,303
77,285,991
6,692,225
Rural—
12,685,335
3,930,305
14,084,906
177,704
1,209,835
196,580
514,218
24,680
7,739,407
3,876,064
50,225,269
364,672
30,878,250
1,945,313
62,205,412
564,087,303
108,164,241
8,637,538
62,205,412
Grand total..
743,094,494 K.W.H. (distributed by central stations).
The volume of K.W.H. sales by the three types of distributers is indicated by the
following- breakdown of the total sales from central stations:—
1942 Distribution.
K.W.H.
Per Cent,
of Total.
Privately owned public utilities—
628,309,718
16,460,063
16,636,480
9,524,001
34,100,237
84.55
2.22
2.24
1.28
4.59
705,030,499
3,665,640
94.88
0.49
708,696,139
30,118,679
4,279,676
95.37
4.03
0.60
743,094,494
-
100 00
The total 743,094,494 K.W.H. sold, plus the losses in transmission and distribution,
was generated in hydraulic, steam, and Diesel plants as follows:—
Type of Generating Plant.
K.W.H.
Per Cent,
of Total.
709,204,363
31,274,365
2,615,766
95 45
743,094,494
100.00
As above noted, 84.55 per cent, of the K.W.H. is distributed by the B.C. Electric
Group of utilities, and this company and four others distribute 94.88 per cent, of the
total. As several municipalities and some companies purchase energy wholesale from
the larger companies the proportion of the energy generated by the privately owned
utilities is even greater, as shown by the following:— RURAL ELECTRIFICATION COMMITTEE.
Z 45
Production of 743,094,494 K.W.H. sold.
1942 Sales.
By whom produced.
K.W.H.
Per Cent,
of Total.
Privately owned public utilities—
634,268,540
42,234,446
16,636,480
9,524,001
4,081,256
85.35
5.68
2.24
1.28
0.55
706,744,723
5,336,501
95.10
0.72
712,081,224
8,754,834
22,258,436
95.S2
1.18
3.00
743,094,494
100.00
The foregoing figures include energy sold to the public in 112 distribution areas,
with the exception of Powell River and Ocean Falls. As previously stated these areas
are served by paper manufacturing companies at such low rates that the consumption
is on a scale to distort the averages which are pertinent to the present survey.
As a matter of interest it may be noted that the total amount of electrical energy
generated in British Columbia in the year 1942 was approximately 2,929,873,000 K.W.H.
This figure is derived as follows:—
K.W.H. sold and included in present survey      743,094,494
Add  20 per cent,  for transmission  and  distribution
losses      148,618,899
K.W.H. generated for central station distribution 	
K.W.H. production of large plants—
West Kootenay Power and
Light Company   1,640,507,895
East Kootenay Power Company         119,931,424
Pacific Mills, Ltd.        85,096,700
Powell River Company _____     227,927,600
Canadian Collieries, Ltd.-       23,811,000
 2,097,274,619
891,713,393
Less included in central station survey—
West Kootenay Power and
Light Company         42,234,446
East Kootenay Power Company 	
Powell River Company ___.
Canadian Collieries, Ltd.
4,081,256
1,001,491
1,944,845
49,262,038
20  per  cent,   for
losses  	
9,852,407
59,114,445
Generated for purposes other than central station distribution   2,038,160,174
Total generation figure for Province   2,929,873,567 Z 46 PROGRESS REPORT.
There are a few mining and lumber companies and the mill at Woodfibre, production figures for which are not available, but these would not make an important addition
to the total output.
10. A MEASURE OF THE CAPITAL INVESTMENT IN CENTRAL
ELECTRIC STATIONS.
While no attempt has been made herein to place a value (for any purpose) on the
properties used to furnish electricity in the Province this survey would not be complete
without some indication of the financial magnitude of the industry. All companies
under the Public Utilities Commission report the book cost of their properties together
with the accumulated provision for depreciation. In some cases original cost of properties has been ascertained by or for the Public Utilities Commission. In order to
convey some idea of the approximate investment represented by the central stations the
reported book costs, undepreciated, of property used to furnish service in 1942 have
been used.    The figures of such cost have been obtained from:—
First:  Original cost as ascertained by or for the Public Utilities Commission.
Second:   Book gross cost as reported by the utilities to the Public Utilities
Commission  or  in  response to  a request by the  Rural  Electrification
Committee.
The figures of property cost used herein are not intended as a valuation of property, but rather as some measure of the total capital that is or should have been
employed in the business.    The reason for using book cost, undepreciated, for this
purpose may be illustrated thus:  e.g., a group of electric properties cost $1,000,000 to
construct and has become depreciated 30 per cent.    If the accounting has been faithfully done and there have been no significant changes in prices the property might be
valued at $700,000, and might be sold for that amount.    However, it is clear that a new
owner would require more than $700,000 capital to buy and continue operation of the
property.    He should have the $700,000 purchase price and $300,000 of credit or assets
in a depreciation reserve, for he will have to restore that property at some time in the
future, although probably never to 100 per cent, condition at any particular time.     The
capital required to establish a completely new property is not less than 100 per cent, of
its total cost;   for an old property it is somewhere between the depreciated value and
the original cost.    A conservative estimate would be 100 per cent, of the cost.
As appraisals of present value of all electric utility properties have not been made,
and as the reporting companies have not established depreciation reserves on a uniform
basis, the undepreciated costs have been used herein as a preliminary measure of capital
investment. Subject to the foregoing, comparative figures of investment have been
prepared. Amounts reported as "intangible" property have been excluded. ,A division has been made between "Generation" property (including high voltage transmission) and "Distribution" property (including general plant). The following
properties used for generation and transmission of electricity are excluded from the
survey of investment, namely:—
Generating and transmission plants of West Kootenay Power and Light Company, Ltd.
Generating and transmission plants of East Kootenay Power Company, Ltd.
Generating and transmission plants of Pacific Mills, Ltd.
Generating and transmission plants of Powell River Company.
Generating and transmission plants of Canadian Collieries, Ltd.
The distribution systems only of these five companies are included in the analyses
of capital investment. RURAL ELECTRIFICATION COMMITTEE.
Z 47
Capital Investment (on Basis op Undepreciated Cost).
Ownership Group
Total
Number of
Customers.
Generation and
Transmission.
Distribution.
Total.
179,522
21,907
$57,669,944
718,990
$22,793,184
1,835,120
$80,463,128
2,554,110
Sub-total	
201,429
5,294
$58,388,934
1,270,756
$24,628,304
1,183,879
$83,017,238
2,454,635
Total	
206,723
$59,659,690
$25,812,183
$85,471,873
The foregoing estimates of undepreciated cost apply to those properties only which
are essentially parts of the central station industry serving the general public. The
generating and transmission systems of Canadian Collieries, East Kootenay Power
Company, Pacific Mills, Powell River Company, and West Kootenay Company are used
primarily to supply energy to special industries, and only a small amount of their
output is delivered to the general public over the distribution systems included in this
survey. The generating and transmission facilities of these companies, therefore, may
be excluded from any plan for improving and extending the electric service in the
Province except that they may be regarded as potential sources of energy for near-by
distribution systems.
The relative importance of the investment in respect to the four groups of distribution systems and the three types of ownership is shown as follows:—
Total
Investment.*
Per Cent of
Total.
Group I	
Group II.-.
Group III...
Group IV...
Distribution System Group.
Ownership Group.
Privately owned utilities—
B.C. Electric Railway Company Group.	
West Kootenay Power and Light Company.—
Northern British Columbia Power Company..
West Canadian Hydro Electric Corporation...
Nanaimo-Duncan Utilities.. — _	
Sub-total for five companies-
Total for twenty-six other private utilities	
Total for thirty-one privately owned utilities..
Municipally owned utilities  	
Industries and institutions 	
Grand total — _
$70,597,000
9,880,561
1,495,857
3,498,455
$85,471,873
$72,509,725
502,000
2,648,286
2,421,953
1,571,272
$79,653,236
809,892
$80,463,128
2,554,110
2,454,635
$85,471,873
82.60
11.56
1.75
4.09
100.00
84.83
0.59
3.10
2.83
1.84
93.19
0.95
94.14
2.99
2.87
100.00
* Investment figures do not include generating and transmission plants of West Kootenay Power and Light
Company, East Kootenay Power Company, Powell Eiver Company, Pacific Mills, Ltd., Canadian Collieries, nor
Bridge River Company expenditures on " suspended construction." Z 48
PROGRESS REPORT.
11. REVENUE OF CENTRAL STATION INDUSTRY AS OF 1942.
The reported gross revenues of the central stations in British Columbia (1942)
are presented to show:—
(a.)  Total revenue by distribution system groups.
(&.)   Total revenue by ownership groups.
Total
Number of
Consumers.
Total Revenues
from Electricity
Sales.
Ratio of
Total Revenues to Investment.
Distribution Plant only.
Total Distribution and
Generation Plant.
Investment.
Ratio.
Investment
Ratio.
(a.)  Distribution System, Group.
Group I. Over 10,000 consumers.
Group II. 1,000 to 10,000 consumers...
Group III. 500 to 1,000 consumers—
Group IV. Under 500 consumers	
127,839
52,900
10,165
15,819
$8,984,850.22
3,082,105.87
501,914.63
1,177,091.39
$17,843,000
5,468,393
1,320,357
1,180,433
Per Cent.
50.4
56.3
38.0
99.7
$70,597,000
9,880,561
1,495,857
3,498,455
Per Cent.
12.7
31.2
33.6
33.6
Total
206,723
$13,745,962.11
$25,812,183
53.3
$85,471,873
16.1
(b.)   Ownership Group.
179,522
21,907
5,294
$12,304,922.28
1,205,119.01
235,920.82
$22,793,184
1,835,120
1,183,879
53.9
65.7
19.9
$80,463,128
2,554,110
2,454,635
15.3
47.2
9.6
Total	
206,723
$13,745,962.11
$25,812,183
53.3
$85,471,873
16.1
The comparative revenues of the four groups of distribution systems and their
respective percentages of the total are given below, as well as similar comparisons by
ownership groups.
Revenue from
Distribution.
Per Cent of
Total.
Distribution System Group.
$8,984,850.22
3,082,105.87
501,914.63
1,177,091.39
65.37
22.42
3.65
8.56
$13,745,962.11
100.00
Ownership Group.
Privately owned utilities-—
$10,355,987,78
613,867.69
304,364.40
310,805.96
442,076.87
75.33
4.47
2.21
2.26
3.22
Sub-total for five companies —	
$12,027,102.70
277,819.58
87.49
2.02
$12,304,922.28
1,205,119.01
235,920.82
89.51
8.77
1.72
$13,745,962.11
100.00
12. THE EFFECT OF TAXATION ON THE EFFICIENCY
OF ELECTRIC UTILITIES.
It has been noted in Part I. of this report (page 17) that any imposed burdens in
excess of the cost of service retard the development of the utility, whether it be privately or publicly owned and controlled. RURAL ELECTRIFICATION COMMITTEE. Z 49
Municipal taxes fairly assessed in respect to public utility property may be
regarded as a legitimate item in the cost of electricity inasmuch as such taxes are used
to provide municipal services essential to or necessitated by the utility. Taxation in
excess of a fair share of municipal service requirements places a burden on the utility
service by adding to the unit cost and thereby contracting the volume of production.
The importance of the relationship between volume of consumption and average unit
cost has been emphasized at several points in this report.
The application of the Dominion sales tax of 8 per cent, to all domestic electric and
gas service bills obviously adds 8 per cent, to the cost of every K.W.H. sold. However
convenient it may be to make tax-gatherers of the public utilities this tax has the effect
of restricting the volume of sales and of increasing the unit cost to the public. Thus
these two factors, namely, increased use and reduced unit costs, which play such an
important part in utility service, are set in reverse operation. This tax is collected
only from householders who use electric and gas service; other householders in Canada
pay no such tax. It is therefore clearly discriminatory as between users and non-users
of electricity. But a further discrimination is apparent among the Canadian householders who are users of electricity. Thus in Ottawa, where the average monthly use
of domestic electric service is 393 K.W.H., the average cost 8%.o of a cent, and the
average monthly bill is $3.39, the sales tax is 27 cents or 7_oo cents per K.W.H. Twenty-
seven cents a month is not an important amount to the average Ottawa householder who
uses 393 K.W.H. a month at a unit cost of less than 1 cent. But consider the small
towns in British Columbia where apparently it has been difficult to provide a supply of
electricity for the most essential purpose (house lighting)—for example, Prince George.
Here the monthly average consumption is only 30 K.W.H. and the average monthly bill
is $3.58, upon which the sales tax is 29 cents, or 1 cent per K.W.H. This is greater
than the total cost of generating electricity in any sizeable plant; it is fourteen times
the per K.W.H. tax paid in Ottawa; and the sales tax per K.W.H. in Prince George is
more than the total cost of electricity, including the sales tax, in Ottawa. This particular tax applies to all domestic sales of electricity, whether under private or public
ownership. It is clearly discriminatory and increases the difficulties of providing
electric service generally. As the tax is proportionate to the cost of providing service
it retards electrification in small communities and in rural areas where costs are
normally high.
The Dominion income and excess profits taxes are even more discriminatory than
the sales tax, for these apply only to privately owned utility companies and do not apply
to the publicly owned regional or municipal utilities. Prior to the war public utility
companies in British Columbia paid both Provincial and Dominion income taxes, the
two amounting to 25 per cent, of net profits. At present every utility company in
Canada making over $5,000 profit must pay 40 per cent, of such profit in Dominion
taxes. Furthermore, under the provisions of the " Excess Profits Tax Act," no utility
company is permitted to retain in its business more than 70 per cent, of its comparable
profits earned in the standard four-year period, 1936-39. In other words, all profits
in excess of 70 per cent, of the profits in the standard pre-war period are taken by
Dominion taxation, and in any case the minimum tax is 40 per cent, of the profits even
though the latter be less than in the standard period.
It would require an exhaustive report to cover this one subject and to show its
deadly effect upon the efficiency of electric service furnished by private companies. It
may be sufficient to point out the obvious, that neither this nor any other tax can be
paid by a public utility without adding to the cost of furnishing service. In 1942 one
utility group in British Columbia paid Dominion taxes equal to 20 per cent, of its total
revenue. Thus 20 per cent, was added to the cost of all its services. In other words,
this utility company, but for that tax, could have reduced every rate schedule by 20
per cent!    No one is so nai've as to think that this tax is or can be borne by any but the Z 50 PROGRESS REPORT.
users of the service.    If by any process it could be paid out of the capital invested the
property could not be maintained for long nor could the service be expanded.
The total income and excess profits taxes paid in 1942 to the Dominion Government
by British Columbia utilities reporting to the Public Utilities Commission was
$5,143,998.14. It will be considerably greater for the current year. This tax is an
added expense to the cost of furnishing service in British Columbia and it can be
obtained only from the people who receive that service, either in their present or their
future rates. It has been observed that the sales tax is discriminatory in that it
applies only to Canadian householders who use electricity; the utility income tax is
even more discriminatory for it applies only to those householders who happen to
receive service from a privately owned utility. In the Province of Ontario, where the
electric system is publicly owned, the Dominion Government collects no income or excess
profits tax on the supply of electricity, while in British Columbia, where most of the
electric industry is privately owned, the Dominion Government collects over $5,000,000.
The effect of this tax is of more than immediate concern for it is draining the life-
blood of an essential public service.
Elsewhere in this report reference has been made to the importance of three active
factors in the most efficient utilities—namely, increased use, reduced rates, and
improved facilities. The use of electricity has nowhere reached saturation and in
British Columbia it has a long way to go. Wider uses depend largely upon the unit
cost of service and the unit cost depends upon wider uses. The activation of these
two factors creates the need for wider and more efficient plant facilities, which in turn
requires more capital. No year passes without a live utility having to make capital
additions. The growth of earnings makes it possible to finance such additions and to
reduce unit costs. But in the case of privately owned utilities the Dominion Government now drains off all such increased earnings. No matter how efficient a utility may
have been and no matter how service conscious its management may be, the current
Dominion income tax regulations make it well nigh impossible for a privately owned
utility to improve the efficiency of its service.
The importance of this matter in relation to any proposals for the expansion of
electric service in small towns and rural areas cannot be overlooked. There are three
utility companies in British Columbia whose distribution facilities could be extended
physically to serve 7,500 consumers not presently served. These three utility companies pay the Dominion Government taxes equal to $5,000,000 per year! If, as in the
case of the publicly owned utilities, the companies could retain this amount in the
industry, many problems of expansion and rehabilitation could be solved.
Thus in most British Columbia communities the cost of supplying electrical service
is increased, thereby retarding rate reductions and increased use to pre-war consumers.
The profits of the industry instead of being available to facilitate the financing
of extensions are removed from the industry to increase the revenue of the Dominion
Government.
It is true that all corporations are subject to income and excess profits taxes
without regard to important fundamental differences between the electric utilities and
other industries, among which may be noted:—
(1.) Electric utilities provide a public service which is as essential as any
provided by the Dominion Government.
(2.) Electric  utilities are  under  Provincial  Government  regulation which
strictly limits their earnings by regulation of their rates;   consequently
they cannot make excessive profits.
(3.) The continuation of the electric utility business depends upon constant
addition to capital property.    A shoe manufacturer may operate his RURAL ELECTRIFICATION COMMITTEE. Z 51
plant at 100 per cent, capacity and may profitably supply a part of the
nation's shoe requirements, but a public utility cannot stop at supplying
a part of the demand for electricity.    It must supply the whole demand
as created by the community.    Public utilities, therefore, must be prepared to increase their facilities to supply the demand.
(4.) A  considerable part  of the  electric  utility  business  is  operated  by
Provincial  Commissions  and  municipalities  which  are not  subject to
Dominion taxation.    The effect of taxation on the utility companies is to
favour communities served under publicly owned systems at the expense
of communities served by private companies.
(5.)  Dominion taxes have assumed such proportions of the cost of service
(approximately 20 per cent, in British Columbia)  that they constitute
an  impelling  artificial  reason  for  changing  utilities  from private  to
public ownership.
A surprisingly large number of people do not realize that income taxes are not
paid by publicly owned utilities such as the Hydro Electric Power Commission of
Ontario;   the Power Commissions of Nova Scotia, New Brunswick, Manitoba, and
Saskatchewan;  nor by municipally owned utilities.    This fact should be kept in mind
when comparing rates and other conditions of service. Z 52
PROGRESS REPORT.
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C »   v 3 £.  bo RURAL ELECTRIFICATION COMMITTEE. Z 53
14. AREAS IN WHICH ELECTRICAL SERVICE IS NOT AVAILABLE.
The survey discloses that 206,723 consumers were receiving some degree of electric
service from central stations in 1942. As there is approximately one service per three
of the population the survey indicates that perhaps 620,000, or 76 per cent, of the
British Columbia population (1941 census) use electricity. This is a high proportion
and would seem to indicate that the people of British Columbia are well supplied as
compared with other Provinces. In respect to the number of connected premises this
is true, but in respect to the quality and conditions of service a large number of consumers are restricted to the most essential uses of electricity, as indicated by the
analyses in this report.
Pursuant to the terms of reference a survey has been made in respect to:—
" Rural areas in which electrical service is not now available,
"(a.)   Number of potential consumers.
"(b.)  Potential sources of electrical energy for such rural areas.
"(c.)   Proposed methods of furnishing the service."
The survey by the Committee's staff covered 5,281 miles of highway. By recording automobile speedometer readings it has been possible to locate and to tabulate all
connected and potential consumers in the rural districts. Field-notes were forwarded
to the office where they have been transferred to maps drawn to scale. Thus it has
been possible to consider a preliminary layout for what might be regarded as a first
stage of rural electrification.
In addition to the work by the Committee's staff, the B.C. Electric Railway Company made preliminary surveys of roads in the Lower Mainland area and Vancouver
Island areas within distribution reach of their facilities. The Company survey covered
603 miles, so that in all 5,884 miles of highway have been surveyed.
It must be recognized that distribution-lines may not be confined to highways under
actual construction conditions; it may be more economical to build " across country "
in some cases.    But for preliminary purposes a road survey is usually satisfactory.
It was the intention to limit the survey to routes with at least three residences per
mile, and while all such routes have been traversed it does not follow that it is practicable to distribute electricity along every road. A large proportion of the distances
covered have fewer than three residences per mile, while in many sections small groups
of residences are too scattered to permit any reasonable plan of connection to a central
source of energy. It is suggested that where the average capital cost per residence for
central station and distribution equipment exceeds the cost of an individual plant the
latter should be considered.
According to the survey information there are 9,778 potential consumers, not
presently connected to any central station, who might be brought under a first stage
in a practicable rural electrification scheme. These people are located within reasonable distribution reach of existing central stations. It would be physically possible to
deliver electricity to them by expanding existing distribution networks, provided the
energy were available at the termini of the existing lines. Whether it will be economically possible to deliver a reasonable quality of service at reasonable rates depends upon
the condition of the respective central plants and the efficiency of their management.
The location of the above 9,778 potential consumers in relation to the central
distribution systems proposed for each is as follows:— Z 54
PROGRESS REPORT!
Distribution Systems for which
Extensions are proposed.
Number of
Potential Consumers.
I. Privately owned systems—
B.C. Electric Railway Company group—
Lower Mainland (not including Fraser Valley)      253
Lower Mainland (Fraser Valley)   3,128
Vancouver Island South
Alberni 	
Newcastle-Nanoose
Royston 	
Kamloops-Barriere
Company total
Armstrong area
North Okanagan
Quesnel 	
Hope 	
Alert Bay	
West Canadian Hydro Electric Corporation group—
Salmon Arm-Chase	
North-east of Sicamous	
Enderby 	
Salmon Arm (east of) 	
Lavington 	
342
89
416
14
234
4,476
394
153
119
78
29
412
1,185
31
85
9
Company total
Nanaimo-Duncan Utilities, Ltd.
Nanaimo Area	
Northern B.C. Power Company-
Digby Island	
West Kootenay Power and Light Company—
Various distribution systems (South Okanagan)
1,310
27
40
__ 1,650
Five larger utility companies, total  7,503
Sixteen smaller privately owned systems—
Burns Lake 	
Campbell River
Golden 	
Hazelton  .....
Invermere 	
Kimberley 	
Kingsgate	
Lake Cowichan
Lillooet 	
Michel 	
Nakusp 	
Sechelt 	
21
130
23
74
172
22
51
50
61
19
397
103
Carried forward..
1,123 7,503 RURAL ELECTRIFICATION COMMITTEE. Z 55
Distribution Systems for which Number of
Extensions are proposed. Potential Consumers.
Brought forward  1,123 7,503
I. Privately owned systems—Continued.
Sixteen smaller privately owned systems—Continued.
Smithers  57
Terrace   195
Vanderhoof   53
Williams Lake  51
Wardner and Elko (East Kootenay Power Co.)   130
  1,609
Total for privately owned systems  9,112
II. Municipally owned systems—
Cranbrook   45
Courtenay   60
Fernie  92
Grand Forks  (City)   25
Kaslo  25
McBride   6
Merritt   70
Nelson   54
Revelstoke  (Arrowhead)    228
Summerland  61
Total for ten municipal systems      666
Total  9,778
Note.—The estimates of potential consumers who could be served by extensions of the B.C. Electric Railway
Company's facilities are based on. information supplied by the Company.
According to the 1941 Dominion Census of Agriculture, Bulletin 12, there were
25,980 farms   (including Indian Reservation farms)   in British  Columbia.    Electric
service was installed in 35.8 per cent, of these or     9,301
Of the 9,778 prospects who could be supplied it may be assumed that 8,000
represent farms. The suggested first stage of rural electrification could increase
the number of farm consumers then by     8,000
raising the number of farms with electrification to  17,301
The completion of the first stage would result in 66 per cent, farm electrification in
British Columbia.
The importance of this accomplishment may be shown by the following estimate
of farm electrification in Canada in 1941:—
Farm Electrification in Canada in 1941.*
Per Cent.
Province. Farms electrified.
Prince Edward Island     5.4
Nova Scotia  26.0
New Brunswick   18.5
Quebec   19.6
* Preliminary estimate based on 10 per cent, sample taken by tbe Census Division of the Dominion Government
in 1941. Z 56 PROGRESS REPORT.
Per Cent.
Province. Farms electrified.
Ontario  .  37.0
Manitoba  _     7.3
Saskatchewan      4.7
Alberta      5.4
British Columbia   35.8
In any proposal for rural electrification the possible sources of energy must be
considered. The amount of power to serve 10,000 consumers is less than 5,000 horsepower. The great distances between the centres of population and the small loads
make it economically impossible to transmit energy from a single generating plant,
and it may be stated without reservation that there is no practical possibility of
constructing extensive high-voltage grid systems in the Province to deliver energy for
general distribution to the public. Until such time as the power requirements are
greatly increased, energy must be obtained from hydro-electric stations near the
distribution areas and in some communities from isolated steam or Diesel operated
stations.
It is submitted that the sources of energy for supplying the possible 9,778 consumers above enumerated should be the same which supply the distribution systems
which must be expanded to serve those consumers. The additional load would not
create a serious problem for the B.C. Electric Railway Company group who are engaged
primarily in the utility business. The West Canadian Hydro Elective Corporation
should have sufficient capacity after the war to supply the North Okanagan district.
Quesnel, Hope, and Alert Bay, all of which are under the same management as West
Canadian Hydro Electric Corporation, will require new generating plants. All but
a small part of the energy distributed by Nanaimo-Duncan Utilities is generated by
the B.C. Electric Railway Company group and delivered at Duncan; twenty-seven
consumers would make no appreciable difference to the power-supply. The increase of V
consumption by 1,650 new consumers on the West Kootenay system would be insignificant to this Company which now generates over 1.6 billion K.W.H. Northern B.C.
Power Company would have no production problem in supplying energy for forty new
consumers.
Some new and more reliable sources of energy must be found to supply the
1,609 prospects on fourteen of the seventeen smaller privately owned systems.
Wardner and Elko are now served by the East Kootenay Power Company system.
Kimberley and Michel power also is generated by East Kootenay Power Company.
The Campbell River area obtains power from the Puntledge plant of Canadian
Collieries. The other fourteen small systems have isolated plants, mostly Diesel, which
are quite inadequate to supply the presently connected customers if conditions permitted
a reasonable use of energy.
Preliminary surveys and estimates made by the Water Rights Branch of the
Department of Lands indicate that hydro-electric energy cannot be produced at reasonable costs in the small quantities required. Until very much larger demands are
developed to warrant the necessary expenditures for hydro developments and long
transmission-lines it will be more economical to use isolated Diesel generating stations.
Such stations should consist generally of three units—a small one for hours of light
load, a larger one for hours of medium load, and a third unit for hours of heavy load.
The larger unit should equal approximately the combined capacities of the two smaller
unjts. Thus economical operation would be possible under normal conditions and
service would be assured at all times with any one unit out of condition. Such a plant
could supply dependable and adequate service to the present and the new consumers. RURAL ELECTRIFICATION COMMITTEE. Z 57
We have given considerable attention to this matter and with the technical
assistance of manufacturers of this type of equipment have been able to prepare preliminary estimates of the capital cost, operating expenses, etc., of plants to serve
variously sized communities. The results have been used in the preliminary estimates
of capital expenditure presented in the next section of this report.
In a Province so fortunately provided with water-power potentialities there is little
doubt that the latter will continue to provide an increasing proportion of energy for
distribution. In 1942 of the K.W.H. sold through central stations 95.45 per cent, were
hydro-electric, 4.20 per cent, steam-electric, and 0.35 per cent. Diesel-electric. It will
be found that a small proportion of the total requirement for some time to come can be
more economically derived from Diesel or steam plants. In this preliminary survey
it is assumed that Diesel plants will be used for isolated distribution centres. If and
when a comprehensive plan becomes operative it is assumed that detailed studies will
be made in each area and the final choice of generating methods in each case will be
the most economical.
The feasibility of supplying the 666 prospects by extensions of existing municipally
owned systems depends upon the availability of power and the co-operation of the
municipalities. Cranbrook and Fernie now obtain energy wholesale from East
Kootenay Power Company (hydro-electric). Nelson has its own hydro-electric plant.
Revelstoke, Grand Forks, and Kaslo own hydro-electric plants of limited capacity.
McBride purchases power wholesale from C.N.R. (steam plant) at a cost too high
to permit of expansion. Merritt is supplied wholesale from the steam plant of the
Middlesboro Collieries, Ltd. Courtenay's power is obtained from the Canadian Collieries' Puntledge hydro-electric plant. Summerland buys hydro-electric energy from
the West Kootenay Power and Light Company.
15. PRELIMINARY ESTIMATES OF CAPITAL COST OF NEW WORKS REQUIRED TO SERVE 80 PER CENT. OF 9,778 POTENTIAL CONSUMERS
IN RURAL AREAS.
In the survey of possible consumers each residence, church, store, filling station,
and complete set of farm buildings, etc., has been listed as one consumer. If the most
efficient distribution system were constructed and electrical service made available at
the lowest rates in the Province it cannot be assumed that every prospect will become
a subscriber. In New Brunswick the contract requirement for each project was
fixed at 75 per cent of the total. That proportion was realized only through much
persuasion and salesmanship. In order to arrive at some preliminary measure of the
capital cost of new work required we have estimated distribution systems on the basis
of 80 per cent, of the total prospects becoming customers. Where new. plants are
required the estimates provide for capacities to supply the total number of potential
subscribers.
Using 1943 prices for the principal items of cost and assuming that the programme
will permit uninterrupted construction of complete projects it is estimated that the
capital requirement for new work will be as follows:—
(1.)  Distribution plant (1,533 pole-miles of line)  $2,586,000
(2.)   Seventeen generating plants     1,136,000
Total for new work  $3,722,000
In addition to the new work considerable rehabilitation will be necessary on the
old distribution systems. In the report on existing utilities the capital investment
is expressed in terms of undepreciated cost. It may be assumed, therefore, that the
present value of old plants plus the cost of reconditioning useful parts will not exceed
the reported investment. Z 58 PROGRESS REPORT.
It is not suggested that rehabilitation of existing utility property and extension
of service to 9,778 new consumers represent the ultimate possibilities of electrification,
but they do comprise an important first stage. Without more reliable and adequate
generating plants it will become increasingly difficult to maintain the present minimum
standard of service in many small distribution areas, and it will be impossible to
provide electrification for adjacent rural sections.
The first stage in a broader electrification plan might comprise performance of
the following technical work:—
(1.)   Installation of adequate and reliable generating plants where such plants
are required to improve the standard of service and to permit extensions
to adjacent areas.
(2.)  Rehabilitation of useful parts of existing generation and distribution
plants.
(3.)   Construction of 1,533 miles of new distribution-lines   (2,300 to 13,000
volts) and services to 7,900 new consumers, being not less than 80 per
cent, of 9,778 possible.
(4.)   Estimated capital expenditure on new plant, $3,722,000.
The foregoing comprises a practical engineering plan which admits of progressive
expansion to all sections of British Columbia.    The execution of such a plan as a practical financial undertaking involves matters of policy and organization.
16. THE WATER-POWER RESOURCES OF BRITISH COLUMBIA.
Many people think that because British Columbia has large potential water-power
resources, every residential and business premises could be supplied with electricity.
This does not necessarily follow. Though operating costs of hydro plants are low,
they are offset by the high capital charges which have a permanent effect on the cost
of the service.
British Columbia undoubtedly has a great wealth of potential water-power, but in
general the possible developments are only economically feasible if a demand many
times in excess of that required for central station service can be created within
transmission distance. An industry or a large urban demand is necessary before such
a development can be undertaken.
This Committee has investigated a number of smaller potential water-powers
which it was thought might be fitted into the scheme, and finds that even under the
optimum conditions of location and possible demand the generating and transmission
costs—i.e., the costs at the distributing station—vary from 5 cents to 10 cents per
K.W.H. The fixed charges of any such development must be carried from the date
the plant is completed, and the costs per K.W.H. would be greatly in excess of the above
figures until the market is fully developed.
On the other hand, Diesel power can be generated at the distributing station at
costs approximating 3 cents per K.W.H., and the plant can be increased as demand
requires.
Our investigations have not disclosed a single instance where the demand which
can be built up through rural electrification is sufficient to justify the development of
any new hydro power.
This does not detract from the potential value of water-power to the Province.
When sufficient demand is created by industry or by the additional requirements of an
urban community, these water-powers will be developed and become a source of wealth.
Water-power, until developed, produces nothing, but when harnessed it continues
to produce indefinitely. Hence the importance of developing all feasible water-powers,
when economic conditions permit.
i LAND RECORDING DISTRICTS
139°        13tf        137°        136°        135°        134°        133°       132°        131°        13Q°       129°       128°        127°       126°        125°       124°       123°       122°        121°        12Q°        119°        118°        117° 116° 115°        114° 113° 112° 1110 11Q°
INDEX   or   DEPARTMENTAL  REFERENCE MAPS
Departmental Reference Maps
136° 135° 134° 133°
131° 130° 129°kongitudel28°   West    127°   from   126°Greenwlchl25° 124° 123° 122° 121° 120°
117° 116°
Geographic Oiv.. Dept.of Lands. B.C. RURAL ELECTRIFICATION COMMITTEE. Z 61
British Columbia, like the western states of America, is subject to variable
meteorological conditions which cause most streams to be erratic in their flow. The wet
season, usually commencing in October and continuing to March or April, together
with the melting of the snows during the early summer, produces a heavy run-off which
diminishes considerably during the later summer months, with the result that storage
is essential on practically every stream in order to regulate the flow and develop the
maximum power potentialities. Storage-sites of sufficient capacity are not always
present and when present are expensive to construct. This is a decided factor in
increasing the cost of hydro development in the Province.
The water-power installation in the Province totals approximately 792,563 horsepower, of which just over 633,000 is utilized in central stations for resale of electrical
energy, about 106,000 is used in the production of pulp and paper, and the balance in
mining and other industries.
The water-power resources of the Province, according to estimates given in
Dominion Government publications, are 7,023,000 horse-power, ordinary minimum flow
of water, and 10,998,000 horse-power based on the flow of the stream for six months
in the year.
Until the last decade a large water-power possibility, to be attractive, had to be
capable of progressive development to keep pace with a demand increasing at a moderate
rate. Within the last few years, a number of projects in various parts of the world
with initial developments in the hundreds of thousands of horse-power have been begun.
This tendency serves to draw attention to other schemes which have not been considered
feasible because of the initial capital outlay involved. The powers in the Fraser River
drainage system in British Columbia are in this class and it is quite possible, in view
of the use to which the large water-powers in Quebec have been put for electro-
metallurgical and electro-chemical purposes, that the water-powers referred to above
could be utilized for similar purposes. Their location is such that, with our present
means of transmission of electrical energy, development of several of them for use in
our centres of population is not economically feasible, but for industrial purposes the
sites appear to offer many advantages. The development of those which would divert
water through the coastal range and generate electrical energy within a few miles of
tide-water would allow industrial plants to be established at points readily accessible
to ocean-going vessels.
It is unnecessary for the purpose of this report to enumerate all the undeveloped
water-powers, but attention is drawn to the larger ones:—
Adams River   22,000                Fraser River   310,000
Ain River  5,600                Fraser River   1,320,000
Ash River   20,000                Fraser River   370,000
Bridge River   355,000                Jones Lake  28,800
Bulkley River   220,000                Khtada River   9,000
Campbell River   100,000                Kicking Horse River_  4,000
Cheakamus River   120,000               Kumowadah River   10,000
Chilko - Tatlayoko - Ho-                                  Lois River   15,000
mathko   800,000               Murtle River   70,000
Chilliwack River '..... 29,000               Nanaimo River   20,000
Columbia River  31,000               Nass River  145,000
Columbia River   36,000                Nascall River   45,000
Crab River  10,000               Nation River   80,000
Dean River   85,000               Nechako River   20,000
Eutsuk-Kimsquit   910,000               Nechako River   26,000
Falls River   9,000                Nimpkish River   60,000
Foch Creek   10,000               Pend-d'Oreille River  200,000 Z 62
PROGRESS REPORT.
Quesnel River   100,000 Stave River   94,000
Skeena River  29,000 Shuswap River  14,000
Stafford River   23,000 Tahtsa-Kemano   845,000
Stamp River   20,000 Victoria Lake  43,000
The map on page 60 has been prepared showing the location of some of these
undeveloped powers in relation to the present load centres; the approximate lengths
of transmission-lines necessary between the larger centres are marked thereon.
There is nothing to suggest that these load centres will not coincide with the load
centres of the future and one must be guided by such relationships in any suggestions
made for their use. As the economic limit of transmission at the present time is about
300 miles, it will be noted, as referred to previously, that some of the larger undeveloped
powers are not located within that distance. It, therefore, does not appear that for
many years to come the powers which can be developed at the Chilko-Taseko Rivers to
Bute Inlet, the Eutsuk Lake to Kimsquit River, Dean Channel, and the Tahtsa Lake to
Kemano River, Gardner Channel, will be required in the probable load centres in the
reasonably distant future unless the technical facilities for the transmission of power
over long distances is greatly improved.
A close examination of the map reveals that there are a number of undeveloped
water-powers within a reasonable distance from the present load centres and the
development of these powers will be a logical outcome as the market for the power
increases. For some years past the rate of increase of the market has been about
ten per cent, per annum. A series of small maps have been prepared and shown on the
following pages indicating the location of the developed water-powers serving the
present load centres and the undeveloped water-powers which are available for the
future loads of those centres.
In conclusion it may be said that there are many water-powers awaiting development when the economic considerations justify. RURAL ELECTRIFICATION COMMITTEE.
Z 63
Vancouver Island.
Campbell H.
Nanaimo.
ictoria.
developed   water poin'er.
undeveloped
transmission lthes.
The southern end of the Island is served by the water-power plants at Jordan
River (36,250 horse-power) and Goldstream (2,300 horse-power), with a steam
auxiliary plant of 5,000 horse-power at Brentwood. The centre section is served from
Millstone River (1,200 horse-power), Coal Creek (250 horse-power), and the Puntledge
River (8,560 horse-power). All the load centres of the Island are within transmission
distance of the undeveloped water-powers of Campbell River (100,000 horse-power),
Ash River (20,000 horse-power), Nanaimo River (20,000 horse-power), and Stamp
River (20,000 horse-power). The Nimpkish River (60,000 horse-power) is about
300 miles distant from Victoria. Z 64
PROGRESS REPORT.
Vancouver, New Westminster, and Lower Fraser Valley.
VAfiCOUVER.
A/eW iWestnims.
/NTEKN&T/ONAJ.      BOUNDARY.
• DEVELOPED     WATER POINER..
XX UNDEVELOPED
— .-_.—..   TRANSMISSION L/NES.
The hydro plants at Buntzen (64,000 horse-power),. Stave (79,000 horse-power),
Ruskin (94,000 horse-power), and Alouette (12,000 horse-power), with an auxiliary
steam plant of 24,200 horse-power, serve these areas.
There are a number of undeveloped powers within transmission distance of these
load centres, such as Jones Lake (28,800 horse-power), Bridge River (355,000 horsepower), Nahatlatch River (60,000 horse-power), Cheakamus River (120,000 horsepower), Harrison Lake (500,000 horse-power), and the Fraser River at Lillooet
(370,000 horse-power) and Moran (1,320,000 horse-power). RURAL ELECTRIFICATION COMMITTEE.
Z 65
Kamloops.
Brida
DEVELOPED   WAITE:*? /=>COWjEAZ.
UNDEVELOPED     <•
TiRi9rvSM7/S3/0/Y L\//V£S.
The Barriere hydro plant of 2,000 horse-power with an auxiliary steam plant of
2,000 horse-power serves this area.
The Adams River (22,000 horse-power) and the Murtle River (70,000 horse-power)
are the closer undeveloped powers to this centre, while the large undeveloped powers
on the Fraser River at Moran and Lillooet as well as the Bridge River and the
Nahatlatch Rivers are within 200 miles. Z 66
PROGRESS REPORT.
The Okanagan Valley, Similkameen Valley, and West Kootenay District.
princet6,
-TX&utfjZZ **»
DEVELOPED   WATER ROWER.
UNDEVELOPED     «
TRANSMISSION   LINES.
In the north end of the Okanagan Valley the West Canadian Hydro Electric Corporation's plant at Shuswap Falls of 6,000 horse-power serves Vernon, Armstrong, and
Enderby, and also Salmon Arm. The Shuswap River at the outlet of Mabel Lake
would provide an additional 4,000 horse-power and the Adams River (22,000 horsepower) is within transmission distance. This load area is interconnected electrically
with the West Kootenay Power and Light Company's system in the south end of the
valley.
The south end of the Okanagan Valley and the Similkameen Valley is served by the
West Kootenay Power and Light Company's system from the Kootenay River and
any increase of load would logically be served therefrom. There are no other undeveloped water-powers in close proximity to this area.
The West Kootenay District and Grand Forks areas are served from the West
Kootenay Power and Light Company's plants (278,000 horse-power) on the Kootenay RURAL ELECTRIFICATION COMMITTEE.
Z 67
River and the plant (1,050 horse-power) on the Goat River. The cities of Grand
Forks (660 horse-power), Nelson (6,570 horse-power), Kaslo (300 horse-power), and
Revelstoke (1,200 horse-power) each have their own hydro plant. With the completion
of the Brilliant plant (90,000 horse-power) of the West Kootenay Power and Light
Company all the difference of elevation in the Kootenay River between Kootenay Lake
and its junction with the Columbia River will be utilized. The only other large
undeveloped water-power in this district is the Pend d'Oreille River (200,000 horsepower) .
East Kootenay.
loss/er ^
p£RHl£
PhlJJi'ps Canyon.
JDEVELOPED    WATER    POWER.
ON DEVELOPED
TRANSMISSION   LIMES. Z 68
PROGRESS REPORT.
East Kootenay—Continued.
The southern end of this area is at present served by the water-power plants of
the East Kootenay Power Company, Ltd., on the Elk River (15,000 horse-power) and
Bull River (7,200 horse-power). There are several undeveloped water-powers in both
the north and the south ends of the area which could be utilized to meet a normal
increase of load for many years to come, such as Elk River at Philips Canyon (10,000
horse-power), Lussier River (10,000 horse-power), Kickinghorse River (4,000 horsepower) , and the Columbia River (36,000 horse-power).
Prince Rupert.
Developed Water rower.
0 undeveloped    »
— ——>—— — -   Transmission /Lines.
The water-power plants of the Northern B.C. Power Corporation at Woodsworth
Lake (1,650 horse-power) and Big Falls Creek (4,070 horse-power) are at present
utilized for the load at Prince Rupert. In addition to the possible enlargement of the
latter plant there are several other undeveloped water-powers within transmission
distance of this load centre, such as Khtada River (9,000 horse-power), Union Creek
(4,000 horse-power), Kitsumgallum River (35,000 horse-power), and the Bulkley River
(220,000 horse-power). RURAL ELECTRIFICATION COMMITTEE.
Z 69
Prince George.
9 DEVELOPED     WATER POWER .
Xk UNDEVELOPED
___._,—„    transmission Lines.
At present the load at Prince George is being supplied by a fuel (Diesel) plant.
The undeveloped water-powers within transmission distance are Stellako River
(1,500 horse-power), Cheslatta River (1,500 horse-power), Quesnel River (25,000 horsepower) , and Nechako River (20,000 horse-power),  PART III. RURAL ELECTRIFICATION IN OTHER
CANADIAN PROVINCES.
17. Observations.
18. Nova Scotia.
19. New Brunswick.
20. Quebec.
21. Ontario.
22. Manitoba.
23. Saskatchewan.
24. Alberta.
17. GENERAL OBSERVATIONS.
The consensus of opinion of those engaged in various ways in the electric industry
is that there has been, up to the present, no concerted demand for electric service from
those who are not now served. A general interest in rural electrification has been kept
alive by public ownership advocates and has been recently stimulated by rehabilitation
committees. It is stated that in many cases where a request is made for rural service
an active campaign of salesmanship is necessary to secure enough contracts to justify
construction of the line. There is, however, a growing demand for lower rates and
better service where electric energy is now available, particularly in the rural areas.
In general, the more prosperous farmers and those engaged in a form of agriculture in which electric energy is particularly helpful—dairying, poultry farming, etc.—
are within reach of central energy systems or are supplied by individual plants. The
fishermen farmers of the Maritimes, the habitants of Quebec, the grain-growers of the
Prairies, and the cattlemen of British Columbia, generally those living in the sparsely
settled areas, have little use for electric current other than for household lighting.
They have not in the past had the means to wire their homes and purchase appliances.
The cost of their present methods of lighting are so small that even a low monthly cash
outlay for electric current would be a big factor in the family budget.
Some of those in the industry are, however, looking for a pronounced change as a
consequence of the war. The spending powers and habits of the more remote agricultural population are changing. Already in many places the simple pioneer homes are
being replaced by more pretentious dwellings, and when restrictions are removed and
building materials become easily available, this trend will undoubtedly increase, particularly if a post-war housing programme is developed. The younger generation who
will be returning from the Armed Forces or from war-work will have become accustomed
to the advantages of electric services and will want them in their homes.
In general, across Canada, under both public and private ownership, electric service has been extended beyond the point where the extensions are self-supporting.
Even the privately owned utilities in an attempt to foster good public relations have
gone beyond the economic limit. Any further extensions of service must be assisted
by the users in the more densely settled areas or by the taxpayers.
Direct Government assistance to rural electrification has been instituted in Nova
Scotia, New Brunswick, Quebec, and Manitoba. The scope and extent of this assistance
is quite accurately summarized in the Manitoba report. In Ontario this assistance by
the taxpayer has averaged roughly $1,000,000 per year since 1921. In Nova Scotia and
Manitoba the assistance in 1941 and 1942 was, roughly, $100,000 a year. In Quebec
assistance by the taxpayer has been negligible. In that Province, however, and in
British Columbia, some of the privately owned utilities have extended their lines beyond
the economic limits and have furnished service in rural areas at the expense of users
in the urban centres. The relatively high percentage of farms electrified in this Province is due to this policy. Such rural service as exists in Alberta is entirely due to
similar policies on the part of privately operated utilities.
71 Z 72 PROGRESS REPORT.
18. NOVA SCOTIA.
Nova Scotia has a Power Commission holding office during the pleasure of the
Executive Council, with offices in Halifax, and consisting of the Premier of the Province and two others, one of whom acts as manager. The activities of the Commission
have developed under varying Government policies without any general or continuing
pattern, with the result that its functions are somewhat involved. The Commission
generates power, purchases in bulk from private utilities and county boards, sells in
bulk to private utilities and boards, and distributes to ultimate consumers, including a
number of large industrial users. In the main it has filled in the gaps between other
utilities.
Under the " Rural Electrification Act" the Government undertakes to pay to the
Commission the loss incurred in reducing the service charge to rural customers to
$1.75 per month where a range is used and $1.25 per month otherwise, and to pay the
deficit incurred by extending service to new customers where three contracts per
mile are signed and there are, in the opinion of the Commission, enough prospective
customers to make the extension ultimately self-sustaining.
The Government under the same Act may contract with a private utility company
to pay part of the cost of serving a rural extension where there are three immediate
and at least three additional prospective customers per mile. In practice the Government pays the difference between the revenue derived from the extension and the aggregate amount of five minimum charges. The Nova Scotia Light and Power Company
and two of the smaller companies interviewed stated that this arrangement worked
quite satisfactorily but involved an elaborate accounting system. Two other companies
had not built any extensions under the arrangement because of the accounting involved
and because they had had no pressing demands for service. If on petition by users a
private utility company fails to proceed with an extension the Commission is authorized
to make such extension and demand power for its service from the utility company at
110 per cent, of increment cost. To the end of 1941 only one extension had been built
under this provision. The increment cost is determined by the Nova Scotia Board of
Commissioners of Public Utilities.
In the four and one-half years between the passing of the " Rural Electrification
Act" and November 30th, 1941, 853 miles of distribution circuits, serving 7,300 potential customers, were completed or installed by the Power Commission at an estimated
capital cost of $1,219,000, for which the maximum annual aid by the Government would
be $81,934. In the same period private and municipal utilities completed or approved
238 miles to serve 1,800 potential customers requiring a maximum annual Government
assistance of $13,764. The maximum assistance will not be required as some extensions become self-supporting before others are built. The amount paid during 1941—
$82,494—should gradually decrease.
Twenty-five per cent, of the potential customers along the lines constructed have
not availed themselves of the service.
The programme has been slowed down by the shortage of material and labour and
by the approaching completion of the feasible extensions. It is estimated that a further
200 miles of line can be constructed under the statutory requirements.
The Commission has authority (section 43) to use the net profit made in any distribution district to reduce the cost of service in other districts. It has established uniform rates, a service charge of $1.25 per month to residential customers without ranges
and $1.75 per month to others, plus 5 cents per K.W.H. for the first 15 K.W.H. and 3
cents per K.W.H. for the excess.
The manager of the Power Commission advocates uniform rates over the entire
Province, raising rates in cities and towns if necessary. He does not think any large
loads can be built up in the rural areas. He thinks that light and simple appliances,
such as irons and toasters, only will be used. RURAL ELECTRIFICATION COMMITTEE. Z 73
The Nova Scotia Light and Power Company and its subsidiaries supply about 50
per cent, of all meters in the Province. The Company operates street-railways and gas
utilities in Halifax and states that the electric service has been carrying the other
utilities until the war activity made the transportation system temporarily profitable.
The rates charged by the Company are regulated by the Board of Public Utility Commissioners. In Halifax these rates consist of a 50-cent service charge without and $1
with range, plus a straight line charge of 2% cents per K.W.H., the minimum being
$1 per month. In smaller towns the service charge has varied but is being brought to
a uniform 40 cents per month. To this is added a current charge of 4 cents per K.W.H.
for 40 K.W.H. and 2% cents per K.W.H. for the excess. In rural areas the minimum
varies with the number of customers per mile, ranging from $1.50 for ten customers to
$3 for four. The Company had an extensive policy based on the five-year contract or
on payment by the customer of the-excess cost, but is now working under the provisions
of the " Rural Electrification Act."
The manager of the Company states that in Nova Scotia there is no surplus of
seasonal hydro power; that due to the almost complete regulation of stream-flow every
K.W.H. can be held and used as required. Accordingly, his Company is not interested
in the development of off-peak loads and does not encourage water-heating. He states
that his Company cannot profitably retail any power at less than 2% cents per K.W.H.
He thinks that rural loads might be increased by loans for the purchase of appliances
on the Wartime Housing Plan.
The Nova Scotia Board of Public Utility Commissioners has complete control of all
utilities, private or municipal, except those operated by the Power Commission. The
Commission is gradually amending rate structures that come before them to include a
uniform service charge of 40 cents per month with a minimum of $1 in Halifax and
$.1.50 in rural areas, except where the number of customers per mile of line is low
enough to require a high minimum as mentioned earlier herein. This Board is not in
accord with the idea of uniform rates, but considers that rates should be based on cost
of service and that any deficit caused by service to any area at less than cost should be
made up by the Government.
A committee, consisting of men prominent in the industry, recently made an
interim report to the Nova Scotia Economic Council to the effect that though the
various supply systems are contiguous and are interconnected in certain areas, no
general system of interconnection is at present justified. The contiguous elements of
the separate systems consist of rural lines that have no carrying capacity and a general
system of interconnection would be quite expensive. There is no surplus of seasonal
power in any of the districts and the hydro potentialities are quite fully developed.
Coal is available in or can be cheaply transported to all areas. Accordingly, as load
develops, the question of supply is a simple one of balancing transmission costs against
construction of local generating plants. This committee is not disturbed over the effect
of cost of power on location of industries, pointing out that except in such manufactures
as cement, aluminum, etc., the cost of power is quite overshadowed by other factors.
19. NEW BRUNSWICK.
Rural electrification in the Province of New Brunswick has been developed almost
solely by the New Brunswick Electric Power Commission. Any extension beyond urban
areas by private or municipal utilities should be classed as suburban rather than rural.
The New Brunswick Electric Power Commission was instituted in 1920. The
members are appointed by the Lieutenant-Governor in Council and hold office during
the pleasure of that body. As in Nova Scotia, the Commission can purchase or construct electric systems, may generate electricity, and may purchase or sell power from
or to any person.    At the time of the Commission's inception some twenty-three sepa- Z 74 PROGRESS REPORT.
rate organizations, private and municipal, were engaged in the sale of power in the
Province. The Commission acquired a number of existing systems, constructed generating plants, and began a programme of extension from these systems to give as wide
a service as seemed economically feasible.
At the present time the Commission operates two hydro, one steam, and two Diesel
generating plants, purchases in bulk from three generating companies, sells in bulk to
the Cities of St. John, Sussex, and Moncton, to a distributing company at Fredericton,
and distributes to retail customers in fourteen out of the fifteen counties. In 1941 the
Commission had 18,411 direct customers.
The New Brunswick " Electric Power Act " provided for the formation of hydroelectric districts outside the boundaries of organized communities. Some such districts
were organized for the purpose of contracting with the Commission for street-lighting,
but in these and other areas the Commission undertook distribution to the ultimate
consumers and set up separate distribution systems wherever it appeared that such a
system might ultimately become self-sustaining. Separate accounts were carried by
the Commission for each of these systems. In 1941, twenty-three distribution systems
were operating with an accrued total deficit, after providing for sinking fund and
maintenance reserves, of $36,000. In 1932, the Provincial Legislature passed an Act
providing that the Lieutenant-Governor in Council might pay 50 per cent, of the capital
cost of a rural distribution-line and for a period of ten years might pay to the Commission the excess cost over and above a service charge of $1 per month and a reasonable
per K.W.H. charge.    No moneys have been paid by the Government under this Act.
The efforts of the Commission have, up to 1941, resulted, according to the Dominion
census, in the electrification of 18.5 per cent, of the farms in the Province. The rates,
except in the larger systems, include a service charge of $1, plus an energy charge
varying from 10 cents to 6 cents per K.W.H. for the first 20 K.W.H. and 3 cents per
K.W.H. for the excess. The average domestic consumption under the systems operated
directly by the Commission is low, ranging from 19 to 49 K.W.H. per month.
Informed parties state that the present Government shows definite intention of
assisting rural electrification; that though no details of the Government's proposal
have been worked out it will probably work to some extent through existing private
companies; that the present Government shows a decided trend toward expanding the
sphere of the Commission and working towards general public ownership.
20. QUEBEC.
The only governmental aid to rural electrification in Quebec is provided in the
" Electricity Municipalization Act." Under this Act the Lieutenant-Governor in Council may pay to a municipality 50 per cent, of the capital cost of lines on highways built
to serve a rural municipality, and may loan a further 25 per cent, of the cost. This
legislation has not become effective. Where the more closely settled parts of the municipalities are served, the ratepayers decline to obligate themselves to extend the service.
Rural electrification in Quebec has been carried out almost entirely by private
utilities, which, with one exception, have confined themselves to the territories adjacent
to their urban systems. This exception is the Shawinigan Company which supplies
approximately 16,000 of the 25,000 farmers using service. This Company, some years
ago, in lieu of spending $500,000 a year on advertising and public relations decided to
devote an equivalent sum to the construction of rural extensions that were not economically justified. The money was allotted to various sections of the Company's territory
and was expended after consultation with Members of Parliament, defeated candidates,
the clergy, and other influential citizens. Some extensions were built with the estimated
revenue as low as 8 per cent, of the cost of construction. Special attention was given
to the lighting of churches and other public institutions. The Company is well satisfied
with the success of the policy. RURAL ELECTRIFICATION COMMITTEE. Z 75
The rates in the rural areas served by Shawinigan are uniform to all residential
customers. In spite of the fact that these rates are lower than those charged in all but
a few of the most favoured rural areas in Ontario, the consumption per customer is
very low, averaging less than 30 K.W.H. per month, less than one-quarter of that in
Ontario. This is due to the generally lower standard of living and spending powers of
the Quebec farmers, and to the fact that labour-saving appliances are not in demand
where large families are the general rule. Some 3,000 out of the 19,000 farms within
reach of the existing distribution-lines have not availed themselves of the service.
The Shawinigan Company sets its average capital cost per farm served at $275.
The experience in Quebec indicates that low rates and a promotive schedule are
not in themselves sufficient to induce a large use of electric energy. The general
economy of the country is an important factor.
21. ONTARIO.
Rural electrification in Ontario has been heavily subsidized by the Provincial
Government and, as a consequence, the Province leads Canada in percentage of farms
electrified. Government assistance began in a substantial manner in 1921, when the
Government undertook to pay 50 per cent, of the capital cost of primary distribution-
lines in rural areas. This was later extended to cover 50 per cent, of the cost of all
rural distribution plant.
The Province was divided into rural districts, each of which was, with the above
assistance, required to be self-sustaining. Under this arrangement the service charge
required was high compared with that in the urban areas, being in some cases as high
as $5 for the classification "light farm service." The Provincial Government then
undertook to pay to the Commission the deficit caused by reduction in the service
charges, which were progressively reduced to $1 for "light farm service" and lower
classifications. The moneys advanced for this purpose were made a charge against the
district to be refunded when the district became self-sustaining.
By 1941 the total advanced by the Province under the above provisions amounted
to over $23,500,000. In addition, the Province has extended loans to the amount of
$386,000 to assist in wiring buildings and purchasing appliances.
It might be assumed that with this generous subsidy the programme should be
completed, and on the basis of the proposal that extensions be made where three customers per mile could be connected this is nearly so. On that basis the Commission
estimated that 75,000 farms out of the 200,000 in the Province would be connected. In
1941 a total of over 71,000 had been reached. The required number of connections
per mile was, however, reduced to two and the number of farms that can be served
increased. Even with this provision it appears that the ultimate farms that can be
served will not much exceed 40 per cent, of the total.
In October of this year the Government announced that service charges would be
eliminated in the rural areas. The Commission pointed out that if this were applied
to all customers a further subsidy by the Government of $1,600,000 a year would be
required. Later information indicates that some modification of this proposal has
been made.
These large grants by the ratepayers have been made necessary by the system
under which the hydro-electric system operates—namely, that it must supply energy at
cost to those municipalities which operate their own distribution systems and must
carry individual accounts for. the rural systems supplied by the Commission. Under
this system the more thickly settled areas, which enjoy the lowest rates on the continent, are building up large reserves and surpluses; 50 per cent, of the municipalities
are in a position to wipe out their entire electric debt. The consolidated balance-sheet
for 1941 for all municipalities operating their own distribution systems shows:— Z 76 PROGRESS REPORT.
Assets  $124,304,766
Liabilities (including depreciation reserve)       51,979,425
Surplus     $72,325,341
One-third of the surplus built up by the municipalities would more than have
provided all the moneys put up by the ratepayers of the Province for assistance to
rural electrification.
The present chairman of the Commission is convinced that the Ontario system is
not in the best interests of the Province, and that greater progress would have been
made if the Provincial Commission dealt in all cases with the ultimate consumer. His
views are supported by others, including the manager of a Municipal Commission, who
stated that residential consumers are supplied below cost at the expense of commercial
and industrial consumers.    This is due to the influence of Municipal Commissioners.
The chairman thinks that uniform rates throughout the Province would result in
unreasonable and embarrassing demands for extension of service, which would tend to
raise the general cost to all consumers. He thinks that the principle originally adopted
of service at cost is sound, but that some modifications are necessary. He aims to
adjust the wholesale cost of power to municipalities, which now varies (1941 figures)
from $15.47 to $80.25 per horse-power year, to provide for a maximum of $40, on the
ground that the effect on the larger areas with low cost would be negligible. He aims
at a uniform first block rate of 4 cents in all districts supplied in retail by the Commission in lieu of the present range of 3 cents to 6 cents. This would be brought about by
combining the present rural systems. As an offset he suggests that the criterion of
eligibility of service be restored to three customers per mile instead of two as at
present. He proposes to pool the generating costs in the three large contiguous
systems of Niagara, Georgian Bay, and Eastern Ontario. He thinks that some modification of the 50 per cent, construction grant should be made on the ground that the
better settled areas are now getting more assistance than is necessary. He believes
that too drastic a method of equalization of rates, which would raise the cost of power
to the larger cities, would result in some of these breaking away from the Commission
and setting up their own generating plants, with a consequent decided increase in cost
to all users in the Province.
Since the above was written the Commission has recommended that the service
charge be eliminated from farm and commercial light classes and be reduced to 56
cents in hamlet classes; that all rural districts be combined and that rates be made
uniform at 4 cents for the first block instead of from 3 cents to 6 cents as at present;
that minimum bills, which formerly amounted to $1 for the above classes be now 75
cents for farms and commercial light services and $1.67 for two-wire and $2.25 for
three-wire service in hamlets. It is estimated that by cutting out the usual provision
for a rate stabilization reserve the deficit for 1944, due to the above revenue reductions,
can be held down to $221,000, and it is expected that legislation will be introduced which
will permit the Government to reimburse the Commission to this extent. The experience of Ontario demonstrates clearly that any schedule of rates set up on the initiation
of a rural electrification scheme is liable to drastic downward revision due to the weight
of popular demand and that estimates of governmental assistance based on such a
schedule should be considered with that definite probability in mind.
22. MANITOBA.
Prior to 1919 electric power was supplied in Winnipeg and the vicinity by the
Winnipeg Electric Company and the City of Winnipeg Hydro Electric Commission, and
in a number of the cities and towns by local fuel plants. In 1919 the Manitoba Power
Commission was formed. This Commission purchased power from the Winnipeg utilities and began a transmission and distribution network to serve all communities of RURAL ELECTRIFICATION COMMITTEE. Z 77
over twenty persons in those parts of the Province where agriculture is the dominant
industry. The Commission gradually acquired nearly all the individual systems operated throughout the Province until at present only some half dozen communities are
separately served.
Up to the end of 1941 the Commission had spent $7,770,000, of which $7,280,000
was advanced by the Provincial Government and the balance borrowed from the Commission's replacement fund. The programme has been arrested by the war. It is
estimated that a further $2,500,000 will be required to complete the scheme as originally
proposed.
The Manitoba " Power Commission Act" requires that rentals on water-power
leases, less the cost of administration, be credited to a fund from which interest and
sinking fund on half the capital cost of electric plant, other than distribution in urban
areas, may be paid. With this assistance the Commission has made a number of rate
reductions and has gradually placed itself on a reasonably sound financial basis.
In 1942 the Commission served 561 farm customers at rates uniform with those
charged in the towns and hamlets—namely, 8 cents for the first 50 K.W.H. and 2 cents
for the balance used. The average consumption of these farm customers is approximately 900 K.W.H. per year. The chairman and manager of the Commission is a
strong advocate of uniform rates throughout the Province, ultimately including Winnipeg. He suggests that rural electrification be associated with the Housing Plan and
advocates drastic measures, even Provincial manufacture if necessary, to bring down
the cost of appliances to the consumer. He believes that a Provincial Commission,
operating throughout the Province and controlling electric service from the generating
plants to the ultimate consumer, pill be in the best interests of the public.
In 1942 the Manitoba Electrification Inquiry Committee, consisting of Dr. E. P.
Schmidt, Professor of Economics, University of Minnesota; J. W. Sanger, Chief Engineer, Winnipeg Hydro; E. V. Caton, Chief Engineer, Winnipeg Electric Company; and
Herbert Cottingham, Chairman of the Manitoba Power Commission, brought out a
report to the Provincial Government on a " Farm Electrification Programme." This
report discusses at considerable length the economy of the Province, the advantages of
power on the farm, the progress of farm electrification in Canada and elsewhere, postwar employment, demand—natural and stimulated, financing, rates, and cost of construction and appliances.
The findings of the Committee may be summarized as follows: That the Manitoba
Commission system can be expanded, to serve 25,000 of the 58,000 farms in the Province at a capital cost of $16,831,687 ($673.27 per farm) if capital can be secured at
3.5 per cent., if local help is used, if 1939 construction prices prevail, if 1.4 customers
per mile (80 per cent, of the total) can be signed up to pay a minimum of $3.60 per
month and use an average of 100 K.W.H. per month at rates of 8 cents for the first
50 K.W.H. and 2 cents for excess.
The probability of all these favourable conditions being combined is remote enough
to cast some doubt on the conservatism of the estimate of the ultimate cost to the taxpayer. This doubt is enhanced by the experience in Provinces more advanced in rural
electrification, where it has been found that the initial demand for service is overshadowed by the later demand for rates and minimum charges similar to those prevailing in the urban centres. One of the members of the Committee believes this later
demand will be insistent enough to secure progressive results. This member thinks
that private companies are on the way out, that rural electrification is not their natural
function, but is a matter of social reform which not being economically feasible must
be carried out by public agencies. He thinks that before any substantial results can
be obtained the Commission must take over both the Winnipeg Electric and the Winnipeg Hydro, and that if the Commission took over.the Winnipeg distribution and sold
at reasonable rates it could finance the rural scheme. Z 78 PROGRESS REPORT.
23. SASKATCHEWAN.
In 1941 it is estimated that in Saskatchewan less than 300 farmers out of 139,000
were supplied with electricity from central energy plants. The 4.7 per cent, shown in
the Dominion census is made up almost entirely by individual gas- and wind-driven
plants.    No organized effort has been or is being made to serve the farm population.
According to the chairman of the Saskatchewan Power Commission, there is no
serious demand for farm electrification and the Government has kept away from the
problem. The Province has the highest per capita debt in Canada, due to the borrowing of $80,000,000 for relief purposes in the drought period. Experience with widespread telephone service has been rather discouraging. Saskatchewan has some 75,000
farm telephones operated by local districts with long-distance connections. During the
drought years these districts went into default and are only now getting out of the red.
The cities and towns built up their own systems, operated by municipal or by
private companies, and some of these have built up quite large surpluses or have used
electric reserves for general purposes. No aid has been available from the more thickly
to the sparsely settled areas.
Any lessons which may be learnt from the present study from the experience in
Saskatchewan are negative in character. The practices in that Province have been
detrimental to Provincial-wide service.
Some general notes on the power situation may be of interest. The Saskatchewan
Power Commission was set up about 1927 or 1928 in response to a general demand for
public ownership. At that time most of the power developments were municipal.
While the Commission was in process of formation private interests came in and
bought up a number of municipal utilities. Regina f etained its system which is still
operated by the municipality. Saskatoon turned its generating plants over to the
Commission but retained its distribution system. Moose Jaw, with a plant worth
about $1,000,000, according to a valuation by a board of engineers appointed by the
Commission, sold out to the National Light and Power Company, an Iowa concern, for
$3,000,000. This money was dissipated by Moose Jaw during the depression years.
The municipal plants have maintained relatively high rates and have used the revenue
from the electric utility for general municipal purposes. Regina now has an annual
surplus on its electrical operation of $750,000; Saskatoon, $400,000; Swift Current,
$50,000.
Some of the municipalities that sold to private interests are now attempting to take
back control. Yorkton sold to Canadian Utilities in 1928 on a ten-year franchise
extended from time to time. This municipality now wants to take back the distribution
system but the Canadian Utilities refuses to sell power in bulk. Yorkton has
approached the Commission to undertake the supply.
The wholesale rate charged by the Commission to Saskatoon in 1942 was 1 cent
per K.W.H. This will be lower in 1943. The Commission operates steam generating
plants at Saskatoon and North Battleford and has fifteen Diesel generating plants at
other points. The Commission's transmission system is interconnected with private
companies at eleven points. It is continuous from Moose Jaw north through Saskatoon
to Shellbrook, west to Rosetown and east to Punnichy. Several small transmission
systems are operated, for which power is generated by the Commission or purchased
from private companies. The Canadian Utilities, Limited, the Dominion Electric
Power, Limited, and the National Light and Power Company operate quite an extensive
system of transmission-lines in the southern part of the Province.
The Commission purchases coal for the Saskatoon plant from Drumheller at $3.25
per ton delivered. The municipality of Regina uses Crowsnest coal at $6 per ton
delivered.
The Commission has a sliding scale of service charges based on the revenue
collected in the community and ranging from $1.25 where the revenue is under $2,000 RURAL ELECTRIFICATION COMMITTEE. Z 79
to 50 cents where the revenue is over $17,000. The rate schedules in the smaller
towns supplied by the Commission are 10 cents or 12 cents for the first 30 K.W.H.,
SVs cents or 5 cents for the next 20 K.W.H., and 3 cents or 3% cents for all over
50 K.W.H. Rates to the few farms served are 1 cent more per K.W.H. than in the
neighbouring town.
24. ALBERTA.
The situation with respect to rural electrification in Alberta is similar to that in
Saskatchewan. No concerted effort has been or is being made to supply electric energy
to farms.
There is no power commission in Alberta, and such central station energy as has
been supplied to farms has been by private utilities. The cities of Lethbridge, Edmonton, and Calgary, where municipal distribution systems are operated, had in 1941 a total
of only sixty-one farm customers connected.
The Calgary Power Company, and its subsidiary the Prairie Power Company, in
1941 distributed to 19,630 services in 214 towns, villages, and hamlets. The average
consumption for December, 1942, was 112 K.W.H. Of these services, 372 are classified
as farms. The Company calculates that the average capital cost of its farm services
is $599.29, of which an average of $245 was contributed by the customers. The Company figures the average annual cost of service, including 6 per cent, return on its own
investment, as $104.30 and the revenue as $97.17 from an annual consumption of 1,357
K.W.H. It is pointed out that these are the pick of the farms within easy reach of
the transmission-lines, and the consumption is well above the average that may be
expected of users under a general rural electrification scheme. Standard rates include
a service charge varying from 30 cents to $2 in inverse ratio to the revenue derived
from the distribution area and an energy rate of 10 cents per K.W.H. for the first 30,
5 cents for the next 20, and 2% cents for the excess.
Parties in close touch with the situation are of the opinion that electrification of
farms cannot be made self-sustaining under present or immediately future conditions;
that even electrification of those farms most conveniently situated will require subsidy
in some form or other; that while the benefits of farm electrification are well recognized, they must be weighed against those resulting from other possible expenditures
of public funds on such projects as home improvement, water-supply, sewage-disposal,
roads, health services, education facilities, mechanization of equipment; that relative
costs must, for the time being, confine central station service to those, farms within
reach of the existing transmission and distribution systems; that in those areas'beyond
the reach of the present lines service must be provided in many cases by local plants
for towns and hamlets before extension to farms can be considered.
They do not think that acquisition of the private systems is essential to extension
of rural electrification. They believe that, with efficient regulation, the benefits derived
from the experience of the company personnel, from the provision of a buffer between
the public and the Government, and from the interest of the companies in increasing
sales, will outweigh the prejudice against large corporations. They think that assistance on the Nova Scotia plan to private utilities within the areas they serve, and the
formation of a commission to purchase or generate power, and in course of time build
up transmission and distribution lines to serve other areas, may well answer the
purpose. They doubt the willingness or ability of many of the farmers to install
service even where other conditions are favourable.
The supply of central station energy in Alberta is confined almost entirely to a belt
100 miles wide, running from near the International Boundary to a point about
35 miles north of Edmonton, and to two strips following the railway-lines east of
Edmonton to the Saskatchewan boundary.    The Cities of Edmonton, Lethbridge, Medi- Z 80 PROGRESS REPORT.
cine Hat, and the town of Cardston have municipal fuel plants. The City of Calgary
purchases from the Calgary Power Company and has a municipal distribution system.
Calgary Power Company has five hydro plants aggregating 91,780 horse-power,
and six fuel plants aggregating 20,790 horse-power. Canadian Utilities has five fuel
plants aggregating 7,018 horse-power. These companies distribute throughout the
belt above described, outside the boundaries of the municipal distribution systems. PART IV. RESUME.
25. Resume.
25. RfiSUMfi.
The factual data indicate a wide extent of some degree of electrical service, there
being in all 206,723 connected consumers, representing possibly 76 per cent, of the total
population. The graphic analysis of the cost of electricity for domestic uses (pages
37-39) and the tabulation of charges (pages 40-43) indicate that charges for limited
lighting purposes, 20 to 30 K.W.H. per month, are with few exceptions reasonable.
Of the larger distribution systems Greater Vancouver, Greater Victoria, Fraser Valley,
Kimberley, Rossland, Trail, Prince Rupert, and Nelson have electricity available at
rates which permit of some competitive and wider uses, such as for refrigeration,
cooking, and other household appliances. A well-equipped house will use 200 or more
K.W.H. per month and except in the above-named communities the cost of 200 K.W.H.
per month is upwards of $6;* in many areas the cost is prohibitive. Consequently
in 90 per cent, of the distribution areas the use of electricity is limited to lighting only.
In fact, the plant. equipment in many cases apparently has been installed for lighting
only; the utility is operated for lighting only and the operation cannot be regarded
as a modern electric utility service.
It has been shown that the average annual consumption for domestic purposes
throughout the Province is less than half that of comparably sized communities in
Ontario and the average unit cost is more than double (see pages 28, 29, 30, and 31).
Service limited to lighting cannot support an efficient utility in a town and much less
an expansion to adjacent rural areas. The fundamental importance of increased average use, lower unit costs, and adequate facilities has been stressed in the first part of
this report. In British Columbia generally the relatively low average consumption,
relatively high average costs per K.W.H., and limited facilities indicate conditions that
are not conducive to improvement in the quality nor the availability of electric service.
These are conditions that make it difficult to maintain a reasonable utility service anywhere and especially in the small towns, and in our opinion these conditions cannot be
remedied simply by treating the symptoms. In the urban distribution systems the
charges for limited uses of energy do not exceed those in many comparably sized communities in other Provinces. But the rate schedules are not as promotional in character; i.e., the higher consumptions are not available at rates that will promote the
highest average use. This is particularly apparent in the smaller distribution areas.
Even the adjustment of rate schedules cannot, of itself, lead to high average use and
low average cost, for the third factor—production and distribution plant capacity—
must be considered.
Any appreciably increased consumption will necessitate enlarged plant, which in
turn will require additional capital expenditure. The ability of the utilities to obtain
the necessary capital under reasonable terms to permit improved service to present
customers and extensions to new customers would appear to depend upon the correction
of certain weaknesses in the utility business, some of which are:—
1. Excluding the large industries such as the paper-mills, West Kootenay Power
and Light Company (97 per cent, of whose production is used by Consolidated Mining
and Smelting Company), and B.C. Electric Railway Company group, there are few
utilities in the Province with sufficient volume of business to permit adequate and
economical financing and the employment of the administrative and executive organizations essential to a business of this nature.
* Note.—This does not apply to the townsites served by the Powell River Company and Pacific Mills, where
domestic rates are exceptionally low.
81 Z 82 PROGRESS REPORT.
2. While the managing personnel of the utilities are rendering a degree of service
in small communities they can only make the best of a difficult task, for they cannot
maintain a progressive utility service for a few hundred consumers. Where a distribution system reaches only 200 customers the employment of one competent man requires
$1 per month for each customer; and an efficient electric utility cannot be operated
as a one-man job.
3. There are thirty-one operators of private utilities. Of the energy sold to the
public in 1942:—
One company generated  85.35 per cent, and distributed 84.55 per cent.
Another company generated.____    5.68 per cent, and distributed   4.59 per cent.
Another company generated     2.24 per cent, and distributed   2.24 per cent.
Another company generated..—    1.28 per cent, and distributed   1.28 per cent.
Another company generated.—    0.51 per cent, and distributed   2.22 per cent.
Five companies generated  95.06 per cent, and distributed 94.88 per cent.
While twenty-six other companies generated      0.76 per cent, and distributed   0.49 per cent.
Nineteen cities and municipalities generated     1.18 per cent, and distributed   4.03 per cent.
4. Each of the above thirty-one privately owned and nineteen municipally owned
utilities pursues its own local policy; each has its own method of financing; each has
its own administration and management; each has its own idea of accounting and its
own criterion of service.
5. A large part of the profits of the privately owned utilities are paid over to the
Dominion Government in taxation, and all the profits of the municipally owned utilities
are paid over to the municipalities to reduce local taxation.
6. In the case of the smaller companies rate revisions might increase consumption
but increased consumption could not be supplied from existing plants and new plants
could not be financed on reasonable terms.
f
It is evident that the quality of service and the conditions under which it is
provided,  particularly  in  the  smaller towns,  cannot  be  improved  and  the  existing
facilities cannot be expanded to rural areas without considerable reorganization of the
central station industry.
The following are among matters which require further consideration:—
(1.)  Methods of obtaining adequate energy supply for all areas which can
support  a  distribution   system.
(2.)  Methods of distribution.
(3.) The financial problems involved in furnishing electric service.
(4.)  Possibilities of reorganizing the utility industry to reduce administrative, management, and financing costs.
The effect of Dominion and municipal taxation, the position of municipally owned
utilities, the financial resources of the privately owned utilities, and the position of
industries engaged primarily in other than utility business are matters which in our
opinion require further time for study before final conclusions can be reported.
VICTORIA,  B.C. :
Printed by Charles F. Banfield, Printer to the King's Most Excellent Majesty.
615-144-77--.

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