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PROVINCE OF BRITISH COLUMBIA Report of the Rural Electrification Committee As of January, 1945 British Columbia. Legislative Assembly 1945

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Full Text

 PROVINCE OF BRITISH COLUMBIA
Report
of the
Rural Electrification Committee
As of January, 1945
PRINTED by
AUTHORITY OF THE LEGISLATIVE ASSEMBLY.
VICTORIA, B.C.:
Printed by Charles F. Banfield, Printer to the King's Most Excellent Majesty.
1945.  Rural Electrification Committee,
Victoria, B.C., January 16th, 1945.
The Hon. John Hart,
Premier, Parliament Buildings.
Sir,—We beg to submit our final report on the extension of rural electrification
in the Province. The further studies indicated as necessary in the letter of submittal
with our Progress Report have been completed and we trust that all the subjects set out
in your instructions to us are now fully covered. Our further studies do not indicate
that any changes are necessary in the findings arrived at in our Progress Report.
In general, as compared with other Provinces in Canada, a high percentage of our
rural population is supplied with electricity, the use of which is mainly confined to
lighting purposes. Except in those areas supplied by some of the larger companies,
the rates are so high that any more extensive and varied use of electricity can not be
expected without radical changes in the organization of the industry.
It has become increasingly clear that rates which will permit the use of electricity
other than for lighting can only be made possible if rural service is combined in some
way with urban and suburban service. It is also clear that unless other uses are
developed the rates for electric service cannot be materially reduced.
The assistance of the various organizations mentioned in our Progress Report has
been continued throughout and is again 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:
(b.)  Numbers of consumers presently served:
(c.)   Numbers of potential consumers not presently served and the reason
therefor:
(d.)  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:
(6.)  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:
(&.)  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.  INDEX.
Page.
Summary of Findings    9
Method of Treatment—■
1. Rural areas in which electrical service is now available  11
(a.) The source of electrical energy and the terms and conditions under
which the service is furnished  12
(6.)  Numbers of consumers presently served  16
(c.) Numbers of potential consumers not presently served and the
reason therefor  17
(d.) Methods of improving the supply and availability of electrical
service    20
2. Rural areas in which electrical service is not now available  26
(a.)  Number of potential consumers  27
(6.)  Potential sources of electrical energy for such rural areas  27
(c.)  Proposed methods of furnishing service  29
3. The feasibility of supplying numbers of presently isolated communities from
" grid " transmission systems and central production plants  31
4. Preliminary estimates of the capital cost of works proposed for increasing
the supply and availability of electrical service  32
5. Estimated rates under which electrical service may be furnished under
proposed plan  37
6. The financial problems involved in furnishing electrical service:
(a.) Whether financing of extension projects can be handled by existing
utilities  39
(6.) Whether rates pursuant to extensions could be carried by new consumers without concurrently increasing unduly costs to existing
consumers  40
(c.) If projects cannot be on a self-sustaining basis, how could they be
financed?  41
7. Other technical and economic information in respect to rural electrification
within the Province  42
Resume  44  SUMMARY OF FINDINGS.
(As set out in the Progress Report.)
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.
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.
3. The average use in rural areas is relatively low.
4. Average use and cost of service are closely interdependent.
5. Sixty-five separate organizations are engaged in providing central station service in the Province.
6. For statistical purposes service in the Province may be divided into 112 distribution systems.
7. There are 206,723 customers of electric service in the Province, of whom 38,227
may be classified as rural.
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.
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.
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.
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.
15. Taxation (Dominion taxes alone approximate 20 per cent, of revenue) is an
important factor in the cost of service.
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.
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.
18. The undeveloped water-power of the Province is not an important factor in
the extension of rural electrification.
19. The sparsity and distribution of population in the Province makes a general
Provincial grid system impractical.
20. No material extension of rural electrification can be made on a self-sustaining
basis without a reorganization of the central station industry. V 10 FINAL REPORT.
METHOD OF TREATMENT.
In this report the sequence of the subjects set out in the Order in Council appointing the Committee is rigidly followed and the questions in that Order are answered
as fully as the information before the Committee permits. The numbering of the subjects as set out in the Order is followed in the chapters of the report. In reporting on
" Rural areas in which electrical service is now available " the utilities are divided into
four groups: 1, 2, 3, and 4, based on size and ownership, for more convenient analysis.
Under " Proposed methods of furnishing service " (2 (c)), the areas are regrouped as
I., II., III., and IV.
The calculations of rates and bills for Vancouver Island South in this Report are
based on the rates in effect prior to the reduction made on January 1st, 1945. Final Report, Rural Electrification Committee.
1. RURAL AREAS IN WHICH ELECTRICAL SERVICE
IS NOW AVAILABLE.
It has been pointed out in the Progress Report of this Committee of January 24th,
1944, page 20, that "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." Extensive rural communities adjacent to cities or
towns with good electrical service can be supplied much more economically than isolated
communities far removed from an efficient urban utility. The availability of service
in rural areas depends in large measure upon their location in respect to urban centres.
If the latter have adequate and efficient service it is usually possible to extend the distribution systems into the rural areas. If, however, the towns are too small to permit
the development of an efficient urban utility neither the townspeople nor their rural
neighbours will have available electrical service in accordance with modern standards.
There is only one community in British Columbia where an electric utility has been
built and operated solely for a rural community. There are several rural areas served
by extensions of the city systems; several which could be served by extensions of the
city or suburban systems; and several city and suburban systems which are incapable
of adequate service within their own boundaries. If the rural electrical service is to
be self-sustaining it must be conditional upon urban and suburban service. It is a
simple matter to supply electricity to fifty farms on the borders of a city of 100,000
population; it is a much more difficult matter to supply fifty farms surrounding a
town with 2,000 population. Thus it is found, in British Columbia as elsewhere, that
those rural areas adjacent to larger cities and towns enjoy a higher standard of service
than those which are isolated or those near small towns. Statistics on service in rural
areas will have more meaning, therefore, if accompanied by corresponding statistics
on the associated urban services.
There are now five extensive areas—later referred to in Group 1—-served by
privately-owned utilities in which electricity may be said to be available to all who can
meet the conditions of service and pay the current rates. The degree of availability
varies. The fact that a resident, who can afford to contribute $100, can obtain electric
lighting service for 12 cents per K.W.H. does not make electrical energy available to
the general public. Availability, according to modern standards of service, must be
general and at the option of the subscriber. The service must be reliable and adequate
and it must be offered at rates which will permit the widest possible uses.
Where electrical service is furnished its efficiency and rates, including conditions
of service, will be reflected in the average consumption and the average K.W.H. cost
to the consumers. Each of the five important areas above mentioned receive special
consideration in this report on rural electrification. This is because they contain
168,390 consumers out of a total of 210,000 for the whole Province, and 6,356 potential
rural consumers out of a total of some 10,000 who might be included in a rural
electrification plan.
Outside these five areas there are numerous smaller groups in rural communities
adjacent to other privately-owned and municipally-owned plants. This report contains
statistics relating to these under the heading " Other Electrical Service Areas."
The survey of the electrical services in the Province has clearly indicated two
important facts:—
(1.)  The practical impossibility of drawing a line between " rural electrification " and city and suburban electrification.    Some of the distribution
11 V 12 FINAL REPORT.
systems in cities and towns have so few consumers that furnishing
service is attended by difficulties equal to those in rural areas. On the
other hand, an extensive rural area, such as the Fraser Valley, contains
a number of sizeable towns which tend to increase the average density
of population for the whole area, thereby simplifying the problem of
distribution. It is therefore, impracticable and misleading to attempt
any rigid classification of " rural " areas.
(2.) The phrase "areas in which electrical service is now available" can be
applied only with qualifications. A certain degree of electrical service
is now " available " to 209,738 customers of all classes. The statistics
contained in the Tables 3 and 4 reflect something of the degree of
availability. They indicate that in three out of the five extensive rural
areas served by privately-owned utilities the average use of electricity
is low and the average unit costs to consumers is high. The availability
is conditional upon the consumers' ability to pay these charges. For the
one outstanding non-competitive use of electricity, lighting, it is available; for the numerous competitive uses of electricity—cooking, auxiliary
heating, refrigeration, etc.—it is available to those who can afford it.
It is upon the development of the competitive uses that volume production
and low unit costs depend.
Subject to the foregoing qualification, statistics have been prepared relating to
electrical service in four areas where it is now available, namely:—       consumers.
Group 1. Five large areas supplied by privately-owned utilities 169,390
Group 2. Other towns and rural areas where service is furnished by privately-owned utilities     15,874
Group 3. Areas  where  service  is  furnished by  municipally-
owned utilities     22,180
Group 4. Areas where service is furnished by industries       2,294
209,738
(a.) The Source op Electrical Energy and the Terms and Conditions
under which the Service is furnished.
Group 1.
(i.) In the Lower Fraser Valley, including Mission, Maple Ridge, Pitt Meadows,
Surrey, Langley, Delta, Matsqui, Abbotsford, Sumas, Chilliwack City and Municipality,
Kent, Dewdney, and Nicomen, service is furnished by the British Columbia Electric
Railway Company and its associated and subsidiary companies over the transmission
network which supplies Vancouver, University of British Columbia lands, Burnaby,
Barnet, North Vancouver, West Vancouver, Richmond, New Westminster, loco,
Coquitlam, Port Coquitlam, and Port Moody. The energy is generated by the following
plants:—
Hydro-electric— k.v.a.        k.v.a.
Buntzen No. 1  21,000
Buntzen No. 2  26,700
Alouette  10,000
Stave Falls   65,625
Ruskin   88,000
Total   211,325
Steam-electric—
Vancouver plant   20,130
Total   231,455 RURAL ELECTRIFICATION COMMITTEE. V 13
The B.C. Electric companies have experienced a shortage of power for the whole
Lower Mainland area during the past summer which has been aggravated by low-water
conditions. Additional power installations will be dictated by the needs of the metropolitan area of Vancouver and the energy requirements for all the rural areas in
the Fraser Valley will be incidental.
The Lower Fraser Valley area includes several fair-sized cities and towns, amongst
others Chilliwack, Abbotsford, Mission, and Langley. It can hardly be classified as
a rural distribution area, but the rates and conditions of service are the same throughout.    For domestic service the rates are:—
The first 30 K.W.H. per month per 1,000 square
feet of floor area  5 cents per K.W.H.
The next 200 K.W.H. per month  2 cents per K.W.H.
All consumption per month over 230 K.W.H  1 cent per K.W.H.
Minimum monthly bill, 50 cents.
This is the same rate as that charged in the City of Vancouver except that the first
30 K.W.H. per month per 1,000 square feet of floor area are charged at 1 cent per
K.W.H. more.
The conditions under which service is extended in all the Lower Mainland area
require a guaranteed annual revenue for each of the first four years equal to 25 per cent,
of the cost of installation. That is, if the cost of an extension to one consumer is $300
the Company require the consumer to guarantee for four years a revenue of 25 per cent,
of $300 or $75 per year. Energy to this value may, of course, be used by the consumer,
(ii.) The Okanagan district from Sicamous to Winfield and Okanagan Centre,
including Salmon Arm, Enderby, Armstrong, Vernon, Coldstream, Okanagan Landing,
Lumby, Lavington, and Oyama, is served by the West Canadian Hydro Electric
Corporation, Limited, with energy produced at its Shuswap Falls 6,500-K.V.A. hydro
plant. Approximately one-third the present annual output of this plant is delivered
under a short-term contract to West Kootenay Power and Light Company at Kelowna.
There is, therefore, considerable capacity available for further distribution in the area.
The service is reliable, but, as the whole operation is limited to about 4,000 subscribers over a wide area, the per customer cost for financing and necessary administration tends to high rates and consequently low average consumption.
The rate structure is the same for all consumers, but monthly bills are subject to
20 per cent, discount in Vernon and 10 per cent, elsewhere.
The domestic lighting rate follows:—
First 30 K.W.H. per month at 12 cents per K.W.H.
Next 30 K.W.H. per month at 10 cents per K.W.H.
Over 60 K.W.H. per month at 5 cents per K.W.H.
Minimum monthly bill $1 in Vernon, Armstrong, Enderby, and Salmon Arm;
$2 elsewhere.
Discount:  Vernon, 20 per cent.;  elsewhere, 10 per cent.
There is an optional combination domestic rate applicable to higher consumptions
as follows:—
First 30 K.W.H. per month at 10 cents.
Next 60 K.W.H. per month at 3 cents.
Next 100 K.W.H. per month at 2V2 cents.
Over 190 K.W.H. per month at V-/2 cents.
Minimum bill, $3.
Discount; Vernon, 20 per cent.; elsewhere, 10 per cent. V 14 FINAL REPORT.
Service installations are made on the basis of a capital expenditure equal to
36 times the minimum monthly bill. Thus for domestic lighting service outside
the cities of Vernon, Armstrong, Enderby, and Salmon Arm, the corporation will
expend 36 times the $2 minimum monthly bill for this class of service, or $72. The
subscriber pays any excess. For a combination service with a $3 minimum monthly
bill the corporation will expend $108.
(iii.) There are twenty-one rural communities served by the West Kootenay Power
and Light Company, Limited, namely: Benvoulin, Black Mountain, etc.; Bonnington,
South Slocan; Casino; Castlegar, Robson; Crescent Valley; Creston, Wynndel, Erick-
son; Fruitvale; Grand Forks (rural), Cascade, Laurier; Greenwood; Hedley, Ellison;
Kaleden; Keremeos; Kinnaird; Naramata; Okanagan Mission; Oliver; Osoyoos;
Salmo;  Sheep Creek; Waneta; Ymir.
The Creston, Wynndel, Erickson distribution system is supplied from the Company's Goat River hydro-electric plant of 825-K.V.A. capacity.
Energy for the other distribution areas is generated at the Company's hydroelectric plants on Kootenay River:— k.v.a.
No. 1. Lower Bonnington      35,000
No. 2. Upper Bonnington      64,000
No. 3. South Slocan      52,500
No. 4. Corra Linn      45,000
Brilliant       64,000
260,500
Over 97 per cent, of the output of these plants is used by Consolidated Mining and
Smelting Company, Limited, at Trail.
The West Kootenay distributes electricity in Trail and Rossland and supplies
energy wholesale to the cities of Penticton, Summerland, and Kelowna. It also supplies
energy for distribution by the Princeton Power and Light Company. The Company's
60,000-volt transmission-line from the Kootenay plants is connected with the West
Canadian Hydro Electric Corporation's system near Kelowna and with the Granby
Consolidated Mining, Smelting, and Power Company at Allenby.
West Kootenay Power and Light Company has ample power supply for its distribution systems and the service is reliable.
The domestic rate structure is not uniform. In the twenty-one distribution areas
the first block varies from 20 to 100 K.W.H. and the rate range is 10 to 14 cents
per K.W.H. In some cases there is a second block of from 25 to 100 K.W.H. at rates
of 3 to 10 cents per K.W.H. The lowest rate applying to the highest consumption is
4 cents per K.W.H. In all but one district the monthly bills are subject to 10 per cent,
discount for prompt payment.    The minimum monthly charge is from $1 to $2.50.
(iv.) Vancouver Island, south of the Cowichan Land District, is now served by
the British Columbia Electric Railway Company, Limited, and its associated and
subsidiary companies. This district includes the City of Victoria, Esquimalt, Oak Bay,
and Saanich. All consumers within a 3-mile radius of Victoria City Hall are supplied
under City of Victoria rates. Cobble Hill, Mill Bay, Shawnigan Lake, and Sooke are
supplied at rates which result in a monthly charge 80 cents higher than in Victoria for
consumptions of 40 or more K.W.H. In other districts nearer Victoria the monthly
charge is only 60 cents higher than in the city. RURAL ELECTRIFICATION COMMITTEE. V 15
Energy is supplied from the following plants:—
Hydro-electric— k.v.a.      k.v.a.
Jordan River  27,000
Diversion (dam) plant     1,875
Goldstream      2,220
Total      31,095
Steam-electric—
Brentwood      13,000
Total     44,095
The Company delivers energy at Duncan for distribution by Nanaimo-Duncan
Utilities.
In the past year it has been necessary to restrict the use of electricity in the
Southern Vancouver Island area due to power shortage which has been aggravated by
low water run-off and war-time scarcity of fuel for the Brentwood steam plant.
The service has become generally available in rural areas in Southern Vancouver
Island; it is reliable and available to all who can meet the conditions of service. The
subscriber must guarantee for five years an annual revenue equal to 25 per cent, of
the capital cost of the extension.
(v.) Vancouver Island Centre, from the southern boundary of Cowichan Land
District to Craig's Crossing, including Duncan and Nanaimo, is served by Nanaimo-
Duncan Utilities, Limited.
From Craig's Crossing to Dashwood, including Parksville and Qualicum Beach,
the National Utilities Corporation, Limited (a subsidiary of B.C. Electric Railway
Company, Limited), operates a distribution system.
The Jordan River and Brentwood plants of B.C. Electric's Vancouver Island Power
Company deliver 80 per cent, of the energy for this area over a 60,000-volt transmission-line to Duncan. The Nanaimo-Duncan Utilities operates 60,000-volt transmission
from Duncan to Nanaimo, and sells energy to the City of Ladysmith for distribution
by the latter. The Company delivers energy at Craig's Crossing, a few miles above
Nanaimo, to National Utilities Corporation for distribution in Parksville and Qualicum.
The total energy purchased in 1942 by Nanaimo-Duncan from the B.C. Electric
companies was 19,471,700 K.W.H.
The Company has a small hydro-electric plant, 1,225 K.V.A., at Nanaimo which
generated 4,986,000 K.W.H. in 1942, and a Diesel engine plant, 295 K.V.A., at Duncan,
which generated 9,765 K.W.H. in 1942.
Service has been widely distributed by the Company over the rural areas adjacent
to and between Duncan and Nanaimo, as well as on Saltspring Island. The Company
reports only a small number of unconnected rural premises.
The service has been reliable but expensive both in the cities and rural areas.
This Company is faced with the necessity of obtaining a source of power for
Nanaimo and Duncan and the intervening rural areas. The B.C. Electric companies
are also short of power for the Vancouver Island South area. Nanaimo-Duncan
Utilities will require 10,000 to 15,000 horse-power as soon as it can be obtained.
A more promotional rate structure would undoubtedly lead to greatly increased consumption of electricity in both city and rural areas. V 16
FINAL REPORT.
The present domestic lighting rates are:-
Nanaimo
and
Suburbs.
Nanaimo
Rural.
Duncan
and
Suburbs.
Duncan
Rural.
Saltspring
Island.
$0.50
.07
.06
.04
1.00
5%
$0.85
.07
.06
.04
1.00
5%
$0.50
.09
.06
.04
1.00
5%
$1.00
.09
.06
.04
1.00
5%
$1.25
First 20 K.W.H	
.09
Next 30 K.W.H                                  	
.06
Over 50 K.W.H..- -   	
.04
Minimum charge 	
Discount  	
3.00
There is a combination domestic rate applicable to large consumptions which is
based on a straight 3 cent per K.W.H. in addition to a service charge and a minimum
bill as follows:—
Nanaimo and suburbs   $1.75
Nanaimo rural     2.25
Duncan and suburbs     2.25
Duncan rural     2.75
Saltspring Island     3.00
Bills under this schedule are subject to 5 per cent, discount except in Saltspring
Island.
In the Parksville-Qualicum districts served by National Utilities Corporation,
Limited, with energy purchased from Nanaimo-Duncan Utilities, the domestic rates
are as follows:—
First 50 K.W.H. at 10 cents per K.W.H.
All over 50 K.W.H. at 3 cents per K.W.H.
Minimum monthly bill $2 for ordinary two-wire service and $3.50 for three-
wire service.
The Company maintains at Qualicum a Diesel-operated auxiliary plant of 125-
K.V.A. capacity.
The five areas outlined above, three on the Mainland and two on Vancouver Island,
may be said to have electrical service available.
Groups 2, 3, and U.
No attempt is made to enumerate the sources of energy and the terms and conditions under which the service is furnished in these groups as the majority of the
utilities are small and the conditions of service varied.
Analysis of Rates and Average Consumption.
Something of the adequacy and the efficiency of the service in all groups may be
gathered from Tables 3 and 4 at the end of this report.
Table 3 shows the amount of monthly bills for various consumptions in K.W.H.
Table 4 shows the total number of consumers, the average annual domestic consumption and the average per K.W.H. charged for domestic, commercial, and industrial
energy respectively. There is also shown the number of potential customers who could
be served from the existing systems or extensions thereto.
(6.) Number of Consumers presently served.
The numbers of consumers presently served under varying degrees of availability,
urban and rural, according to classifications made by the various distribution agencies
are as follows:— RURAL ELECTRIFICATION COMMITTEE.
V 17
(The classifications between " urban " and " rural " consumers have little significance except in the case of Group 3, where the distinction is made between consumers
within municipal boundaries and those beyond such boundaries.)
Consumer Classification.
Group 1.
Group 2.
Group 3.
Group 4.
Total.
Urban—
121,306
18,966
3,622
28
50
21
11,464
2,710
469
30
1
19
15,833
2,772
523
15
1,497
131
26
2
8
150,100
Commercial  .. _   	
24,579
4,640
75
51
1
49
Totals                          '  	
143,993
14,693
19,144
1,664
179,494
Rural (outside city, town, and village) —
22,480
2,504
363
26
24
1,048
108
20
3
2
2,849
142
41
2
2
581
47
1
1
26,958
2,801
Industrial.-   	
425
32
28
Totals        	
25,397
1,181
3,036
630
30,244
169,390
15,874
22,180
2,294
209,738
(c) Numbers of Potential Consumers not presently served
and the Reasons therefor.
In 1943 the Committee made a general survey of the Province with a view to locating and determining the number of potential rural consumers within reasonable
economic distance of existing distribution systems or centres of population that might
support a distribution system. In the case of the lower Fraser Valley and areas on
Vancouver Island adjacent to the British Columbia Electric Railway Company the
survey was made by the Company. The Nanaimo-Duncan Utilities Corporation and
Columbia Power Company assisted with information in their respective territories.
The Committee's staff covered 5,281 miles of highway. The object of the survey was
to locate the number of possible consumers wherever the average density was three or
more to the mile of line required, in groups within practical reach of distribution
systems.
The survey disclosed that 9,387 potential rural consumers are so located that they
could be included in the first stage of a rural electrification plan. There may be others
who could be and would be included eventually if the first stage is completed. As
suggested in the Progress Report, no material extension of rural electrification can be
made on a self-sustaining basis until efficient and economical service is established in
the urban systems which must be expanded into the adjacent rural areas.
In addition to the potential rural consumers there have been reported to the Committee 390 potential consumers in the urban sections where some degree of service is
now available.
Potential consumers not presently served, where there is an average density of not
less than three per mile are located as follows:— V 18 FINAL REPORT.
Group 1.—Five Extensive Areas requiring Extensions of Privately-owned Systems.
Potential Consumers
not presently served.
Urban. Rural.
(i.)   Lower Mainland, Fraser Valley   253 3,128
(ii.)  Okanagan  District   1,185
(iii.)   Areas  supplied  by  West  Kootenay  Power
and Light Company  1,700
(iv.)  Vancouver Island South  342
(v.)  Vancouver Island Centre    443
253 6,798
Group 2.—Other Areas requiring Extensions of Privately-owned Systems.
Mainland—
Burns Lake     21
Elko   59
Golden      15 8
Hazelton     21 53
Hope   85
Invermere      12 160
Kamloops  234
Kimberley   22
Michel   19
Nakusp   397
Prince Rupert   40
Quesnel      17 14
Sechelt   103
South Wells   57
Terrace (no public utility now operating)   195
Vanderhoof     40 13
Wardner     71
Williams Lake  .     20 31
125 1,582
Vancouver Island—
Alberni   89
Alert Bay  9
Courtenay-Campbell River  130
Lake Cowichan    50
Royston  .  14
292
125 1,874
Carried forward...., 378 8,672 RURAL ELECTRIFICATION COMMITTEE. V 19
Potential Consumers
not presently served.
Urban. Rural.
Brought forward 378 8,672
Group 3.—Areas requiring Extensions of Municipally-owned Systems.
Courtenay-Comox     60
Cranbrook     45
Fernie    92
Grand Forks   25
Kaslo  .  25
McBride  '  6
Merritt      12 58
Nelson   .  54
Revelstoke   228
Summerland     61
12 654
Group U.—Areas requiring Extensions of Systems operated by
Industries and Institutions.
Lillooet   61
390 9,387
The reasons the foregoing 10,000 potential consumers are not presently served vary
according to the conditions of service in the respective systems which require extensions
to serve them. The total volume of business in any one area would be inadequate to
support a special undertaking to furnish electrical service. The only practical method
involves expansion of the existing distribution systems and in most cases the generating
capacity. In Section (d) of this report, immediately following, each of these groups
is discussed and the general methods proposed for improving the supply and availability
of service suggest the reasons these groups are not served.
(1.) In general the extension policies of existing utilities are based on individual
services or small groups, rather than on extensive areas as a whole. This policy has
permitted expansion to those who could from the first guarantee the utilities' estimate
of the cost of service. It is a costly method of negotiating contracts and of building
extensions. It has resulted in service to those requiring the least outlay of capital and
has increased the difficulty of extending to the more remote. Under this policy the
utilities have taken the " cream " of the business, including the cities and suburban
areas, and left the " thin milk."
(2.) Except in the lower Fraser Valley and Vancouver Island South areas the rates
for electrical service in rural areas are not such as to encourage its installation or use.
(See Table 3.)
(3.) The small utilities do not own adequate generating facilities to supply more
than a necessary lighting service to their existing distribution systems. Rates are
high and consumption consequently limited, making for a continuation of high costs.
They have not the capital resources to build extensions to their generating plants or
distribution systems, and to carry on through a considerable period during which a load
might be developed under a promotional rate schedule.
(4.) The problem of rural electrification is inseparable from that of electrification
for central cities and towns. The latter must have adequate, efficient, and economical
service before rural electrification can be provided. V 20
FINAL REPORT.
\d.) Methods of improving the Supply and Availability
of Electrical Service.
Group 1.—Five Extensive Areas where Rural Service is Available.
These five areas, listed in Tables 3 and 4, include large groups of rural consumers
so located in relation to existing facilities that the problem of improving the supply and
availability of service is simplified in comparison to other sections of the Province.
Before proceeding with a discussion of each of these five areas some indications of
the present comparative availability of service in the respective rural areas may be
drawn from the analyses of K.W.H. costs to domestic consumers and the average consumptions shown in Tables 3 and 4.
From Table 3.
From Table 4.
Area.
Monthly Bill for
Average
Annual
K.W.H.
Consumption
per
Customer.
Average
100 K.W.H.
200 K.W.H.
Charge
per K.W.H.
(i.)   Lower Mainland—
$3.20
4.04
4.55
3.24
4.73 to
9.09
4.40
4.20
5.10
5.60
4.60
5.10
6.00
6.50
$5.20
5.96
6.70
5.49
7.43 to
17.10
6.40 |
6.20 j
7.95
S.45
7.45
7.95
9.00
9.50
875
900
769
615
437 to
1,200
752
551
729
609
447
561
545
Cents.
2.57
(ii.)   Okanagan District—
City of Vernon—   - -	
Armstrong, Enderby, Salmon Arm, and rural districts
(iii.)   Areas supplied by West Kootenay P. and L. Co.—
4.12
5.20
6.6
3.1 to
(iv.)  Vancouver Island South—
Cobble Hill, Mill Bay, Shawnigan Lake, Sooke -	
9.0
3.4
(v.)   Vancouver Island Centre—
6.6
6.4
Nanaimo (city) - -.- - - -	
Nanaimo (rural)-   - - _ -
5.4
7.2
8.6
Parksville, Qualicum, etc. -_   —
7.3
While the size of farms and local economic conditions influence the use of electricity, the unit price of the service is a first condition of availability. It will be
observed that the average monthly consumption is higher where the average unit cost
is lower.
(i.) In the rural areas of the Fraser Valley the rates are such as to permit wide
uses of the service. Here is the highest average consumption per customer and
the lowest average cost, notwithstanding a large proportion of the farms are small.
In this area rural service is tributary to the urban system of Greater Vancouver.
There are 3,100 unconnected premises according to information supplied by the British
Columbia Electric Railway Company. It would require a capital outlay of over
$800,000 to provide complete distribution facilities for this section. Thus far the policy
of the B.C. Electric Railway has been to make extensions on an individual or small
group basis. The Company now expends $82.50 per service and the subscriber is
required to guarantee revenue over a four-year period equal to the amount of capital
expenditure.
This piecemeal policy of expansion makes for high capital cost of installation and
negotiation of contracts. The rural service in the Fraser Valley is associated with the
Lower Mainland distribution system and the investment is included in the rate base
for the whole area. It is suggested that availability of service could be best improved
by a more liberal development policy under which the facilities would be provided RURAL ELECTRIFICATION COMMITTEE. V 21
reasonably in advance of individual demands and upon a scale to permit lower construction costs.
(ii.) The Okanagan District served by West Canadian Hydro Electric Corporation
contains some 1,200 potential rural consumers. The corporation has made numerous
extensions of its system so that in many sections service is now available. However,
the rates charged in the City of Vernon are considerably higher than rural rates in the
Fraser Valley; and in Armstrong, Enderby, Salmon Arm, and the rural areas 100
K.W.H. per month now cost $4.55 and 200 K.W.H. cost $6.70. The average cost per
K.W.H. at the 1943 scale of domestic consumption was 4.12 cents in Vernon and 5.20
cents in all other areas.
Notwithstanding these high rates the average consumption is higher than in any
rural area except Fraser Valley (which includes Chilliwack, Langley, Mission, and
Abbotsford). This indicates a good field for the development of electrical service.
There is adequate power at Shuswap for considerable expansion of the market. The
consumption by the present customers could be greatly increased by a more promotional
type of rate; the service could be extended to 1,200 new consumers by building distribution facilities in consolidated units covering whole communities. Like the B.C. Electric
Railway Company the Corporation's rural extensions are made on a piecemeal individual
basis—a slow and expensive method. It must be noted that the rural service of the
Corporation comprises a large proportion of its total business. It is a comparatively
small utility and the addition of distribution facilities to serve 1,200 rural consumers
is a major undertaking to a company with only 4,000 customers. It involves a capital
investment of $400,000 and it may require a few years under a rate structure that will
permit load building to develop business to support such an expenditure.
Improvement in availability of electrical service in this area, urban and rural,
could be effected by:—
(1.) A revision of the rate schedules to promote much higher average consumption resulting in lower average charges.
(2.)  Construction of extensive distribution facilities to include considerable
areas under one job, instead of piecemeal construction to meet individual
demands.
It may be difficult for this corporation to carry out either of the above suggestions.
The total operation is small and has required extensive production and transmission
plant for the number of consumers on the system—4,100. The cost of capital for the
plant has been high and the carrying charges have to be met year by year. While a
general revision of the rate structure would undoubtedly tend to increase use and
decrease average K.W.H. costs it would take some time—possibly a few years—during
which development period the earnings might not be sufficient to pay interest on funded
debt and dividends on capital stock. A small utility with limited working capital finds
it difficult to provide facilities in advance of demand and to adopt a rate system which
will fail to produce during the first year revenue equal to cost, even though it be assured
that the net results will be improved in the second and third succeeding years. This is
particularly true of a utility with a small volume of business. Rural electrification in
the Okanagan district comprises an important part of the total utility service in the
area and, under a progressive policy, it can become a larger part. The conditions
affecting availability of service are different from those in the Lower Fraser Valley or
Southern Vancouver Island. In the latter cases the utility has the stable backlog of
business in Greater Vancouver and Greater Victoria; service to adjacent rural areas
would comprise a small proportion of the total business and should present no important
financial problem to a utility capable of supplying the metropolitan consumers in contrast to conditions under the West Canadian Hydro Electric Corporation. V 22 FINAL REPORT.
(iii.) West Kootenay Power and Light Company, Limited, a subsidiary of Consolidated Mining and Smelting Company, Limited, owns and operates five hydro-electric
plants on Kootenay River and one on Goat River with a total capacity of 260,000 K.V.A.,
greater than the total hydro-electric capacity of all the public utilities in the Province.
Over 97 per cent, of the energy is used by Consolidated Mining and Smelting at Trail.
The West Kootenay furnishes electrical service to the public in Trail and Rossland
under domestic rates which permit a use of 100 K.W.H. per month at $3.24 and 200
K.W.H. at $5.49. These rates permit a comparatively high average consumption, as
indicated in Table 4.
The West Kootenay Power and Light Company have a 60,000-volt transmission
system extending westward to Oliver; thence to Allenby near Princeton, with a branch
running north from Oliver to Penticton and Kelowna. The Company sells energy
wholesale for redistribution by the cities of Penticton, Summerland, and Kelowna, and
by the Princeton Power and Light Company in Princeton.
The Company has installed at several points sub-stations to transform from 60,000
to 2,300 volts, and has built distribution systems in a score of widely separated rural
areas listed in Tables 3 and 4.
It will be noted that the charges for service vary widely in these distribution areas,
the cost to the consumer for 100 K.W.H. is from $4.73 to $9, and for 200 K.W.H. from
$7.43 to $17.10. These rates apparently have resulted from individual consideration in
each separate community and are presently under examination by the Public Utilities
Commission. There is a large number of potential rural consumers, some 1,700 who
could be served by extensions of the existing lines at an estimated capital expenditure
of $410,000.
The availability of service in the areas served by West Kootenay Power and Light
Company could be improved by a revision of the rate schedules to promote load building and by a broad policy of extensions aimed at the greatest availability in all areas
within economical distances of substations.
The volume of business which could be developed would be insignificant in comparison to the Company's total output and the position of the Company is such that it
should have no difficulty in financing a progressive policy in respect to rates and
extensions of service. Whether it might be advisable to include the rural distribution
systems of this Company in a consolidated Provincial electrification scheme will depend
upon the extent to which the Company is prepared to increase the availability of service.
(iv.) In the Vancouver Island South area, from Victoria to Cowichan Land
District, electrical service is generally available and widely installed in the rural areas.
The B.C. Electric Railway Company surveys indicate that there are only 342 potential
consumers not presently connected. The service is reliable, it being an outgrowth of
the Greater Victoria distribution system, except for Cobble Hill, Mill Bay, Shawnigan,
and Sooke, which are supplied from small substations on the Company's high-voltage
lines.
The cost to rural domestic users for 100 K.W.H. per month is $4.40 and for 200
K.W.H., $6.20. In Cobble Hill, Mill Bay, Shawnigan Lake, and Sooke the corresponding
costs are 20 cents higher. The average monthly consumption in 1943 was 752 K.W.H.,
and the average price paid 3.4 cents per K.W.H. These are rates which permit installation and general use of electricity in rural districts. The conditions for new
installations are similar to those in the Fraser Valley. Here again a piecemeal
policy of expansion is followed. Under this policy those consumers who can be reached
with the smallest capital outlay are first served, as the guaranteed revenue required
from the consumer is lower in such cases. When a consumer within easy reach is
connected under such a policy it becomes a little more difficult to serve the remainder
who may be farther away from existing lines. If, as the Company reports, there are
only 342 potential rural consumers, for whom service facilities would cost $87,000, it RURAL ELECTRIFICATION COMMITTEE. V 23
would appear that reasonable rural electrification could be effected under a single
programme of construction. As in the case of the Fraser Valley, such a programme
would involve no financial problem to a utility equipped to furnish service in the Greater
Victoria area.
(v.) In Vancouver Island Centre, from Cowichan to Parksville and Qualicum, rural
electrical service is now generally available, but under conditions far less favourable
than in the southern section of the Island. Under present rates 100 K.W.H. per month
costs the user $5.10 in Duncan City and the rural areas near Nanaimo; $4.60 in
Nanaimo City; $5.60 in the rural areas near Duncan; $6 on Saltspring Island; and
$6.50 in the Parksviile-Qualicum district. Two hundred K.W.H. per month costs the
user $7.95 in Duncan City and rural areas near Nanaimo; $7.45 in Nanaimo City;
$8.45 in the rural areas near Duncan; $9 on Saltspring Island; and $9.50 in Parksviile-Qualicum district. The effect of these high rates is reflected in the low average
consumptions and the high average cost per K.W.H.—5.4 cents in Nanaimo City, 6.6
cents in Duncan City, 6.4 cents in Duncan rural areas, 7.2 cents in Nanaimo rural areas,
8.6 cents on Saltspring Island, and 7.3 cents in the Parksviile-Qualicum district.
Distribution in this extensive area is by the Nanaimo-Duncan Utilities, Limited,
except in Parksviile-Qualicum where distribution is by National Utilities, Limited, a
subsidiary of B.C. Electric Railway Company.
This area is now dependent for 80 per cent, of its energy supply upon the B.C.
Electric Railway Company plants serving Vancouver Island South. Owing to shortage
of power for their own distribution-lines the B.C. Electric Railway Company have
indicated inability to continue the supply at Duncan. The Nanaimo-Duncan Utilities
have no generating plant capable of supplying the load and the whole area, including the
cities of Nanaimo and Duncan, is faced with the problem of power supply. Nanaimo-
Duncan Utilities Company has made preliminary surveys and investigations of a power-
site on Nanaimo River. If this is the most economical potential source of energy it
should be developed at the earliest possible date. It will involve a large capital expenditure—in excess of the present total investment of the Company. The building of
sufficient load to carry the cost of such a development will require a sharp downward
revision of the rates in the whole area; no substantial increase in load can be expected
at the present rates. It may take a considerable period of time before revenues will
balance costs. Whether the Company is in a position to finance a required $3,000,000
construction programme and to provide, in addition, working capital to carry through
a necessary development period is a question which the Committee cannot answer.
This is an important and extensive area where the need of some method for improving
the availability of service to both urban and rural consumers is apparent.
The Parksviile-Qualicum district is contiguous to the Nanaimo system although
supplied by the National Utilities Corporation with energy purchased from Nanaimo-
Duncan Utilities. It is submitted that any comprehensive plan of rural electrification
should provide that this area be included in the Nanaimo-Duncan system.
Group 2.—Other Towns and Rural Areas served by Privately-owned Utilities.
Tables 3 and 4 contain information in respect to available service in other cities,
towns, and rural areas served by privately-owned utilities. In this group there are
15,874 connected consumers of all classes.
There are 1,874 potential rural consumers and 125 in towns who are within
economical distance of the existing distribution lines, and who could be served therefrom if the plant capacity and the rates were permissive.
Only seven of these distribution areas have over 500 consumers:—
Kamloops with 2,427 is served by B.C. Electric Railway Company with hydroelectric and steam-electric energy generated by the Company.    The average domestic V 24 FINAL REPORT.
consumption is 1,152 K.W.H. and the average K.W.H. charge is 2.9 cents. There are
234 potential rural consumers near Kamloops and between Kamloops and Barriere.
Kimberley with 1,611 is served by Consolidated Mining and Smelting Company
with hydro-electric energy purchased from East Kootenay Power Company. The average domestic consumption is 1,085 K.W.H. and the average K.W.H. charge is 3.4 cents.
There are 22 potential rural consumers.
Michel with 573 is served by Crow's Nest Pass Electric Light and Power Company
with hydro-electric energy purchased from East Kootenay Power Company. The average domestic consumption is 465 and average cost 6.5 cents. There are 19 potential
rural consumers.
Prince Rupert with 3,369 is served by Northern British Columbia Power Company
with hydro-electric energy generated by the Company. The rates are as low as anywhere in the Province. Average domestic consumption is 1,545 K.W.H. at an average
cost of 2.2 cents to the consumer for domestic energy. There are only 40 potential
rural consumers.    The Company should be in a position to extend to these.
Princeton with 562 is served by Princeton Power and Light Company with hydroelectric energy purchased from West Kootenay Power and Light Company. The average K.W.H. consumption is 361 and the average cost 6.5 cents per K.W.H.
Alberni with 2,244 is served by National Utilities Corporation (subsidiary of
B.C. Electric Railway. The former Company also serves Parksville, Qualicum, and
Royston areas). The Alberni average domestic consumption is 598 K.W.H. and
the average cost 4.7 cents. Power is purchased from the Bloedel, Stewart and Walsh
sawmill at Port Alberni. The Company maintains a Diesel standby. There are 89
potential rural consumers.
Cumberland with 675 is served by The Cumberland Electric Lighting Company
with 25-cycle energy purchased from Wellington Colliery Company, Puntledge hydroelectric plant. The average domestic consumption is 390 K.W.H. and the average
cost 8.2 cents.
The East Kootenay Power Company is primarily engaged in production and transmission of power. It owns and operates two hydro-electric plants—at Bull River,
5,000 K.V.A.; at Elko, 12,000 K.V.A. The Company has a steam plant at Sentinel,
Alberta, 12,500 K.V.A. These plants are connected by 60,000-V. transmission. Energy
is sold wholesale to Consolidated Mining and Smelting Company at Kimberley, and to
the cities of Cranbrook and Fernie, as well as to several mining operations. Power is
exchanged with Alberta districts. The Company distributes directly to only 97 retail
consumers in Bull River, Crowsnest, Elko, and Wardner.
Attention is directed to the small number of consumers in the other distribution
systems in this Group 2, Table 4, and to the high charges for various K.W.H. consumptions in Table 3. Rates are high not because the companies are making too much
profit; the undertakings are too limited to support individual organizations and financial structures. The generating plants are for the most part Diesel operated and too
small to supply energy for general purposes. Lower promotional rates would tend to
overload the existing facilities and few if any of the companies are able to finance new
and larger plants and the temporary deficits which must be incurred during a load-
building period at greatly reduced rates. Electrical service in these communities is
limited by a chain of circumstances; small isolated operations cannot support technical
management or economical financing; plants have been installed for electric lighting
and rates are electric-lighting rates; the business is not profitable because the volume
is too small; the volume of business cannot be increased unless rates are reduced;
if rates are reduced the plants will be inadequate; there is no capital upon reasonable
terms to build new plants. L
RURAL ELECTRIFICATION COMMITTEE. V 25
To improve the service to these communities and to permit of expansion to
adjacent rural areas it will be necessary to install adequate, reliable, and efficient small
plants—mostly Diesel operated. It will be necessary to rehabilitate the distribution
systems and to offer service under a promotional type of rates that will permit general
use of electricity for domestic, commercial, and small industrial purposes. This involves problems of organization and financing beyond the capacities of these small
companies.
Where small towns and rural areas provide an important proportion of the consumers on distribution systems, improvement in the availability and supply of electrical
service can be effected by the consolidation of such systems—including production and
distribution—under a single management and financial plan. Such a plan would require
adequate financing to construct the most suitable generating plants; to rehabilitate
existing facilities that may be useful, and to carry the undertaking over a reasonable
number of years required for load-building under promotional rates.
Rural electrification cannot be segregated from urban electrification, as a practical
proposition. Until service is made available in the widest sense to the urban systems
there is little that can be done to improve the supply and availability to rural areas.
It has been pointed out that the supply and availability of service to the rural areas
in the Fraser Valley and Vancouver Island South can be improved by extending the distribution systems of Greater Vancouver and Greater Victoria to cover these areas.
It should be possible for the West Kootenay Power Company to supply the rural areas
within practical distribution distance of its existing facilities. In these three areas
rural electrification would amount to a small fraction of the total business of B.C.
Electric Railway Company and of West Kootenay Power Company. Both companies
have the necessary organization and financial resources to effect rural electrification
under reasonable terms and conditions of service. No hardship would be incurred by
the companies or by the present consumers if the former were required to extend their
facilities so long as the net revenues of the companies as a whole were not significantly
affected. The same may be said of the extensions required to serve small groups outside Kamloops (B.C. Electric Railway Company), Elko and Wardner (East Kootenay
Power Company), Kimberley (Consolidated Mining and Smelting Company), Michel
(Crow's Nest Pass Electric Light and Power Company), and Prince Rupert (Northern
B.C. Power Company). Such a change in policy, if not voluntarily made, would require
revision of section 35 of the " Public Utilities Act."
In the other rural areas served by privately-owned utilities the rural service forms
such a large proportion of the electrical business and the supply and availability of
service is so limited that a similar policy could not be applied without working hardship
on the companies and, in some cases, wrecking such service as now exists. Here it
appears that any improvement in the supply and availability of electrical service in
rural areas will depend upon reorganization and consolidation of the privately-owned
utilities.
The financial problems involved in a practical reorganization will be indicated, as
directed, under Section 6 of this report.
Group 3.—Cities, Towns, and Rural Areas served by
Municipally-owned Utilities.
Tables 3 and 4 contain information in respect to available service in cities, towns,
and rural areas served by municipally-owned utilities.
There are 19 such systems with a total of 22,180 consumers, of whom 3,036 are
outside the municipal boundaries.
There are 654 potential rural consumers who could be served by extensions of
these systems.
Analyses of rate schedules and average costs are contained in Tables 3 and 4
respectively. V 26 FINAL REPORT.
It will be noted from Table 4 that some of the municipal systems have developed
fair average domestic consumption—Revelstoke, 1,272 K.W.H. per year at an average
charge of 3.2 cents; Nelson, 970 K.W.H. per year at an average charge of 4.4 cents;
Kelowna, 838 K.W.H. with an average charge of 4.3 cents, etc. Some of the municipal
plants have a small number of consumers and the average consumption is high.
The municipal systems have 3,036 consumers beyond their boundaries and the
surveys show 654 to whom the distribution systems could be extended. This indicates
82 per cent, rural electrification—a fair accomplishment.
The extension of service to rural areas adjacent to municipal systems will depend
largely upon the co-operation of the latter, and may require some financial assistance.
Group U-—Service furnished by Industries and Institutions to
Employees and Others.
In order to complete the survey of the present extent of electrical service in
the Province information has been assembled in respect to distribution by primary
industries and institutions—Tables 3 and 4.
Except in the vicinity of Lillooet, where the Pacific Great Eastern Railway operates
a small plant, there are no rural areas dependent for service upon this group.
The rates in effect and the statistics on consumption and operation are presented
simply to round out the survey. They have no particular application to the problem
of rural electrification and the results cannot be regarded as standards for electrical
service. The furnishing of electricity to employees and others is incidental to the
primary functions of the larger industries and rates and conditions of service may be
influenced by the general policies governing the main enterprise.
2. RURAL AREAS  IN WHICH ELECTRICAL SERVICE  IS  NOT
NOW AVAILABLE.
No clear distinction can be drawn between areas where service is and is not
available. All areas, with the exception of Terrace, covered by this survey are adjacent
to community centres where electrical service is available to some degree. In many
cases the facilities are inadequate to supply the present consumers for anything but
lighting and limited household appliances. Such plants must be enlarged and improved
before a modern standard of service can be furnished to the present consumers, and
certainly before the adjacent rural areas can be brought into the distribution systems.
All groups of consumers listed under 1 (6) are again reported here as being in
areas where electrical service is not now available. This is in the sense that service
cannot be considered available until distribution-lines, connected with adequate and
reliable generating plants, extend by the premises of the consumers. The construction
of such lines and generating plants will not be sufficient to make service available; the
facilities must be financed, constructed, and operated efficiently so that service can be
made available to all at unit rates which will permit the widest use of electricity for
domestic, commercial, and industrial purposes.
A programme of rural electrification must in most areas be contingent upon a
marked improvement in the existing service—as to quality, quantity, and rates. The
problem of rural electrification is so closely associated with the problem of adequate and
economical service to the cities and towns that a report on the number of consumers
not presently served would be incomplete if it did not include the number of present
consumers for whom service could be greatly improved. In addition, therefore, to the
number of potential consumers to whom service is not now available Table 1 shows,
under:—
(a.)  Number of consumers for whom service could be greatly improved.
(6.)  Potential sources of electrical energy for such areas. RURAL ELECTRIFICATION COMMITTEE.
V 27
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9 RURAL ELECTRIFICATION COMMITTEE. V 29
(c.) Proposed Methods of furnishing Service.
The methods proposed for improving the service are set out under four groups
and remarks follow respecting each group. It should be noted that the grouping
referred to here and which is set out in Table 2 is not the same as the grouping 1, 2, 3,
and 4 referred to in Tables 3 and 4.
Group I.—That certain rural areas which are now served by private
operators and where those operators are financially capable of
making extensions and which also have sufficient plant capacity
to serve these extensions, be required to extend their systems,
if necessary invoking the provisions of the " Public Utilities
Act" to require them to do so. These areas are referred to as
Group I. in Table 2.
The volume of business and the magnitude of the undertaking involved in effecting
rural electrification in Fraser Valley and Vancouver Island South comprise a small
proportion of the total business of the B.C. Electric Railway group in the Vancouver
and Victoria areas respectively. In the lower Mainland area the Company now has
122,800 consumers; there are 3,128 potential rural consumers. In the Vancouver
Island South area the Company now has 27,000 consumers; there are 342 potential
rural consumers. The obvious method of furnishing service is to extend the distribution systems to make service available. This would involve a capital expenditure for
distribution lines estimated at:—
Fraser Valley   $820,000
Vancouver Island South        87,000
$907,000
Somewhat similar conditions exist in the rural areas adjacent to those now served
by the West Kootenay Power and Light Company. In the latter the rates are high
compared to those in Fraser Valley or Vancouver Island South. But the Company
produces a great volume of electrical energy, over 97 per cent, of which is used at Trail.
It now has a high-voltage transmission-line to the various rural substations and, while
it supplies only 8,500 individual consumers, the addition of 1,700 to its various existing
distribution systems would be a comparatively small undertaking involving capital
expenditure of the order of $410,000. In this case it would be desirable to effect a more
uniform rate structure of a promotional type.
In the three foregoing areas, and those served by the B.C. Electric Railway Company at Kamloops, the East Kootenay Power Company, Limited, the Consolidated Mining and Smelting Company, Limited, the Northern B.C. Power Corporation, Limited,
and the Crow's Nest Pass Electric Light and Power Company, Limited, rural electrification could be financed and accomplished by the utilities now operating, even to
the extent of providing facilities for the total areas, without increasing unduly the total
expenses of the companies.
The suggested method could be carried out voluntarily in these areas or required
by an amendment to the " Public Utilities Act," sec. 35, subsec. (1). It is suggested
that the Act might be amended so that the Public Utilities Commission could require
the utilities to make a survey of any rural area and to report on the capital expenditure,
estimated revenues and expenses involved in supplying such area. If the Commission
decides that the operation would not result in increased rates to the present consumers,
and that it would not reduce the utility's net earnings as a whole below its permitted
return on the total investment, the Commission might be empowered to order the necessary construction. V 30 FINAL REPORT.
Group II.—That other areas referred to as Group II. in Table 2
where the private operators of the systems serving those areas
are considered for the reasons expressed in this report, in a difficult position to make the desired extensions or to increase
the plant capacity, should be organized into a single enterprise as
a sufficient volume of business would then be provided to support
a centralized management with an efficient technical staff.
The same method as for Group I. is not applicable to other areas within reach of
the existing distribution systems. Any practical method of improving the service
of these plants and of expanding it to the adjacent rural areas should involve an amalgamation of the various properties into a single enterprise with sufficient volume of
business to support a centralized management and operation. A considerable amount
of capital expenditure would be required for new plant and sufficient credit to sustain
the operation over a considerable development period under much lower rates of
a promotional type. The financial problems involved are discussed under Section 6 of
this report.
In the case of the North Okanagan district, served by West Canadian Hydro
Electric Corporation, there are now only 2,749 customers in the City of Vernon.
In Armstrong, Enderby, Salmon Arm, Lumby, Lavington, Oyama, and the rural areas
the rates are similar and the total number of consumers is 1,427. There are 1,200
potential rural consumers. Under a complete electrification plan 50 per cent, of
the total consumers will be outside the City of Vernon. It will require a capital
expenditure of $380,000 for new distribution-lines in addition to considerable improvement to existing equipment to effect reasonably complete electrification. Rates in
Vernon as well as the other towns and rural areas would have to be revised downward
to build a load that could support the present and additional capital expenditures.
It might require several years to develop higher consumptions and sufficient business
to make the undertaking self-sustaining. The cost of financing by the Company is
high; the whole operation is comparatively small, and it has not now the backlog of
business to enable it to finance extensive new plant during a period of load-building.
There are similar conditions in the Vancouver Island Central area. Here the
Nanaimo-Duncan Utilities have 4,000 customers in the cities and suburbs of Nanaimo
and Duncan and 2,450 in rural areas. Eighty per cent, of the Company's power is
purchased from B.C. Electric Railway Company and the latter is short of power for
Vancouver Island South. A new generating plant is required for this area at a cost
of $3,000,000 for hydro-electric development. A steam plant would cost much less
initially but its production costs in the long run would be higher.
Average K.W.H. charges in the two cities are approximately double those in rural
areas of Vancouver Island South and the average consumption is consequently low.
It will take a long time at the present rates and consumptions to build a load that will
support a new production plant. A large proportion of the consumers are in rural
areas and there is no volume of urban business upon which to finance a new plant
during the necessary development period.
North of Nanaimo the Parksviile-Qualicum district, supplied by National Utilities
(a subsidiary of B.C. Electric Railway Company) has even higher rates and lower
consumption. It is suggested this area should be combined with Nanaimo-Duncan
distribution system and that the system should be expanded to 342 potential rural
consumers.
What has been stated regarding the Okanagan and Central Island services applies
with greater emphasis to other services, with the exception of Prince Rupert, included
in Table I. under Group 2—Privately-owned Utilities. As pointed out in the Progress
Report these utilities are too small to support the management and financial structure RURAL ELECTRIFICATION COMMITTEE. V 31
necessary to provide service in volume at attractive unit costs. Most of them require
new production plants and improved and extended distribution systems. As isolated
undertakings they cannot be financed and operated on self-sustaining bases.
Group III.—That municipal areas referred to as Group III., in
Table 2, to be assisted financially in providing extensions outside
the municipal boundaries or be required to sell energy wholesale to the single enterprise referred to above who would undertake the extensions.
In Group III., Table 2, there are only 654 potential rural consumers with a density
of three or more per mile who could be reached by extensions of municipally-owned
plants. Some of the municipal utilities have extended their lines to adjacent rural
areas but are under no obligation to expand that policy. Methods of serving the above-
mentioned 654 potential customers would involve working agreements between some
central authority and the municipalities.
Group IV.—That the extensions required to serve the potential consumers adjacent to the Town of Lillooet should be undertaken by
the P.G.E. Railway Company. If the Company is not prepared
to provide additional generating capacity or to make the extensions to the system then the latter should be incorporated in
Group II. referred to above.
In the industrial Group IV. there is only one area, Lillooet, where rural electrification depends upon existing plants. Here there are sixty-one who could be served by
extensions of the P.G.E. system. The latter's small hydro-electric plant at Lillooet is
now in need of considerable repairs.
3. THE FEASIBILITY OF SUPPLYING NUMBERS OF PRESENTLY ISOLATED
COMMUNITIES FROM "GRID" TRANSMISSION SYSTEMS AND CENTRAL PRODUCTION PLANTS.
" 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."—Progress Report, page 56.
There is at present a 60,000-volt transmission-line from the Vancouver Island
Power Company's (B.C. Electric group) Jordan River and Brentwood plants to
Duncan and Nanaimo. The need for a production plant at Nanaimo is pressing and
the Nanaimo-Duncan Utilities has made some preliminary studies of a development
on Nanaimo River. If this plant is constructed the supply for Vancouver Island South,
including Victoria, could be augmented by energy from the new plant delivered over
the existing line. With a plant at Nanaimo it might be practicable to extend 60,000-
volt transmission as far north as Courtenay, with a branch to Alberni. From Courtenay
to Campbell River there is now a 20,000-volt distribution-line. The provision of
a source of energy at Nanaimo would, therefore, make it physically possible to deliver
electric service all the way from Victoria to Campbell River, and from Parksville or
Qualicum to Alberni and Port Alberni.
On the Mainland extensive transmission grids will be uneconomical until such time
as the power requirements are greatly increased by development of the existing markets
or by new industries requiring large blocks of energy. There is now in operation
a 60,000-volt transmission system between the West Kootenay Power and Light Company plants on Kootenay River and the West Canadian Hydro Electric Corporation V 32 FINAL REPORT.
plant at Shuswap Falls. Thus the Okanagan Valley from Sicamous south to the U.S.
border; Allenby, Princeton, and Copper Mountain; and Oliver to Rossland and Trail
are all connected to a grid system which provides extra insurance to the energy supply.
The Fraser Valley areas from Agassiz and Rosedale to Vancouver and Britannia
Beach are connected to the 66,000- and 33,000-volt transmission system of the B.C.
Electric group of companies.
Outside the above-mentioned areas the indications are that energy for general
purposes must be produced in comparatively small plants—hydro-electric or Diesel-
electric—until the market will permit of economical connection with larger hydroelectric developments. The establishment of new large power-consuming industries in
the Interior would, of course, facilitate the development of larger plants and transmission systems.
4. PRELIMINARY ESTIMATES OF THE CAPITAL COST OF WORKS PROPOSED FOR INCREASING THE SUPPLY AND AVAILABILITY OF
ELECTRICAL SERVICE.
Preliminary estimates of capital cost of new works proposed for increasing
the supply and availability of electrical service have been made on the basis of 1943
costs, as follows:—
I. Proposed extensions by private operators—
Affecting new consumers  5,615
and improved service to  3,846
9,461
Estimated capital cost of new works—
B.C. Electric Railway Company—
Fraser   Valley,   Kamloops - Barriere,
Vancouver Island South   $1,003,549
West  Kootenay   Power  and  Light   Company—
Seventeen areas  ■        410,000
East  Kootenay  Power  and   Light   Company—
Elko and Wardner  45,919
Consolidated Mining and Smelting Company—
Kimberley   5,197
Northern B.C. Power Company—
Prince Rupert         .   9,900
Crow's   Nest   Pass   Electric   Light   and
Power Co.—
Michel  '.  5,832
•  $1,480,397
II. Proposed consolidation of privately-owned operations—
Affecting new consumers      3,182
and improved service to  16,956
20,138
Carried forward     __ $1,480,397 RURAL ELECTRIFICATION COMMITTEE. V 33
Brought forward  $1,480,397
Estimated capital cost of new works—
Generating plant—
Hydro-electric plant,  Nanaimo  $3,000,000
Fourteen   Diesel   electric   plants   or
equivalent         921,299
$3,921,299
Distribution plant         897,813
     4,819,112
III. Proposed extensions of Municipal systems—
Affecting new consumers  654
Estimated cost of extensions to ten systems         195,557
IV. Proposed extensions of industrially-owned systems—
Lillooet, affecting new consumers  61
Estimated cost of extension          20,780
Total estimated cost   $6,515,846
Total new consumers  I     9,512
Total present consumers to whom service would
be improved .*  20,802
Total consumers affected  30,314
The proposed consolidation, Group II. of the foregoing, involves 23 operations of
privately-owned utilities. The present reported investment in electrical service plant,
exclusive of " intangible assets," is as follows:—
Reported original cost of property  $4,999,115
Reported depreciation reserves     1,365,237
Net investment   $3,633,878
It is estimated that the depreciation reserve which would
be applicable to plant to be retained in service, and
which would therefore constitute a capital liability,
amounts to   $1,033,943
A measure of the total capital involved in the consolidation may be stated as follows:—
Present net investment in plant     3,633,878
Accumulated capital liability in respect to depreciation of old plant to be retained in service     1,033,943
Estimated cost of proposed new works:—
Generating plant   $3,921,299
Distribution plant         897,813
     4,819,112
Total   $9,486,933
This consolidation would provide for increasing the supply and availability of
service to 16,956 consumers now receiving limited service and would provide for service V 34 FINAL REPORT.
to 3,182 rural consumers, thus affecting 20,138 consumers. The capital investment
would, therefore, be $471 per consumer.
This figure, which includes the full original cost of both generating and distribution plant compares favourably with the estimated expenditures for distribution plant
only under some of the rural electrification plans in other jurisdictions. It is an extraordinary coincidence that original cost investment in total electric service facilities of
the B.C. Electric group of companies, as determined by the Public Utilities Commission,
is also $471 per consumer.
This is a reasonable figure for capital cost, including as it does both production
and distribution plant and all classes of consumers—domestic, commercial, industrial,
etc. The proposed hydro-electric plant at Nanaimo will solve the supply problem
for all Vancouver Island for some time, and there are other potential sites on the same
river which can be developed as required. The storage facilities provided for in
the preliminary estimates for the first installation will serve future developments,
thereby reducing the unit cost of the latter.
Operating costs of the consolidated undertaking will not compare so favourably
with large concentrated operations. The consumers are located in widely separated
groups and a considerable number of these groups must be supplied for some time to
come from Diesel-operated plants. While it cannot be hoped to realize operating costs
as low as in the metropolitan areas a great improvement over present conditions will
result from a consolidated operation under one competent organization.
A summary of the estimates of capital cost of new works is contained in Table 2. RURAL ELECTRIFICATION COMMITTEE.
V 35
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5. ESTIMATED RATES UNDER WHICH ELECTRICAL SERVICE MAY
BE FURNISHED UNDER PROPOSED PLAN.
The rates on which local service can be furnished depends upon so many elements
that estimates of the rates made before these elements are determined would be meaningless. The actual rates will depend upon the organization of the utilities supplying
the service—upon their management costs and financial credit. In the Progress Report
the Committee emphasized the interdependence of three factors, namely: rates, consumption, and plant growth.
In this report it is accepted as axiomatic that unit costs decrease as consumption
increases. But it may be as well to explain briefly the interrelationship of these
factors.
A substantial part of the cost of providing electric service is only to a negligible
extent affected by the quantity used. This part of the cost includes the outlay for
meter-reading, billing, servicing, acquiring new business, a proportion of the general
overhead, and interest and depreciation on the construction cost of the distribution
system. These items are the same whether 1 K.W.H. per month or 100 K.W.H. are
used. They are only slightly increased if the use requires a three-wire connection and
are again stationary to the limit of the demand of any residential user. These items
are affected by density of population, labour and material cost, standards of construction, efficiency of operation, and other factors. They vary according to a continent-
wide survey made by the Power Commission of the United States from a minimum of
83 cents to a maximum of $2.43 per customer per month. In British Columbia an
average of $1.50 per customer per month is a conservative assumption. These items
are commonly referred to as " customer costs," and are in addition to the generating
and transmission costs.
On the basis of " customer cost" of $1.50 and a use of 30 K.W.H. per month—
a lighting load—5 cents per K.W.H. must be added to the generating and transmission
cost. If use is increased to 150 K.W.H. per month—a lighting and range load—only
1 cent must be added. As a result of the increased use the unit cost is reduced in this
case by 4 cents per K.W.H. As consumption increases the " customer costs " are spread
over a greater number of K.W.H. and the unit K.W.H. cost automatically decreases.
The average unit cost of electricity is more significant than rate schedules.
The former will be high if the service is for house-lighting only. Service will be
limited to house-lighting if the rates are not designed to enable the consumers to use
electricity for wider purposes. It is therefore desirable that a type of rate structure
which suits the requirements of the household consumer be made available so as to
permit a greater use of electricity. Such a rate structure, which is called promotional,
should be designed to lower the average unit charge to the consumer, as the latter
makes possible a greater output and a lower unit cost of production. An example of
a promotional rate structure is that available in the Fraser Valley, i.e.:—
First 30 K.W.H. per month per 1,000 square feet
of floor area  5 cents per K.W.H.
The next 200 K.W.H. costs  2 cents per K.W.H.
All excess over 230 K.W.H  1 cent per K.W.H.
And, in addition, water-heater service may be obtained in conjunction with a cooking
range at a flat rate per month of $3 for a 750-watt heater and $4 per month for
a 1,000-watt heater. This works out at 55/100 cent per K.W.H. This is similar to
the proportional rate structure used in the City of Vancouver.
The reason for the higher charge for the first block for the rural area is that
the cost of distribution is higher because of the greater distance between consumers.
Where the consumers are more scattered than in the Fraser Valley the unit rate in
this block would necessarily be higher. V 38 FINAL REPORT.
Another example of a promotional rate structure would be:—
First 30 K.W.H. per month @ 8 cents per K.W.H.
Next 170 K.W.H. per month @ 2 cents per K.W.H.
Next 720 K.W.H. per month @ y2 cent per K.W.H.
All over 920 K.W.H. per month @ 1 cent per K.W.H.
This type of rate structure fits the requirements of the household consumer and
therefore promotes the greater use of electricity. The first block would include house-
lighting, which practically every one requires, there being at present no serious
competition. If electricity is used for house-lighting only the volume of business is
very small and the unit cost of furnishing service is high. Hence the reason for high
rates on the first block. The second block of 170 K.W.H. approximates the consumption of a range. Here the service is in a highly competitive field where the consumer
has available coal, wood, and sawdust, oil, and in some cases gas. If the rate for this
block does not meet the competitive costs the customer's use of electricity will be limited
generally to lighting. The third block enables the customer to operate a 1,000-watt
water-heater as cheaply as by any other method. A water-heater requires more heat
units than cooking and unless rates are suitable many customers will find it more
economical to use other fuels for both water-heating and cooking. The final block rate
is the average of the previous rates and enables the consumer to use any additional
electricity at this average rate.
From the foregoing the promotional feature of this type of rate structure may be
observed. A rate which permits the full use of electrical service enables a customer
to use thirty times as much energy at only four times what he would pay for lighting
only. But the average cost to the consumer is lowered from 8 cents to 1 cent
per K.W.H.
Unfortunately in the past, utilities, both publicly and privately-owned, have
departed from logical or scientific rate structures for a doubtful advantage in public
relations. As a consequence the public has been given a wrong conception of the cost
of electric service and it may be very difficult to secure acceptance of a rate structure
that will best promote a high average use and consequent low average unit cost.
Under the type of promotional rate structure suggested above many customers find
it to their advantage to become large users of electrical service. That leads directly to
greatly increased energy output by the utility at lower average costs of production.
But the utility must have the necessary capital resources and credit to provide the
enlarged plant facilities required to furnish the increased volume of service.
The importance of financial credit on rates may be gathered from the analysis of
twenty-three areas, in Table 3. This group of small utilities which are classed as
Group 2, under the proposed consolidation, have now plant with a reported investment
of $3,634,000. One per cent, interest rate on this amount is $36,340 per year, which
is equal to over $2 from each of their 16,956 consumers. Under the suggested consolidation of these twenty-three areas, including adequate generating plant and distribution to contiguous rural areas:—
The new capital required is estimated at (see Table 2).... $4,819,000
The presently reported net investment is     3,634,000
Total net capital required   $8,453,000
The total number of consumers will be 20,800.
One per cent, interest rate on the net capital is $84,530 per year which will equal
$4 for each consumer.    Hence the impossibility of estimating rate before the basis of
finance is determined becomes apparent.
The effect of income taxes on the cost of furnishing service has been pointed out
in the Progress Report.    This particular group of twenty-three companies in  1943 RURAL ELECTRIFICATION COMMITTEE. V 39
paid non-refundable income taxes in the amount of $132,285, equal to $8 for each of
the 16,956 consumers. Some of the group paid no income taxes while the total paid in
respect of Vancouver Island Centre was equal to $14 per consumer. The rates cannot
be estimated until it is known whether or not the plan of consolidation will eliminate
this item in the cost of furnishing service.
The future specific rates under the proposed consolidation cannot be estimated until
the basic conditions of service are established—organization, method of raising the
necessary capital funds and the cost thereof, the amount of income tax, the scope of
the consolidation, the possibility of establishing a proper rate structure, and many other
factors.
6. THE  FINANCIAL PROBLEMS  INVOLVED  IN  FURNISHING ELECTRICAL
SERVICE.
(a.) Whether financing of Extension Projects can be handled by
Existing Utilities.
The Committee submitted to the various utilities a questionnaire regarding extensions of service to the potential rural consumers in their respective areas of operation.
Among others the following question was asked:—
" 9. Is your utility in a position to finance the indicated capital additions to
generating and distribution plant? "
The foregoing question was submitted to fourteen privately-owned utilities. The
B.C. Electric Railway Company and the West Kootenay Light and Power Company
replied " Yes "; two others replied " No "; one replied that it was not accepting any
major loads at the present time due to power shortage, but did not state its position
in respect to financing new plant. The East Kootenay Power Company is working on
the questionnaire. The West Canadian Hydro Electric Corporation indicates ability
to finance in part.    No replies have been received from other privately-owned utilities.
The question was submitted to ten municipally-owned utilities. Six replied. Only
one answered " Yes " to the above question;  four answered " No ";  one was indefinite..
One industrial corporation answered " No," while the other has the matter under
consideration.
In the two extensive areas, Lower Mainland and Vancouver Island South supplied
by the B.C. Electric Railway Company group, rural electrification would be a small
project in comparison with the existing electrical undertaking of the companies in
Vancouver and Victoria areas respectively.
In the areas served by West Kootenay Light and Power Company the total investment required for further rural electrification would be small in comparison with the
Company's existing undertaking. It may be assumed that the existing utility could
handle the financing.
Other small extensions of privately-owned systems—Group I. of Table 2—would
appear to involve no financial problem beyond the utility's ability to handle.
It is extremely doubtful if any of the projects included under Group II. of Table 2
could be financed as separate undertakings by any one of the existing utilities. It will
be noted from Table 2 that this group will require for generating plants and distribution-lines  .  $4,819,000
The present reported net investment in plant is      3,634,000
The  capital  liability  in  respect  to  depreciation  of  plant to  be
retained in service is estimated at      1,034,000
Total capital requirement  $9,487,000 V 40 FINAL REPORT.
It might be possible for a single company in possession of all the existing assets
to obtain the $5,800,000 new capital required. But a large part of the existing plant
has been financed by bond issues and it is hardly possible that the additional amount
could be raised by the sale of bonds unless the latter were guaranteed by the Province.
The incidence of income tax—not less than 40 per cent, of the earnings on common
stock equity—makes it necessary for common stock to earn 10 per cent, in order to pay
6 per cent, dividends. If the service is to be self-sustaining it is essential that the
capital funds be obtained at the lowest possible rate of interest.
(b.) Whether Rates pursuant to Extensions could be carried by New Consumers
without concurrently increasing unduly Costs to Existing Consumers.
In those extensions proposed for the larger companies—Group I. of Table 2—the
cost of the added services would be so small in comparison to the present business
volume that there should be no difficulty in furnishing the service at reasonable rates
without increasing the cost to existing consumers.
In Group II. of Table 2, which includes the areas suggested for consolidation, the
service could be so organized that instead of increasing costs to present consumers
they could be lowered materially and progressively. Lower costs to present consumers
will result from increased uses which will follow improvement in the quality and availability of the service.
The last annual reports of the utilities operating in these areas have been summarized. Estimates of operating costs of the proposed consolidation have been made
on a conservative basis. In the latter, provision is made for depreciation and full-time
operation of a new hydro-electric plant for Vancouver Island Centre and for fourteen
complete new Diesel-operated plants, or their equal. It is assumed that the consolidation will finance on a basis not subject to income tax. The revenues have been
estimated on the same per customer ratio as for 1943 while provision is made for considerable increase in production and energy sales.    The comparative data follow:—
Comparison between reported Operating Results for 19U3 in 23 Areas and estimated
Operating Results for the same Areas under proposed Consolidation to include
Expansion to adjacent Rural Areas.
Estimated under
Actual, 1943. Consolidation Plan.
Number of consumers  16,956 20,118
K.W.H. produced and purchased   50,757,000 56,985,000
K.W.H. sold to consumers   44,785,000 50,146,000
Average revenue per consumer  $70.59 $65.45
Average revenue per K.W.H.   2.7 2.6
Total revenue   $1,196,900 $1,316,800
Operating costs—
Administration   $117,353 $100,000
Production—operation and maintenance   288,740 305,913
Distribution—o peration   and
maintenance    140,612 204,388
Depreciation on plant   163,700 271,079
Taxes, land, etc.  .  11,891 12,241
Income taxes, non-refundable   132,285 	
Total, exclusive of interest _._.     $854,581 $893,621
Available for return on capital       342,319 423,179
Net investment (reported original cost
less depreciation reserve)    $3,633,878 $8,452,990
Ratio return to net investment            9.4% 5.0% RURAL ELECTRIFICATION COMMITTEE. V 41
The foregoing comparisons are of conditions as they are and as they would be in
the first stage of the programme. Under that programme there would be adequate
generating and distribution facilities for a great increase in production and sales at
very little additional cost. The possibilities for developing sales of electrical energy
under rates permitting general uses are obvious. As the use and sales increase
the average unit cost to the consumer will decrease.
The costs need not be increased to existing consumers if the project can be financed
fully at less than 5 per cent, interest rate. Each 1 per cent, reduction in the interest
rate below 5 per cent, will permit 6% per cent, reduction in revenue upon the present
volume of business. Conversely each 1 per cent, addition to the interest rate above
5 per cent, will require 6% per cent, increase in revenue upon the present volume
of business.
Each 1 per cent, in the interest rate will be equal to $4 per year per customer.
(c.) If Projects cannot be on a Self-sustaining Basis,
how could they be financed?
It is submitted that electrical services should be established on a self-sustaining
basis; i.e., that revenues from service should be sufficient to pay all operating and
administration costs, to provide reserves to maintain unimpaired the plant investment,
and to pay the interest on capital invested. That is not to say that the revenues and
expenses should be balanced in the first month or the first year of each operation, but
a utility project should be planned so that expenses and revenues will balance over
a foreseeable operating cycle. The first part of such a cycle will begin with the organization, planning, and construction of facilities. Plans and facilities must be in advance
of one year's requirements; they should provide for a period of growth in service and
for stimulation of growth. Consequently in the first part of the operating cycle
the expenses may be expected to exceed the revenue; in the middle of the cycle
the revenue may be expected to equal the expenses; in the final part of the cycle
the excess of revenue over expenses must balance the deficiency in the first part.
Comparatively large amounts of capital are necessary for:—
(1.)  The construction of plant, and
(2.)  Working capital  or credit to  carry the  enterprise through  complete
operating cycles.
The interest or return on the invested capital is an important factor in the cost
of service. The ability of a utility to furnish a modern standard of service, and to
increase its use while decreasing its unit cost, depends in large measure upon its
capital resources and the rate of interest thereon.
Few individual investors have the knowledge and experience to assess the organization, management, and prospects of any particular utility undertaking. Their investment in utilities is subject therefore to a degree of risk that is reflected in the interest
or dividend rate. There should be a minimum of risk to investment in soundly conceived and efficiently operated electric utilities. Prior to the imposition of large-scale
taxation those utilities which were soundly planned as regional systems and operated
under Government agencies had an advantage over privately-owned utilities because
the Government guaranteed the investor against any risk, real or assumed, and thereby
enabled the systems to obtain capital at low cost. The enormous increase in Dominion
income tax applicable to private companies is a fact which further increases the difficulty of financing privately-owned utilities. Apart from land, school, and other
municipal taxes, the electric utility service operated by companies in British Columbia
paid Dominion income taxes totalling $3,469,000 in 1943. It seems incongruous that
an industry paying national taxes on this scale should have to be subsidized. V 42 FINAL REPORT.
It has been indicated in this report that a limited service to a great majority of
the population is, or can be, furnished on a self-sustaining basis. But it is possible
that costs of that service in some of the areas listed in Group II. may be too high to
promote sufficient use to materially improve the living conditions of the rural consumers. It may then be in the public interest to stimulate, an extensive use by
departure from a strict cost basis. To what extent this should be done becomes a
matter of policy.
After consolidation of Group II. is effected there may be a few thousand potential
consumers beyond economical distance of the improved services. In such cases it may
ultimately appear in the public interest to provide some degree of direct governmental
assistance by way of operating subsidy or payment for distribution facilities.
7. OTHER TECHNICAL AND ECONOMIC INFORMATION IN RESPECT TO
RURAL ELECTRIFICATION WITHIN THE PROVINCE.
The principal difficulty restricting rural electrification in the Province is the uneconomical number of agencies engaged in furnishing a degree of service to small isolated
groups of consumers. No significant progress can be made in rural electrification
unless the industry which must undertake extensions to rural areas is organized to
plan, finance, build, and operate efficiently. It is obvious that a few hundred consumers
cannot provide sufficient volume of business to support an efficient public utility
organization and to pay the carrying charges on the capital investment required for
such an undertaking.
The success of any reorganization of the industry will depend upon:—
(1.) The inclusion of a number of consumers sufficient to warrant the employment
of competent personnel to plan, build, and operate the necessary plant facilities.
(2.) The development of the uses of electrical energy by those to whom a limited
supply is now available. The present use of electricity is not sufficient to warrant
the capital cost of adequate facilities, and more general use will depend upon rate
schedules which will permit electricity to compete successfully with other fuels for
cooking, water-heating, auxiliary space heating, etc.
(3.) The ability of the reorganized industry to obtain capital and credit to
construct facilities and to provide working capital over a necessary period of load
development.
The latter is important, for it may require from three to five years under promotional rates to build a self-sustaining volume of business. At the present time electrical
equipment and appliances are hard to obtain and will be for a considerable period after
the war. This period could be used advantageously for the planning and construction
of necessary plant facilities and for the reorganization of the industry so that it would
be ready to meet the post-war demand.
The twenty-three areas in Group II. of Table 2 represent what may be considered
a minimum requirement for a self-sustaining enterprise. The amalgamation of these
areas under a single organization, whether the latter be a private company or a public
authority, would seem to require legislative action. Even in the case of consolidation
under a private operation it may be necessary for the Province to participate in financing so that the lowest rate of interest may apply to plant investment, and so that
the credit of the undertaking can be maintained during a reasonable development
period.
In the twenty-three areas suggested for consolidation the existing utilities now
have a reported net capital investment in plant totalling $3,634,000. There are now
16,956 connected customers who also have a considerable investment in wiring, motors,
fixtures, and appliances which may average $200 per customer and in the aggregate RURAL ELECTRIFICATION COMMITTEE. V 43
may be over $3,000,000. Under existing conditions both the utilities' and the consumers' capital outlay are being utilized on a short-time and costly basis.
Even when the facilities for producing and distributing electricity are provided it
is necessary for the subscribers to make a considerable expenditure for wiring and
appliances before general use can be made of the service. It is suggested that some
provision whereby the central utility could make limited short-term loans to subscribers,
for wiring and appliances, would encourage the use of service and the development of
load.
The survey by this Committee and its report deal primarily with rural electrification. Consequently, the methods suggested herein for improving rural electrification
by consolidation apply only to those areas and services which must be expanded to
carry out a practical general plan. There are other communities with inadequate and
costly service which might be included in the general plan when its advantages are
demonstrated.
As referred to in the letter of transmittal, your Committee has confined itself as
closely as possible to the financial feasibility of rural electrification as expressed in
the terms of reference and has not considered the possible general economic and social
improvement which might result in assisting the rehabilitation of the rural areas by
providing those areas with electricity on similar terms to those in the larger cities of
the Province.
If it is accepted as a fact that for the economy of the country as a whole the rural
areas should be populated in order to provide agricultural products and reduce the
importation of foodstuffs, it may be desirable as a contribution to rehabilitation to
provide farm families with modern conveniences even though the agency supplying
those conveniences is not self-sustaining. The inevitable trend, however, will be to
build electric lines that are not self-sustaining; therefore there should be a limit set
below which densities per mile of line or minimum revenue per mile should be considered even from the social standpoint. There is no justification for building the
lines which have no semblance of self-support.
The Committee suggests the consolidation of the smaller utilities in order to
provide a better financial status and more economical management, thereby permitting
a reduction in the retail charges. Under such a consolidation it may be possible to
establish uniform wholesale costs to the several distributing areas by pooling the production and transmission expenses. To establish uniform retail rates in the distributing areas within the suggested consolidation would necessitate increasing the rates in
the larger cities and towns in order to make the enterprise self-sustaining. As an alternative some plan of governmental subsidy would be required to absorb the deficits.
This is a matter of policy.
In 1941 the Legislature of Tasmania amended the " Hydro Electric Commission
Act" of that State to bring into effect uniform charges throughout the State for
electricity for other than bulk supply purposes. These charges to be the same as those
ruling in the city of Hobart.
This reflects the idea that has begun to appear in some quarters to the effect that
charges for electric service, like postage, should be uniform to all without reference to
cost. This idea, attractive as it may be as a social development, holds a possible danger
to the successful operation and expansion of the electric industry, whether privately
or publicly owned. The experiment in Tasmania, combined with the proposal to extend
rural service beyond economic limits, will, according to the Commissioners, turn the
former successful operation of the Commission into a serious burden on the taxpayers. V 44 FINAL REPORT.
The idea appeared in a somewhat different form in Ontario, when in 1943,
the Government suggested the elimination of service charges in the rural areas.
The Chairman of the Hydro-electric Commission pointed out that a subsidy by the taxpayers of $1,600,000 a year would be required if the financial standing of the Commission was not to be jeopardized.    The proposal was materially modified.
It is a common, almost universal practice, to set up uniform charges for a class of
customers within the limited areas such as a city, municipality, or district. This is
justified when the differential in cost is so moderate that none in the consolidation is
seriously adversely affected.
But the same scheme on a Province-wide basis may be quite impractical. Here
the differential in cost is much greater and the average charges may appreciably exceed
those paid by some of the group. This increase may well result in an increase in cost
to all and a consequent decrease in use and to a general slowing-up of the ultimate
objective, the widest possible use of electricity in the service of the public.
Any artificial reduction below basic cost by uniform charges or otherwise should
be approached with caution and the best technical and expert advice should be sought
and followed.
RESUME.
1. There is no definite line between rural electric service on the one hand and urban
and suburban on the other.
2. There is a close interdependent relationship between rural electrification and
the central station industry established to supply cities, towns, and villages.
3. Extension of rural electric service requires a sound and progressive central
station industry.
4. The large number of small separate organizations supplying electricity in the
Province is a serious obstacle to a sound industry and extension of service.
5. The number of customers served by many of the organizations is too small to
support the technical personnel necessary to promote good service.
6. The overhead cost of the many organizations is excessive.
7. Electricity for lighting service is available to a large percentage of the population of British Columbia.
8. Average consumption for domestic purposes is less than half that of the
comparably sized communities in Ontario and the average unit cost is more than double.
9. The average unit cost cannot be materially reduced unless consumption is
increased.
10. Increased consumption will necessitate increased plant capacity which requires
a substantial capital outlay.
11. Many of the organizations have not the capital or the ability to secure it to
provide the required expansion of service and to operate it during the development
period.
12. Some of the larger and financially stronger companies may be able to secure
the necessary capital.
13. In the case of these companies the cost of rural extension bears so small a ratio
to the total cost of operation that the cost of rural extensions will have no appreciable
effect on urban service.
14. The volume of business of the other companies is so small that rural extension
will have a serious effect on the business already established.
15. In the opinion of the Committee, a major reorganization of the central station
industry is necessary not only that service may be extended in the rural areas but also
that rates and service in towns, villages, and areas at present served may be improved.
16. In the reorganization as many as possible of the present supply systems should
be combined under one control which should have sufficient capital to carry out an RURAL ELECTRIFICATION COMMITTEE. V 45
extensive construction programme and to carry on the operation of the combined
systems until they become self-sustaining.
17. The organization proposed cannot be expected to be self-sustaining until a
sufficient load is built up to carry the expanded supply systems.
18. The length of the deficit period suggested above will depend on the energy,
initiative, and vision of the administration, on its freedom from excessive overhead
and other adverse influences, on availability of appliances, and on the establishment of
a scientific rate structure.
19. Until a policy of reorganization is determined, estimates of rates give no
information of value.
20. Service should be provided at cost and the cost should be kept to an absolute
minimum. The cost of capital—interest on borrowed moneys or dividends to shareholders—should be carefully controlled. Unnecessary capital costs, excessive overhead, profits to municipal or other public ownership organizations are all detrimental
to expansion of service.
21. The undeveloped water-powers of the Province are not at present a material
factor in rural electrification. Their development depends on a general growth of the
demand for domestic, commercial, and industrial purposes. For the time being many
of the smaller communities must be served by individual fuel plants which should be
standardized and improved and which should be controlled by a centralized organization. V 46
FINAL REPORT.
3
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FINAL REPORT.
TABLE 4.
Group 1.—Statistics relating to Service furnished by Privately-owned
Utilities in Five Extensive Areas where Rural Service is Available.
Area.
Total No. of
Consumers
(all
Classes).
Average
Annual
Domestic
Consumption.
Average
to
Cost per K.W.H.
Consumers.
No.   OF
Potential
Consumers
NOT  NOW
CONNECTED.
Domestic.
Commercial.
Industrial.
Urban.
Rural.
(i.)   Lower Mainland.
K.W.H.
Cents.
Cents.
Cents.
107,543
1,157
875
2.18
2.46
253
Fraser Valley (suburban and rural)...- 	
15,248
2.57
3.07
1.43
3,128
(51.)   Okanagan District.
Vernon (1943 data)	
2,749
900
4.12
5.27
1.84
Armstrong, Enderby, Salmon Arm, and rural
1,427
769
5.20
4.30
1 74
1,185
(iii.)   Areas supplied by West Kootenay
P. & L. Co.
Benvoulin, Black Mountain, etc. (1943 data)..
587
478
6.7
9.4
2.5
94
640
4.8
3.2
5.7
133
16
707
7.7
17.8
339
649
6.4
7.2
2 9
21
437
9.0
1.4
2 2
Creston, Wynndel 	
747
459
6.9
6.3
2.6
512
535
615
6.6
6.9
0.9
104
122
465
7.4
6.9
1.7
130
166
931
5.2
7.8
1.2
151
Hedley, Ellison— - —
173
635
6.1
9.3
0.8
52
1,192
3.9
9.0
1 4
47
Keremeos   	
116
627
6.4
8.7
1.8
77
45
6.6
11.4
143
548
6.5
8.4
2.3
99
758
5.5
10.7
5.0
458
536
6.9
7.7
1.4
133
543
6.9
8.4
2 0
1,104
984
3.1
3.4
3 3
3,582
1,211
3.1
4.1
(iv.)   Vancouver Island South.
Victoria,    Esauimalt,    Oak    Bay,    Saanich
(1942 data)	
22,456
1,006
2.5
2 8
Cobble   Hill,   Mill   Bay,   Shawnigan   Lake,
Sooke,   and   rural   areas   of   Vancouver
Island South (company estimate) -
4,632
752
3.4
3.9
1.0
342
(v.)   Vancouver Island Centre.
1,091
6.6
853
729
6.4
8 3
^
2,916
5.4
Nanaimo (rural areas) (company estimate) —
1,390
447
7.2
6.0
2.7
27
Saltspring Island  __	
210
561
8.6
8.9
2.6
Parksviile-Qualicum, etc....	
343
545
7.3
8.2
416
169,390
253
6,798
* Not including energy supplied Consolidated Mining & Smelting Co. RURAL ELECTRIFICATION COMMITTEE.
V 53
TABLE 4.
Group 2.—Statistics relating to Service furnished by Privately-owned Utilities in
other Towns and Rural Areas.
Area.
Utility.
Total No. of
Consumers
(all
Classes).
Average
Annual
Domestic
Consumption.
Average
to
Cost per K.W.H.
Consumers.
No. op
Potential.
Consumers
NOT  NOW
CONNECTED.
Domestic.
Commercial.
Industrial.
Urban.
Rural.
Mainland.
K.W.H.
Cents.
Cents.
Cents.
Ashcroft	
Ashcroft   Water,   Electric   &   Improvement Co.
136
912
5.7
7.8
6.7
Barkerville	
Barkerville Light & Power Co	
28
208
19.6
13.0
Bowen Island	
Union Estates, Ltd.	
146
158
10.0
345
5
729
210
4.9
17.0
4.1
0.6
	
Bull River
60
143
20.0
16.0
21
Larsen, C. G	
43
240
6.5
6.5
Chase 	
Carlin Bros	
82
200
12.9
15.0
Clinton	
Clinton Motors and F. T. Boyd	
20
235
20.0
20.0
	
44
335
7.7
& Power Co., Ltd.
Crowsnest -
East Kootenay Power Co., Ltd	
16
1,124
7.0
	
413
488
10.7
7.4
7.2
Pouce Coupe
Elko         	
48
162
9.0
7.2
59
Fort St. John.	
Canadian Utilities, Ltd 	
155
245
14.8
11.3
Columbia Power Co., Ltd 	
Kitanmax Water & Power Co	
140
45
374
218
12.4
25.0
10.8
12.5
15
21
8
Hazelton	
53
132
317
12.3
8.4
85
Invermere	
Invermere Contracting Co	
45
157
27.5
25.4
12
160
B.C. Electric Railway Co., Ltd.
2,427
1,152
2.9
4.8
1.9
234
1,611
1,085
3.4
3.2
22
Co., Ltd.
73
254
16.9
8.6
3.0
Michel..-	
Crow's  Nest Pass Electric Light
& Power Co., Ltd.
573
465
6.5
8.5
19
13
600
2.0
3.9
Nakusp 	
Columbia Power Co., Ltd	
233
313
9.51
2.9
397
Prince Rupert—
Northern B.C. Power Co., Ltd	
3,369
1,545
2.2
3.6
1.5
40
Princeton 	
Princeton Power & Light Co., Ltd..
562
361
6.5
5.5
5.4
Quesnel Light & Water Co., Ltd. ..
256
422
8.4
8.9
6.0
17
14
16
641
4.4
Sechelt..—	
Columbia Power Co., Ltd  	
273
230
14.7
6.8
103
Silverton, New
Denver Light & Power Co., Ltd	
199
912
5.7
6.5
4.1
Denver
296
40
334
175
12.3
10.0
11.2
57
South "Wells     -   -
Spences Bridge -
Spences Bridge Light & Power Co.
21
600
10.0
10.0
10.0
195
V a nderhoof	
Columbia-Vanderhoof  Power Co.,
Ltd.
101
345
13.6
13.3
40
13
"Wardner— —
East Kootenay Power Co., Ltd	
28
644
8.6
71
Wells-	
Wells Townsite Co.. Ltd	
116
456
10.5
7.7
Westside Utilities, Ltd.. _	
85
325
12.4
8.8
3.6
Williams Lake —
Columbia Power Co., Ltd	
152
581
10.6
9.7
20
31
12,347
125
1,582
Vancouver
Island.
2,244
598
4.7
4.0
3.3
89
Ltd.
Alert Bay Utilities, Ltd.
146
452
10.3
10.4
5.3
9
Campbell River„.
Vancouver Island Utilities, Ltd	
299
581
7.2
7.9
4.1
130
Cumberland-
Cumberland Electric Lighting Co..
675
390
8.2
4.8
2.0
Minto
Lake Cowichan...
Lake Cowichan Electric Co	
106
225
10.0
50
Royston	
Royston Light & Power Co., Ltd	
57
570
6.7
4.1
	
14
3,527
292
Mainland.
B rought forward
12,347
125
1,582
15,874
~       1     	
125
1,874 V 54
FINAL REPORT.
TABLE 4.
Group 3.—Statistics relating to Service furnished by Municipally-owned
Utilities in Towns and Rural Areas.
Area.
Total Number op
Consumers
(all Classes).
Average
Annual
Domestic
Consumption.
Average Cost per K.W.H.
to Consumers.
Number of
Potential
Consumers not
now connected.
Urban.
Rural.
Total.
Domestic.
Commercial.
Industrial.
Urban.
Rural.
683
283
905
914
373
272
1,892
539
82
362
2,164
6,380
586
16
181
3
1,269
299
1,086
917
373
272
1,892
665
82
362
2,769
6,643
119
2,063
886
906
699
694
184
K.W.H.
701
586
480
471
496
500
838
397
212
250
970
645
397
830
382
1,272
465
684
704
Cents.
4.85
4.22
5.69
6.07
7.17
7.00
4.30
8.26
13.45
13.56
4.45
4.52
7.13
4.03
10.12
3.20    '
4.90
3.86
2.58
Cents.
4.29
2.71
2.84
5.95
2.92
6.00
4.55
5.02
15.97
7.00
5.02
3.65
4.46
7.57
5.79
3.85
2.06
3.03
Cents.
3.18
1.89
3.29
3.00
1.91
4.01
2.07
1.91
4.13
1.44
2.57
12
60
45
92
25
25
Ladysmith  —
126
6
58
Nelson (estimated)	
605
263
119
280
58
100
699
54
Penticton (estimated)...
Prince George.. -	
1,783
828
806
228
61
694
184
Totals	
19,144
3,036
22,180
1
12
654 RURAL ELECTRIFICATION COMMITTEE.
V 55
TABLE 4.
Group 4.—Statistics relating to Service furnished by Primary Industries and
Institutions to Employees and others.
Area.
Utility.
Total No. of
Consumers
(all
Classes).
Average
Annual
Domestic
Consumption.
Average Cost per K.W.H.
to  Consumers.
No. OF
Potential
Consumers
not now
connected.
Domestic.
Commercial.
Industrial.
Urban.
Rural.
Mainland.
Albert Canyon..
Allenby, Copper
Mountain
Bella Bella
Canadian Pacific Railway Co., Ltd.
Granby Consolidated M.S. & P. Co..
B.C. Packers, Ltd  	
Britannia Mining & Smelting Co..
6
89
220
59
89
11
53
106
76
502
91
513
14
207
K.W.H.
400
207
600
390
229
400
457
573
289
4,432
476
22,822
500
240
Cents.
4.0
2.8
5.0
8.0
12.4
4.8
4.1
10.5
10.9
0.7
4.8
0.4
11.9
10.0
Cents.
6.0
6.0
12.7
4.1
3.7
10.5
0.3
8.1
1.3
11.9
7.3
Cents.
1.5
0.6
0.5
0.5
(Seel
Britannia Beach
Field ...	
Glacier 	
Harrison Hot
Springs
Kimberley	
Lillooet	
North Bend
Canadian Pacific Railway Co., Ltd.
Canadian Pacific Railway Co., Ltd.
Harrison Hot Springs Hotel Co.
Consolidated   M.   &   S.   Co.,   Ltd.
(included in Table 2a)
Pacific Great Eastern Railway Co.
Canadian Pacific Railway Co., Ltd.
Pacific Mills, Ltd	
able 2b.)
61
Port Alice.	
B.C. Pulp & Paper Co., Ltd.  (employees only)
Consolidated M. & S. Co., Ltd. .
	
Powell River
Rosebery-Sandon
Radium Hot
Springs
Powell River Co., Ltd... 	
B.C. Security Commission  (Japanese only)
Dominion Government	
Pacific Great Eastern Railway Co-
Province of B.C. (own use only)	
Tranquille	
2,036
	
61
Vancouver
Island.
198
60
640
1,191
5.0
2.9
1.3
3.6
Youbou.. 	
Industrial Timber Mills, Ltd	
258
2.294                	
61
VICTORIA,  B.C. :
Printed by Charles F. Banfield, Printer to the King's Most Excellent Majesty.
1945.
755-145-4592 

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