Formation of Black Hills Power and Light Company
In 1935 the Congress of the United States passed a new Public Utility Act which stipulated that holding companies should be abolished and utility properties broken up into smaller groups, confining their activities to small geographic territories. The Dakota Power Company was a subsidiary of the General Public Utilities Company which also owned the General Public Utilities properties in the Northern Hills. General Public Utilities was, in turn, affiliated with the Community Power and Light Company who owned some properties scattered over ten states.
In conformity with this act, the Community Power and Light Company divided their properties into small integrated groups and offered them for sale.
There were only two bidders for The Dakota Power property. When J. B. French discussed these bids with local people he found that neither of them was acceptable to the community so he conceived the idea of organizing a South Dakota corporation to take over everything in the Hills except Hot Springs, Edgemont and Newcastle.
The new company, Black Hills Power and Light Company, was organized in August 1941 by George Philip; Judge Rice; Mr. Nesbitt, Manager in Deadwood; and J. B. French. Mr. French spent several months in Washington and New York working out a satisfactory plan with the Securities and Exchange Commission (SEC). After the plan was approved by the SEC an arrangement was completed with Dillon-Read and Company of New York to sell the securities. On October 30, 1941, the properties were purchased and the securities were turned over to Dillon-Read for resale.
They immediately sold $2 million of bonds to one of the large insurance companies, Equitable Life Assurance Society of the United States. They then organized a group of about 35 security dealers scattered all over the country and through them began selling to the public. There were 8500 shares of 5 percent preferred stock at $100 per share and 100 thousand shares of common stock which was offered for sale at $16.50 per share. The stock was made available to local purchasers through W.G. Edwards company of Rapid City or arrangements could be made through several of the Black Hills banks.
Mr. French felt and so stated, "Black Hills Power and Light Company bought the property at a very reasonable price and, through the Dillon-Read connection, will be able to sell additional securities to finance reasonably necessary improvements. The management will be under the control of Black Hills men and we believe the company will be able to serve the community economically and well."
The people who served on the first Board of Directors of Black Hills Power and Light Company were:
- Jarvis D. Davenport, Sturgis, South Dakota
- J. B. French, Rapid City, South Dakota
- Liewellyn H. Heinke, Holland, Michigan
- Louis R. Myers, Little Rock, Arkansas
- Henry A. Nesbitt, Deadwood, South Dakota
- George Philip, Rapid City, South Dakota
- William G. Rice, Deadwood, South Dakota
- Mr. French was Chairman of the Board of Directors.
Officers of the Company included:
- J. B. French - President - Rapid City, South Dakota
- Neil G. Simpson - Vice President- Rapid City, South Dakota
- Henry A. Nesbitt - Vice President - Deadwood, South Dakota
- B. B. Neel - Secretary-Treasurer - Rapid City, South Dakota
- Elta Newkirk - Assistant Secretary - Rapid City, South Dakota
Mr. French often spoke about the period when he came to Rapid City in 1929 until the time Black Hills Power and Light Company began operations, "Financing had always been a problem, and there were many times when we didn't have the money to do the things we needed to do, but we always managed to scrape through by the skin of our teeth." He thought that when Black Hills Power and Light Company was organized we would have our financial worries behind us, but it didn't turn out to be quite that easy. On many occasions Mr. French talked about the philosophy that was ingrained in his mind by his previous experiences with the Dakota Power Company. "We must have adequate financing, provide good service, and have excellent public relations. These are the ingredients for a successful company."
From that philosophy he adopted the policy of sharing the company's success as equally as possible with the employees, the customers, and the stockholders. That philosophy and policy has been a tradition in Black Hills Power and Light Company. The tradition is the focus, but the methods used to accomplish the goals change from time to time as the leadership of the Company changes. The records show that this same philosophy and policy still exist and is practiced in the Company.
On December 7, one month and six days after the Company began operations, the bombing of Pearl Harbor occurred. Almost immediately, construction of two defense projects in the area, the Rapid City Army Air Base near Rapid City and the Black Hills Ordinance Depot near Edgemont, were started and both needed a reliable power supply.
The local Rural Electrification Associations, with the backing of the National Rural Electrification Administration, were very eager to build plants to serve the defense projects and were highly competitive in bidding for the business. They also tried to buy the Edgemont property that Black Hills Power and Light Company had an option to buy. The REA had an extensive system of paralleled transmission lines planned through the territory and expected to compete with the Company for other business in the area.
A twelve-mile line was built from the Rapid City plant to the Air Base and the Company began serving the Base with power in April 1942. Construction began on a new diesel generating plant at Provo near the Black Hills Ordinance Depot.
The Provo Plant consisted of five 300 kW internal combustion engines; one 625 kW internal combustion engine; and two 240 kW internal combustion engines, for a total capacity of 2605 kWs.