Black Hills Power and Light, Decade of the 40's
On November 1, 1942, the Black Hills Power & Light Company purchased the Edgemont electrical property and power plant from Mountain States Power Company in Casper, Wyoming. Edgemont, at this time, was a small town of approximately 1,000 in population, located about 50 miles south of Custer. It was the company's southernmost town. The power plant at Edgemont consisted of two 120 kW internal combustion engines, a 60 kW internal combustion engine, and a 136 kW internal combustion engine for a total capacity of 436 kW.
Natural gas was burned under the boilers at the generating plants at Rapid City and Pluma. The War Production Board restricted the Montana Dakota Utilities Company in the drilling of new wells and on extending the necessary gathering lines. The Gas Company notified the Company that these restrictions were causing a shortage of gas in the area.
The Homestake Mining Company's coal burning plant near Pluma had excess generating capacity because their gold mining operation was shut down for the duration of the war. The Company and Homestake worked out an agreement where Homestake generated a part of the Company ' s requirements for the duration. The Company did not serve the Homestake Mine, but their operation did have a very substantial, indirect bearing on the Company's business. When the mine closed, Lead and Deadwood's population decreased between 10 and 20 per cent because the miners and their families moved to other areas where work was available.
The war years not only saw the gold mines close down and the consequent loss of population, but gas and rubber restrictions nearly closed down the tourist industry. Manufacture of current consuming appliances was stopped which prevented any load building and marketing activities.
Approximately one-third of the 150 employees in 1941 moved on to defense plants or joined the armed services. A few were replaced, but most were not. The regular employees accepted the additional burden and did an excellent job, evidenced by the fact that the Army Engineers expressed their appreciation for the dispatch and efficiency with which the Company completed the work on the defense projects. The employees also signed up a 10 percent salary allotment plan for the purchase of war bonds for their individual accounts.
In 1943, Mr. Nesbitt resigned as a Director and Officer of the Company and Guy N. Bjorge of Lead, South Dakota, was elected as a Director of the Company. Kermit F. Fenner was elected as Assistant Treasurer of the Company in 1944. He came to the Company in 1931 after graduating from the South Dakota School of Mines.
During the first years of the Company, Leo Loeb of Loeb and Ames Consulting firm in New York worked very closely with Mr. French on engineering and financing plans. They became very close friends. A man who also had a part in the formative years of the Company was Henry Mulcahy, a New York attorney who guided the Company's legal work in the financial area in the early days.
The generating plant at Edgemont was closed down because of its physical condition and a nine-mile transmission line to the Provo plant was built to serve the 485 customers in Edgemont.
During 1943 the Company employees purchased"K" war bonds through the Employee Insurance and Welfare fund to which the Company also made a substantial contribution. The bonds were held in trust for the employees for the duration of the war. The purchase price of bonds held on November 1, 1943, was $33,318.75.
In July of 1943, the Company arranged with Equitable Life Assurance Society for a pension Plan for the employees. The Company paid all of the cost for the plan for the duration of the war. After the war, both the Insurance and Welfare plan and the pension plan were put on the normal employee participation basis.
The bentonite plants, feldspur plants, and sawmills operated at full, schedule during these years, and there were several small mines producing mica and other minerals essential to the war effort. Agriculture and range conditions were favorable, and the cash income of the farmers and ranchers was considerably above average.
Early in 1942, after the Company had lost a large number of employees to the Armed Forces and defense plants, the work week was increased from 40 to 48 hours. The Company got along with a total of approximately 100 employees as compared to 150 during prewar times.
During the war, a high degree of cooperation was demonstrated by the employees, as evidenced by their ability to maintain almost normal service to the customers. With the approval of the War Labor Board, two general wage increases were made and the normal individual merit increases were given periodically. The increases, along with the overtime resulting from the 48 hour week, did increase the total wages paid, but did not unduly increase the hourly wage scale. On November 1, 1945, the work week was reduced from 48 to 45 hours and the wage scales were increased sufficiently so the employees' take-home pay was the same as they had received for the 48 hours. On November 1, 1946, the work week was again changed from 45 hours per week to 44 hours per week.
The Company began working with the city officials of various towns on a program to improve streetlighting as soon as equipment became available. Five towns signed contracts in 1944 that would call for reduction in rates for current used for streetlighting but provide for increases in use ranging from 10 percent to 40 percent.
In 1945, mining operations were resumed and soon reached normal levels. The lumbering industry was in full swing and it was felt it would continue at a high level for several years. Crop yields and farm product prices were relatively high. Livestock prices were good and the cattle ranchers had good prospects ahead. The future of the tourist business was especially bright. It was felt that this business would be limited only by the available housing facilities.
Both the Rapid City Army Air Base and the Black Hills Ordinance Depot were active, and there was reasonable assurance that they would continue to be active on some scale for a considerable period, perhaps permanently.
In 1945 the Company offered a new schedule of optional rates which met with approval of the customers. The new rates were offered on an optional basis and were designed to be promotional in character. The results of a study had shown that new homes were high on the want list of the average family. It also showed that those who were planning these post war homes favored the complete electric home except for space heating. The complete electric home would contain an all-electric kitchen equipped with an electric range, dishwasher, and garbage disposal unit. In some homes the kitchen would also contain an electric water heater, automatic clothes washer, dryer, and ironer.
It was felt that it was important to make the new rates available to the customers at that time so they could definitely plan for electric equipment in their new or remodeled homes. The optional rates offered were as follows:
For residential customers having lighting, small appliances, and refrigeration:
Base rate $1.00 per month plus 3 cents per kWh.
For residential customers who install and regularly use an electric range:
Base rate $2.00 per month plus 2 cents per kWh.
For residential customers who, in addition to the above, have installed and regularly use an electric water heater:
Base rate $3.00 plus l cent per kWh.
Arrangements were completed in 1945 for the sale of $600,000 of Series B 3 percent 30-year bonds at par to the Equitable Life Assurance Society, holder of our presently outstanding 3 percent Series A bonds. This sale was completed on July 20, 1945. As part of the deal, Equitable reduced interest charges on Series A bonds outstanding after October 15, 1945, from 3 1/2 percent to 3 3/8 percent. This meant a savings of $2,500 per year on the $2 million of Series A bonds presently outstanding.
Electrical merchandise was still extremely limited. To solve the problem, Mr. French worked out a plan for the participation of employees in the sale of merchandise, which he believed would move electrical appliances in maximum volume and increase kWh sales. The plan was for each local Company manager and their employees to incorporate an appliance retail sales and service operation with the Company, providing support at an established price to the local appliance companies. Floor space, accounting, inventory and supplies were some of the support available.
Also during 1945, a large network transmission and distribution program was started to connect the existing power plants together from Edgemont to Custer and Custer to Pluma through Pactola where a large switching station would be located. Then a line from Pactola to Rapid City would complete this large $700,000 project.
Prior to 1945, it became apparent that gas would not be available to the Company for fuel after 1948, so the Company began to search for fuel.
It was found that oil was available in reasonable quantities, but deliveries were uncertain during winter months and prices were too high to permit economical use as boiler fuel. An unlimited supply of sub-bituminous coal was less than 100 airline miles away, but because of intervening mountain ranges, the rail routes around the mountains made the freight charges prohibitive. It was decided to build a plant in Wyoming, near the supply of coal. A site was found near Osage which was ideal. In 1943, the Company had discovered an abandoned oil well flowing 720 gallons of water per minute. The water was analyzed and a study made on the probable life of the well and the possibilities for securing additional water. The site was only about 60 miles from the coal supply which satisfied one of the requirements for a good plant location. It was also close to the fuel source with an adequate supply of water, and not too far from the Company's electrical load centers.
The Company purchased the well and 480 acres of land in 1945 and selected the plant site near the CB&Q Railroad and near Highway l6so that coal could be delivered either by truck or rail. The site was close enough to South Dakota to permit the use of 69 kV transmission lines.
The surrounding country was typical Wyoming cattle country. There was no available housing for employees at Osage so it was necessary for the Company to build employee housing and to provide a water system. The nearest supply of plant materials and construction labor was Denver, Colorado. Stearns Rogers Manufacturing Company of Denver was the contractor. In spite of the many problems encountered, the first 10,000 kW unit was put in service on September 29, 1948. The total cost was approximately $170 per kW which was "quite low under present conditions", especially when it is considered that this plant was constructed in the middle of bare prairie country, miles away from the source of supply of labor and materials.