Utah Power And Light Company Business Information, Profile, and History
Portland, Oregon 97232-4116
History of Utah Power And Light Company
Utah Power and Light Company (UP&L) is the major provider of electrical power in Utah and the Intermountain West. Since its creation in 1912, it has acquired more than 100 small power producers and supplied power for the area's homes, companies, and cities. UP&L has encouraged the use of electrical consumption by promoting appliances and the benefits of modern electrified life. It has endured many challenges from the Great Depression to the energy crisis of the 1970s, when it began emphasizing energy conservation and finding new sources of energy. In 1989 UP&L became a subsidiary of Portland-based PacifiCorp, which operates in seven states: Oregon, Utah, Washington, Montana, Idaho, California, and Wyoming. In late 1998 Scotland-based ScottishPower began the acquisition of PacifiCorp, but government approval was pending. Heavily regulated historically by state laws and policies, UP&L and most electric utility firms face a major change from probable energy deregulation and increased competition as the century ends.
Preliminary Power Developments in Utah
Strange as it may seem, Utah played a key role in the history of electrical power. While Utah was still a federal territory, in 1880 the Salt Lake Power, Light, and Heating Company was formed. Following London, New York, San Francisco, and Cleveland, in 1881 Salt Lake City became the world's fifth city to electrify with a central station source of electricity. Dr. John McCormick in his history of UP&L described this dramatic moment: "At 8 p.m. the lights came on. Even a blind man would have known it because a loud shout went up from the assembled spectators, and those who had remained inside until the last moment rushed out into the already crowded streets. At first there was only a faint, pale glow, but it gradually grew brighter and brighter until each lamp 'glowed like a sun, being fully as dazzling to the eye and lighting up every nook and corner within their reach with the brightness of noonday'."
One of the first main uses of electricity was to run streetcars. The Salt Lake City Street Railway Company in 1872 had started the city's first streetcars pulled by horses and mules. In 1889 electricity replaced the animals in Salt Lake City's trolleys, allowing some families to live further from downtown. Ogden, Provo, and Logan, Utah also had electric streetcars.
Electric streetcars within cities led to electric trains between cities. Five such interurban trains were built in Utah, starting in 1891 with the Bamberger line between Salt Lake City and Ogden, originally a steam-powered line. Other interurban electric lines were built across the nation, reaching a peak of 15,580 miles in 1916.
Although people marveled at the changes from the electrical revolution, for a generation rival power companies wasted resources fighting each other. For example, different firms erected their own power lines, resulting in a maze of electric, telephone, and trolley lines in Salt Lake City. Plants remained small and inefficient, and rural consumers seldom received power. McCormick called it a "nightmare."
Well into the 20th century, consumers could get electricity only part-time. When the moon was bright, the lights went out in Salt Lake City. Plus, power was unreliable because of frequent equipment failure and vandalism. At the turn of the century, only about 20 Utah communities in nine of the state's 27 counties had electricity.
Early 20th-Century Incorporation
On September 6, 1912, Utah Power & Light Company was incorporated in Maine as a subsidiary of Electric Bond and Share Corporation (EBASCO). General Electric (GE) had started EBASCO in 1905 as a New York City holding company to consolidate small power companies in Utah, Idaho, and Colorado into stable entities that could purchase GE-manufactured equipment. EBASCO's 200-plus operating companies in 30 states supplied 14 percent of the nation's power in the mid-1920s.
Such consolidation was a major trend in the electrical industry in the early 20th century. By 1929, 16 holding companies provided more than 80 percent of the nation's electricity. Smaller firms simply did not have the capital and could not attract enough investors for the increasingly complex technology and huge service areas that needed access to electricity.
UP&L on November 22, 1912 acquired Telluride Power Company with its five power plants that served southeastern Idaho, western Colorado, and northern Utah. Telluride had started and UP&L finished a major hydroelectric and irrigation project on Bear Lake that McCormick said was "one of the first multipurpose reclamation developments in the nation." On February 7, 1913 Utah Power purchased another major firm, Knight Consolidated Power, started by Provo's Jesse Knight to provide electricity to his mines mainly in the Tintic Mining District south of Provo. Two months later, in April 1913, UP&L purchased Idaho Power and Transportation Company, Ltd. with its three plants serving customers in southeastern Idaho. And then in 1915 Utah Power made its fourth major early acquisition, that of Utah Light and Traction, which operated five power plants for Salt Lake City customers.
Utah Power eventually acquired some 130 companies. In addition to the four major acquisitions, it purchased shortly after its founding the Park City Light, Heat, and Power Company; Preston, Idaho's Idaho-Utah Electric Company; Shelley, Idaho's Gem State Light and Power Company; Provo's The Electric Company; the Camp Floyd Electric Company in Mercur, Utah; and several other small firms in Utah and Idaho. By 1922 UP&L operated 40 generating plants and had nearly doubled its miles of power lines to integrate its system. About half of its total capacity came from its Bear River hydroelectric plants.
The company also emphasized stimulating demand for power in its early years. Its Sales Department told consumers electricity was necessary for modern life, not just a luxury for the rich. It advertised the benefits of electric fans, blankets, irons, and toasters produced initially after the turn of the century. Since few dealers were available, the company sold and serviced electric stoves and refrigerators. To appeal to the new generation, it placed appliances such as stoves in public schools for cooking classes. Utah Power demonstrated the new labor-saving devices in schools and churches and even on sidewalks. In 1917 UP&L produced two movies promoting the advantages of electricity, not only for lighting, but for electric sewing machines, vacuum cleaners, and other new equipment.
Meanwhile, most industries, from mines to cement factories, had been electrified by 1922. That included agriculture, which increasingly used electric pumps for irrigation. UP&L pushed city lights to prevent crime.
World War I stressed the company due to labor and material shortages. Women helped make up for the men who left for the military after the Congress declared war in 1917.
The Twenties and the Great Depression
Utah Power enjoyed prosperity in the Roaring Twenties, when many American corporations increased their production and stock prices rose for many years. UP&L built three new plants in the 1920s, including its first steam plant, which marked the start of the declining role for hydroelectricity. It acquired 17 small power firms in Utah, Idaho, and Wyoming between 1922 and 1929.
The only negative aspect of that era, from the power company's perspective, was the increasing use of cars and trucks, which slowly replaced the electric trolley cars and interurban trains. According to McCormick, trolley use in Utah peaked in 1914 when only 6,216 cars were registered in the state. By 1929 Utah residents registered 112,000 cars, and the number of trolley passengers had declined rapidly. The power company tried a hybrid vehicle. In 1928 it pioneered the use of a rubber-tired trolley bus powered by overhead electrical lines. To gain further flexibility, internal combustion engines replaced the electrical lines, resulting in the modern bus that could go anywhere.
In 1929 the Great Depression began, and Utah Power suffered along with the rest of the nation. Utah's unemployment rate in 1932 reached 35.8 percent, the fourth highest in the United States. UP&L's customers, revenues, and kilowatt hours all began to decline in 1929. Plus, the company from 1932 to 1940 doubled its taxes to all levels of government and was forced in the 1930s to reduce its power rates by Utah's Public Service Commission. In 1935 Utah Power admitted that "it had been fighting for its very existence" for the previous five years. Provo and also Delta, Colorado rejected UP&L during the Depression in favor of their own municipal power agencies; the power company succeeded in defeating similar proposals in Salt Lake City, Ogden, and Montrose, Colorado.
UP&L survived the depression by drastically cutting its work force and the wages of its remaining workers. The company also eliminated salaries for board members, reduced dividends, and ended its free services on electrical appliances.
Increasing Demand from World War II
The Great Depression finally ended as the United States prepared to fight World War II. UP&L geared up to meet the electrical needs of the state's new military bases and defense-related companies. In the company's history book, UP&L's former President E.M. Naughton said, "The nineteen-forties were a busy time for the people of Utah Power & Light. In many ways it was like a three-ring circus."
New military installations needing power included Fort Douglas, Camp Kearns, Wendover Air Force Base, Ogden Arsenal, Hill Field's General Depot, Clearfield Naval Supply Depot, Tooele Army Depot, Dugway Proving Ground, and the Deseret Chemical Depot. The federal government built the huge Geneva Steel plant in Utah County, which was sold after World War II to U.S. Steel. Other defense plants that helped increase power demands included Salt Lake City's Remington Small Arms Plant with peak employment of 10,000, the Eitel McCullough Radio Tube Plant, and the Standard Parachute Company in Manti.
Such plants had to work around the clock, so Utah Power had to scramble to keep its systems working. That proved rather difficult because of war shortages of copper, steel, and rubber. The company sometimes was forced to use substitutes, for example, iron for copper. Meter readers used bicycles instead of cars. Overtime was common for Utah Power workers, not surprising in light of the 27 percent increase in output between 1940 and 1943.
Postwar Developments as an Independent Firm
As required by the 1935 Public Utility Holding Company Act, Utah Power on January 1, 1946 changed from an EBASCO subsidiary to an independent company with a new board of local directors. They led a company that for the next 20 years or so kept prices low and enjoyed steady expansion and prosperity. By 1967 its customers numbered 275,000, about double from the 140,000 in 1945.
Using mainly new coal-fired plants, Utah Power had doubled its 1945 output by 1954 and then again doubled that capacity by 1963, when it could produce 1,064,275 kilowatts. The company spent $313 million from the end of the war to 1967 on new construction. For example, it spent $6 million to build at the mouth of Provo Canyon the second unit of the Hale Plant, with generating capacity of 44,000 kilowatts. Coal for the Hale Plant and other facilities came mostly from Utah's Carbon County, a major coal source since the late 1800s.
After not advertising during World War II, Utah Power renewed that effort in the postwar years. It promoted "Better Living Electrically" by emphasizing the benefits of television in the late 1940s and the 1950s, air conditioning starting in the late 1950s, and the all-electric home in the 1960s. The company in 1953 started a national advertising program to attract new businesses to Utah, citing the area's abundant natural resources, open spaces, good transportation, and numerous recreation opportunities.
The 1960s brought some major changes to Utah Power. The firm began using mainframe computers in 1961 to automate its accounting. Half of the firm's 31 hydroelectric plants by 1964 were unattended because of computerization. Centralized computers in 1966 controlled the company's electrical production and transmission to gain the best balance of fuel prices and efficiency, system security, and power purchases from outside companies. In addition, a microwave radio system improved communication between power plants, substations, and company headquarters.
In 1958 Utah Power began participating in the development of atomic energy. Along with 51 other utilities, it formed High Temperature Reactor Development Associates, Inc. (HTRDA) to fund research and development of a new plant. HTRDA, General Atomic, Bechtel Corporation, and the Philadelphia Electric Company built and operated the nation's first gas-cooled nuclear plant built by private enterprise. Nuclear energy did not, however, fulfill the high hopes of UP&L President G.M. Gadsby, who in the firm's corporate history said, "With the availability of a great new energy source&mdashõmic power ... the millennium of physical comfort is almost at hand."
The Difficult 1970s and 1980s
Starting around 1970, UP&L faced some major challenges fueled by rapid population growth. Its customer base expanded from 282,000 in 1968 to almost 500,000 in 1984. To meet the demand, Utah Power built some huge and very expensive plants: the third Naughton Plant unit near Kemmerer, Wyoming and five 400,000-kilowatt units at the Huntington and Hunter plants in Emery County, Utah. To save money on these and other coal-fired plants, Utah Power in the early 1970s began purchasing its own coal mines with several hundred million tons of reserves. By the early 1980s only about five percent of its power came from hydroelectric dams, compared with 90 percent in 1946.
This expansion cost consumers a pretty penny. Starting in 1971, the Utah Public Service Commission allowed UP&L to raise its rates every year due to increasing inflation. For example, between 1975 and 1980 the cost of coal increased 150 percent. Its new plants cost the firm $1,000 per kilowatt, far more than the $129 per kilowatt to build the oldest of the 13 steam-generating plants it owned in 1980.
Not surprisingly, many complained about rising power rates. That kept Utah Power's public relations staff busy trying to explain why the increases were necessary. For example, the company told how increasing environmental regulations impacted power rates. Utah Power also started programs to help those struggling to pay their utility bill. It started in 1983 the Project Share program that was administered by the Red Cross to help the needy. And it began working with social workers to help families contact state and local government agencies that provided help not only for electrical bills, but also for medical care and other assistance.
After the Arab oil embargo in 1973, Utah Power implemented an energy conservation policy that was just the opposite of what was done in the early 20th century. It published booklets and gave demonstrations on how to save energy. It worked with architects and contractors to help them design and build more energy-efficient structures. Houses became more air-tight and thus saved energy, but that also resulted in increased indoor air pollution as an unintended side effect.
Like other energy companies around the world, Utah Power in the 1970s began exploring alternative energy sources, including solar power and the possibility of using garbage to create energy. It built one of the nation's first geothermal plants in 1984. Located at the Roosevelt Hot Springs near Milford, Utah, this geothermal plant had a capacity of 20,000 kilowatts. The company in 1984 also formed a wholly owned subsidiary called Energy National, Inc. to explore alternative energy sources.
In 1975 Utah Power sold its subsidiary Western Colorado Power Company for $20.7 million to a group of four rural cooperatives called the Western Colorado Power Agency. The sale had little impact on UP&L, however, because the subsidiary accounted for only two percent of its income.
Aquisition, Deregulation, and Diversification: Late 1980s--90s
In 1987 UP&L and PacifiCorp announced they had agreed to merge in a $1.85 billion stock swap. Utah Power had considered merging with other utilities, including Public Service Company of New Mexico. Headquartered in Portland, PacifiCorp originated in 1910, about the same time as UP&L. The agreement allowed Utah Power to retain its name and Salt Lake City offices, but it would operate as a PacifiCorp subsidiary. Verl Topham, UP&L's president/CEO, became a board member of PacifiCorp.
This deal was not finalized until 1989 because of regulatory requirements. The Federal Energy Regulatory Commission required PacifiCorp to open its power lines to independent producers under certain situations. In spite of criticism from other power companies, PacifiCorp agreed in order to gain the advantages of merging with UP&L. PacifiCorp gained access through UP&L lines to distribute its power to California and the Southwest. PacifiCorp, whose demand peaked in winter, and UP&L, with peak demands in the summer, both benefited from the merger. In 1989 PacifiCorp received 37.2 percent of its electricity revenues from Utah customers and 29.6 percent from Oregon.
In December 1995 Utah Power announced it would close 13 customer service offices in Utah and five in Idaho to cut costs and expand modern payment options. Company representatives said that 85 percent of the firm's customers already used the mail system or phones to make payments and that UP&L would expand the use of electronic transfers and 24-hour telephone services.
In 1996 California started a new trend by passing legislation deregulating the energy industry. According to the power industry in December 1998, 12 states had passed laws allowing what it called retail choice in power. Utah was not on the list, but its lawmakers had looked into energy deregulation. Utah Power supported deregulation, since power from any producer would be transmitted over its lines. At the end of the century, it was a major issue faced by Utah Power and its parent company PacifiCorp.
To prepare for deregulation, PacifiCorp and Utah Power in 1997 diversified their services and products, with advice from the law firm Stoel Rives LLP. Offered to all PacifiCorp customers in its seven-state market, this new "Simple Choice" program included new payment options, extended appliance warranties, surge suppressors, DISH Network Satellite TV, carbon monoxide detectors, and payment protection in case of customers' death, disability, or unemployment. Other new items included cell phones, paging, wireless modems, Internet services, home security services, a parts hotline, and on-call repair assistance for the do-it-yourself consumer.
In 1998 Utah Power began building 12 substations to power the Utah Transit Authority's light rail system from downtown Salt Lake City to the suburb of Sandy. Thus the company came full circle by again supplying power to electric trains that were so crucial in its early history around the turn of the century.
In December 1998 company representatives announced that Scotland-based ScottishPower plc had agreed to purchase PacifiCorp, pending approval by the Securities and Exchange Commission, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, and state regulatory bodies. If accepted, the deal was reported to be the first time a foreign company purchased an entire American electric firm. Utah Power spokesmen stated, however, that the firm's 580,000 Utah customers would not see many changes and that UP&L would continue as a PacifiCorp subsidiary.
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