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THE UNIVERSITY OP OKLAHOMA GRADUATE COLLEGE AN ANALYSIS OP THE PRODUCTION AND DISTRIBUTION OP ELECTRIC POWER BY THE GRAND RIVER DAM AUTHORITY A DISSERTATION SUBMITTED TO THE GRADUATE FACULTY in partial fulfillment of the requirements for the degree of DOCTOR OP PHILOSOPHY BY C. ORVILLE ELLIOTT Norman, Oklahoma 1958 AN ANALYSIS OF THE PRODUCTION AND DISTRIBUTION OP ELECTRIC POWER BY THE GRAND RIVER DAM AUTHORITY APPROVED BY DISSERTATION COMMITTEE ACKNOWLEDGMENTS I wish to thank Dr. Jim E. Reese, professor of economics at the University of Oklahoma, for suggesting this topic for research. As director of the dissertation. Dr. Reese gave unselfishly of his counsel in the field of public policy and of his time. His advice and encouragement were invaluable. Dr. Paul A. Brinker, professor of economics; Dr. Virgle G. Wilhite, professor of economics; Mr. Dewey L. Bames, professor of accounting; and Mr. James M. Murphy, assistant professor of finance, all of the University of Oklahoma, deserve grateful acknowledgment for their suggestions as the research progressed and their careful study of the completed work. Mr. W. B. Hoss, General Manager; Mr. Q. B. Boydston, General Counsel; Mr. James I. Monroe, General Auditor; and the entire staff of the Grand River Dam Authority at Vinita, Oklahoma, were very cooperative and helpful in providing full access to the records of the Grand River Dam Authority and in making many suggestions as the research was conducted. Without their cooperation it would have been impossible for iii this study to have "been completed. Mr. Francis J. Borelli and his staff in the Division of Water Resources, of the Oklahoma Planning and Resources Board, were also very cooperative in permitting access to their records, files and publications. Mrs. Eardean Rector, business administration librarian, and Miss Opal Carr, reference librarian, along with others of the staff of the University of Oklahoma Library, have been especially helpful in their suggestions on research procedures. Mrs. Fletcher, librarian of the Oklahoma Publishing Company; Mrs. Cook, librarian of the Oklahoma State Historical Library; and the staff of the Oklahoma Library Commission, all of Oklahoma City, Oklahoma, deserve grateful acknowledgment for their cooperation. Space alone prevents the acknowledgment of each of the many other individuals, along with the staff members of the Legislative Counsel Committee and Governor Gary’s office, who provided friendly help and aid in furnishing research data. Last, though certainly not least, is an acknowledgment of the many hours spent in research and manuscript preparation by my wife, Helene, and for the typing work performed by my daughter, Mrs. Diana Roane. iv TABLE OP CONTENTS Page ACKNOWLEDGMENTS........................................ iii LIST OP T A B L E S ..................................... vi LIST OP ILLUSTRATIONS................................ % Chapter I. INTRODUCTION. ........................... 1 II. HISTORY OP THE GRAND RIVER DAM AUTHORITY AND RELATED PROJECTS.......................... 9 III. AN ANALYSIS OP THE PRODUCTION AND PURCHASE OP ELECTRICAL ENERGY.......................... 56 IV. AN ANALYSIS OP THE DISTRIBUTION OP THE ELECTRICAL ENERGY SOLD BY THE GRAND RIVER DAM AUTHORITY................................ 95 V. SUMMARY AND CONCLUSIONS......... .. ......... I8 I BIBLIOGRAPHY............................................202 APPENDIX................................................205 LIST OF TABLES Table Page 1. Authorized and Issued Value, Issued Totals and Maturity Dates, Grand River Dam Authority 4 Percent Revenue Bonds of April 1, 1938 ........ 50 2. Authorized and Issued Value, Issued Totals and Maturity Dates, Grand River Dam Authority 2 1/2 Percent Revenue Bonds of January 1, 1946 .... 51 3. Maturity Values and Dates, Interest Rates, by Series, Grand River Dam Authority Revenue Bonds of October 1, 1948 ............................ 52 4. Grand River Dam Authority Revenue Bonds of October 1, 1948 Redeemed, by Series, as of December 31 ^ 1957 .............................. 54 5. Summary, Grand River Dam Authority Bonds Authorized, Issued, and Outstanding to December 31, 1957 .......................................... 55 6. Electrical Energy Produced, by Method of Generation, and Energy Purchased, by the Grand River Dam Authority, Annually, 1§46-1957 .... 59 7. Electrical Energy Sources as a Percent of Total Energy Available for Distribution, Grand River Dam Authority, Annually, 1946-1957 ............ 60 8. Date of Installation, Size and Type of Electrical Generating Equipment Operated by the Grand River Dam Authority as of December 31, 1956 .......................................... 61 9. Cost of Electrical Energy Produced, by Method of Generation, and Energy Purchased by the Grand River Dam Authority, Annually, 1946-1957 .... 63 Vi Table Page 10, Average Costs, by Source, of Electrical Energy Produced and Purchased by the Grand River Dam Authority, - Annually, 1945-1957 .......... 64 11. Operating Expenses of the Grand River Dam Authority, by Type of Expense, Years 1946 1947, and 1948 .............................. 65 12. Operating Expenses of the Grand River Dam Authority, by Type of Expense, Years 1949 1950, and 1951 .............................. 68 1 3 . Operating Expenses of the Grand River Dam Authority, by Type of Expense, Years 1952 1953, and 1954 ........................ 75 l4. Operating Expenses of the Grand River Dam Authority, by Type of Expense, Years 1955 1956, and 1957 ........................ 83 1 5 . Grand River Dam Authority Revenues for the Period September, 1940 to November 20, 1941. 104 1 6 . Average Sales Price, by Class of Customer, Grand River Dam Authority...................... 105 1 7 . Industrial Power Sales, Period of September 1 to December 31, 1946 .......................... 107 1 8. Sales to Public Authorities, Period of September 1 to December 31, 1946 .............. 108 1 9. Sales to Electric Utilities, Period of September 1 to December 31, 1946 .............. 108 20. Industrial Power Sales, Year 1947.............. 112 21. Sales to Public Authorities, Year 1947 ........ 112 22. Sales to Electric Utilities, Year1947 ......... Il4 2 3 . Industrial Power Sales, Year 1948............... II6 24. Sales to Public Authorities, Year 1948 ......... II6 2 5 . Sales to Electric Utilities, Year 1948 ......... II9 2 6 . Industrial Power Sales, Year 1949.............. 121 vii Table Page 2 7 . Sales to Public Authorities, Year 19^9........ 122 2 8. Sales to Electric Utilities, Year 19^9........ 124 2 9. Industrial Power Sales, Year 1950 ............ 127 3 0 . Sales to Public Authorities, Year 1950........ 128 3 1 . Sales to Electric Utilities, Year 1950........ 130 3 2 . Industrial Power Sales, Year 19 5 1 ............. 133 3 3 . Sales to Public Authorities, Year 1951........ 134 3 4 . Sales to Electric Utilities, Year 1951........ 136 3 5 . Industrial Power Sales, Year 1952 ............ 139 3 6 . Sales to Public Authorities, Year 1952........ 139 3 7 . Sales to Electric Utilities, Year 1952........ l4l 3 8. Industrial Power Sales, Year 1953 ............ l44 3 9. Sales to Public Authorities, Year 1953........ l4$ 40. Sales to Electric Utilities, Year 1953........ 147 41. Industrial Power Sales, Year 1954 ............ I50 42. Sales to Public Authorities, Year 1954. 151 4 3 . Sales to Electric Utilities, Year 1954........ 152 44. Industrial Power Sales, Year 1955 ............ 155 4 5 . Sales to Public Authorities, Year 1955........ 155 46. Sales to Electric Utilities, Year 1955........ 157 4 7 . Industrial Power Sales, Year 1956 ............ I60 48. Sales to Public Authorities, Year 1956........ I6 I 4 9. Sales to Electric Utilities, Year 1956........ 162 5 0 . Industrial Power Sales, Year 1957 ............ I65 5 1 . Sales to Public Authorities, Year 1957......... I66 viii Table Page 5 2 . Sales to Electric Utilities................... 167 5 3 . Summary, Grand River Dam Authority Income Statements, Annually, 1946-1957................ I83 5 4 . Summary, Grand River Dam Authority Income, Principal Payments and Net Gain or Loss, Annually, 1946-1957............................ 186 5 5 . Other Operating Revenues, Grand River Dam Authority, Annually, 1947-1957 ................ 191 5 6 . Allocation of Grand River Dam Authority Steam Plant Costs to the Production of Electrical Energy, Steam, and Water and Air, Years 1956 and 1 9 5 7 ...................................... 192 i% LIST OP ILLUSTRATIONS Figure Page 1. Electrical Energy Produced, by Method of Generation, and Power Purchased, Annually, 1947-1957, by the Grand River Dam Authority. 88 2. Cost of Electrical Energy Produced, by Method of Generation, and Power Purchased, Annually, 1947-1957, by the Grand River Dam Authority . 91 3 . Average Costs, by Source, of Electrical Energy Produced and Purchased, Grand River Dam Authority, ~ Annually, 1947-1957 ................ 92 4. Grand River Dam Authority Kilowatt-hour Sales, by Major Type of Customer, Annually, 1947-1957 . 170 5 . Grand River Dam Authority Sales Revenues, by Major Type of Customer, Annually, 1947-1957. 171 6. Grand River Dam Authority Kilowatt-hour Sales, by Public Authority Classification, Annually, 19 47-1957..................................... 173 7 . Grand River Dam Authority Sales Revenues, by Public Authority Classification, Annually, 194 7 -1 9 5 7..................................... 174 8. Grand River Dam Authority Kilowatt-hour Sales, by Electric Utility Classification, Annually, 1 9 47-1957..................................... 176 9. Grand River