Electricity charges likely to increase 7 per cent

Press, 30 January 1986, Page 7

Electricity charges likely to increase 7 per cent

Electricity users in Christchurch face 7 per cent tariff increases from April 1.

The tariffs were approved yesterday by the Christchurch City Council’s airport and electricity committee, in spite of determined efforts by Labour councillors to have the Municipal Electricity Department budget reviewed.

The budget is traditionally the first examined each year by the council because of the setting of tariffs to come into effect on April 1. The budget was eventually approved by five

votes to three for referral to the budget sub-commit-tee, but not before Cr Rex Lester said that tariffs could be held by a reduction in capital expenditure, funding of capital works that were done by loan, and by not increasing staff or vehicles.

This was the only responsible attitude to take in light of possible reorganisation of the distribution of power in Christchurch, he said.

This would mean cuts to the council’s underground reticulation but that was more acceptable than increases to power charges when reform

within the industry would make those higher charges unnecessary. The surplus land and equipment that would result after amalgamation of supply authorities could be sold off to offset loans taken out now, he said.

The $l4 million in capital works — the largest capital expenditure the M.E.D. had undertaken — should be pared back and then funded from loans, Cr Lester said.

The general manager of the M.E.D., Mr Chris Laurie, said he doubted that much of the capital planned works would be eligible for loan funding. Loan finance was usually

restricted to development and expansion rather than simply maintaining a programme already begun.

The M.E.D. extension, due for completion in October or November, would not be eligible because it had started.

A number of planned special projects, including a new computer system, the 66kv Bromley-Pages Road cable and most of the new ripple control system, would not be eligible for loan financing. These projects would have to be funded from revenue from electricity sale, he said. The $14.5 million capital works will be funded by a loan of $4 million, revenue of $5.3 million and accumulated reserves of $5.2 million.

Mr Laurie said a combination of increased costs, including the 4 per cent on bulk electricity costs set by the Government late last year and 30 per cent jumps in salaries because of the State linkage, meant the bill to the M.E.D. for bulk power was 7.9 per cent higher than for the last year.

It would cost the M.E.D. $73 million to buy the power needed for the 1986-87 year.

Retail tariffs would need to increase 7 per cent to meet this and to pick up the 2. per cent deficit in expected revenue for power sales last year caused by several large non-domestic consumers changing to lower tariffs.

About 63 per cent of the M.E.D.’s custom is from domestic users, who meet 48 per cent of revenue. The remaining 36 per cent is sold to non-domes-tic users who contribute 50 per cent of revenue. Miscellaneous sales account for the other 1 per cent of units and 2 per cent of revenue.

The 7 per cent increases mean that an average domestic consumer using 1500 units over two months would pay another 68 cents a week. Their supply charge would rise from $3 every two months to $3.30.

The domestic supply charge for 1986-87 would come to 11c a day; for non-domestic consumers it would be 25c a day, for non-domestic bulk consumers it would be 55c a day; for non-domestic community users (small hospitals, schools, libraries, churches) 25c a day; for coincident demand users (larger consumers) it would be $5.50 a day.

The M.E.D. now charges at 12 different tariffs rather than the 56 that used to exist.

The M.E.D. budget includes provision for nine new staff at a cost of $158,522. Cr Lester queried the value of adding people to staff when reorganisation would probably make them redundant. It was better to “hold things” until that reorganisation occurred, he said.

“It may never happen,” said Cr John Bum. “We must budget for business as usual.”

Cr Lester said that attitude ignored political reality. “The city councillors have been the most vocal In support of reform and now, when we have a chance to make a budget that reflects that desire for reform, we simply ignore it and go blindly on,” he said. “We could send the budget back for the capital works to be reviewed and that way save any increase to consumers,” Cr Lester said. Mr Laurie said that if the underground wiring programme and special projects were cut it would mean staff lay-offs. The staff numbers had been set on the amount of work planned for the year. Last year councillors had set a target of increased underground conversion. Provision had been made in the budget for inflation of 12 per cent, he said.

The cost of street lighting to the council under the proposed charges would be $1.05 million. That cost attracts National Roads Board subsidies.