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Evening Post, Volume CXVII, Issue 106, 7 May 1934, Page 10

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ELECTRICITY PROFITS

AMOUNTS WRITTEN DOWN

CHANUE-OVER ENDED

The Labour members of the City Council arc strongly of the opinion that further reductions should be made during the present financial year in the charges for electricity, and in, support of this contention today made the following statement:—

One of the most efficiently conducted branches of Wellington's civic government is the electricity department. For a number of years past this department has shown such large annual profits that it has now become a happy hunting ground for the present and past occupiers of.the Mayoral office.

The procedure usually followed on such occasions has become somewhat hackneyed, because after the estimates for the year have been completed, councillors can always anticipate the Mayor and Ms immediate colleagues discovering some special work-which he contends is extremely urgent. This is 'sufficient to provide a plausible reason for raiding the profits of this department. So in the past eight years no less a sum than £110,000 has been taken in this manner, or an average annual raid of £12,500. Therefore, the electricity consumers have had to bear the full cost of those special works which were undertaken out of the profits of the electricity department, and it has to be remembered that a largo percentage of consumers are ratepayers only, and very many of them are relief workers. Under ordinary business principles those profits should have gone directly to electricity consumers in the form of reduced charges, and the sum expended on the above special works should have been a legitimate charge' upon the annual rates levied.

What a wonderful benefit .it would have been to consumers, especially during these difficult times, if electricity charges had been so reduced as to return to them the £110,000 to which by all the rules of the game they were entitled, but whije representatives of the large property-holders' are in the majority on the City Council, this is too much to be expected, because their policy is'definitely one to reduce the rates principally on large properties at all hazards, whether other essential services are sacrificed or not.

STREET LIGHTING.

Here is another instance of the vicious policy pursued bs r vested interests ou the City .Council. Tor many years it has been an established principle that the general fund should bear a proper proportion of street lighting costs. For a number of years this usually averaged about £10,000 annually. So the'idea was conceived that it would be a further relief to large ratepayers if they could transfer a por-. tion of this cost on to the shoulders of the electricity consumers. Two years ago they initiated this policy, and for the year 1932-33 £.5600 was transferred in this way; for 1933-34: £7000; and for the curronf year it is estimated that the sum of £6470 will be transferred. For. the three years, out of a. total of. £36,000, the proportion of street lighting costs which should be a direct charge upon the rates, no les sa sum than £18,527 is being borne byi electricity consumers.

It must be remembered that the Electricity Department is simply a trading concern which supplies a service to the Consumers, and it is no more the function of the Electricity Department to bear the cost of street lighting than it is for the Milk Department to shoulder the cost of refuscTCOllecting.

EFFECT OF TARIFF REDUCTION.

However, if a'reduction of one penny in the present domestic lighting tariff was given, it would mean a greater annual saving, to consumers than the proposed reduction of rates, which can only amount to two ;or three shillings at the:most, for. the year. On the other hand, a reduction of one penny per unit on domestic lighting rates would mean. to. the consumer who only consumes twelve units per month a saving of 12s per year, This would be a saving considerably in,excess of the present proposed reduction of rates.

To reduce the domestic and commercial lighting tariff by one penny per unit would cost .approximately £33,000 per annum. ,

If the consumers would only realise the enormous annual profits earned on the present tariffs, they Would unhesitatingly'demand a reduction of charges as a first call upon the allocation.

WRITTEN OFF OLD PLANT,

Take, for instance, the huge amounts written off old plant account. For the year ending March, 1932-33, no less a sum than £23,000 was written off, and for the year just ended the sum of '£48,000 was written-off old plant.

It is a recognised principle in business to ' regularly write down capital by a reasonable amount, but surely the writing off to the extent of £71,000 in two years calls for some explanation. It is suggested that the only apparent reason is to cloud the largo profitearning capacity of this concern.

Another'important point which requires explanation is the fact that working expenses have increased in the past year by £6276, notwithstanding the fact that the change-over is practically completed. With tho suspension for three years' of sums allocated to the renewal funds account a. further saving of approximately £70,000 .will be made to the department for that period, and must load to an increase in profits, unless in-the meantime some- other old plant has been discovered which has not previously been written down., .