SOUTHLAND POWER

Evening Post, Volume CXVIII, Issue 91, 15 October 1934, Page 10

SOUTHLAND POWER

MONOWAI PLANT

STATE OFFER TO PURCHASE

DECLINED BY BOAKD

On the ground that its position would not be improved, the Southland Electric Power lioard has declined to accept the offer of the Public Works Department to purchase tho board's generating plant at Monowai and to sell power to tho board in bulk, to bo retailed to the consumers in the provinco (states tho "Southland Times"). A statement concerning the negotiations which have taken place betwoeu the board and the hydro-electric branch of the Department was issued by tho chairman of the board (Mr. W. Hinchey).

Mr. Hinchey said that tho effect of the Department's proposal was: —

1. That the board, in lieu of generating power for Southland at the Monowai electric power station, should sell to the Government that portion of the board's works consisting of Monowai, tho main (66,000-volt) transmission lines conveying the power from Mouowai to the board's sub-stations and parts of tho sub-stations. 2. That the board should purchase Southland's power requirements in bulk from the Public Works Department. 3. That the board should retain the ownership of the reticulation and cojitinuo to distribute tho electricity to consumers as at present. CAPITAL COST. The capital cost to tho board of the works proposed to be purchased was £430,000, which amount was repayablo by tho board in London in sterling. Tho Department was offering £400,000 in New Zealand currency, or equivalent to £320,000 in London at the present rate of exchange. The Department's policy in regard to the price of power from Waitaki was equivalent to saying that that price must return to the Department the Government's outlay in purchasing Monowai, also the cost of the transmission line from the north to Southland, as well as some return' on a share of the original capital to construct the Waitaki scheme and on the lines between there and Dunedin. Mr. Hinchey said that the board had viewed tho offer purely from the point of whether the board's ratepayers would bo afforded any permanent relief by the proposed change. Tho board decided that the offer as presented by the Department's officers had failed to convince it that the board's position would be bettered by selling tho generating works, and it had decided that the proposal should be declined. Mr. Hinchoy said that it would serve no useful purpose to the board to obtain £400,000 by the sale of portion of its works unless it could turn that money to some advantage. The way to do that would be to use the money for the redemption of debentures. The remitting of the moneys would cost tho board at least £160,000 in exchange, and that would have to be borrowed in London. This and other more vital factors had been very fully considered by the board before reaching the decision to decline the Government's offer. SECRETARY'S PROPOSALS. Mr. Hinchey said that in regard to tho matter of power supply two alternative proposals had been formulated by tho board's secretary (Mr. Charles Campbell) and submitted to the Public Works Department, but both had been declined by tho Department. The proposals provided for a payment by the board of £46,000 per annum for power provided that when the board was able to show a surplus without collecting a rato tho initial payments wero Lo be increased. The suggestion was turned down by tho Department on thn grounds that the initial payments would not pay tho Department its operating and full captal charges on the capital which it ,vou!d have invested in tho Monowai system and conneotinjr line to Dun;din, and would provide nothing tovards the cost of any power generated it Waitaki or towards a share of the mo from there to Dunedin. The Department said that it must maintain he same price per kilowatt through)iit the years of any contract made vith the board so as to obtain some •eturn on a share of the original caplal expenditure on the Waitaki scheme md on the lines between there and Dunedin. AN ECONOMICAL SCHEME. Concluding, Mr. Hinchey said that in .ho Monowai generating plant the joard had a very economical scheme vliich could be increased from 6000 dtowatts to 11,000 kilowatt?. To exend tho Monowai plant to 11,000 kilovatts capacity would cost no more than o bring a line down from AVaipori to 3ore. The board's most valuable isset was its cheap and efficient gensrating works. The ratepayers of Southland were entitled to the full lenefit of those works or of an alternaive not less advantageous.