OAMARU STREET LIGHTING

Evening Star, Issue 22447, 18 September 1936, Page 11

OAMARU STREET LIGHTING

“ EXTRAORDINARY " LETTER POWER BOARD AND “ COST " PRICE BOROUGH COUNCIL WAXES SATIRICAL “ 1 think this is the most extraordinary communication I have ever known or heard of, from one local body to another,” said the Mayor (Mr M. F. E. Cooney) at last night’s meeting of the Oamaru Borough Council, after he had read a letter from the Waitaki Power Board concerning the “ cost ” of street lighting The reading of the letter was punctuated by humorous and satirical interjections from councillors, such as “ Hear hear,” “ They don’t say so,” and “ Most extraordinary.” The Power Board stated in effect that it had made a constant effort for many months now to convince the council of the good deal they were receiving, even holding their figures open for inspection. It was confirmed in its way of reckoning and thought the council’s systematic analysis of the figures would have been mote understandable to a sister local body than Mr Finch’s general average of many factors, some extraneous. Even the impromptu examination at the conference must have shown that some of his arguments were untenable. The board, however, was pleased to have the council’s agreement to get away from the contentious word “ cost,” but was afraid that the council’s new definition “ without loss to the board ” was only a distinction without a difference. It was admitted at the conference that the exact figure of cost could not be arrived at. The words “without loss” indicated that a starting or “ cost ” figure must still be ascertained; therefore the problem would still remain of agreeing on a satisfactory approach. It was noted in the Press report that one councillor expressed the opinion that “ the charge was unreasonable. The hoard was definitely of the opinion that the order of reference should be “an investigation to ascertain if the charge for street lighting in Oamaru was unreasonable or otherwise.” It believed that an independent arbitrator could give better satisfaction along this line, for it was on this line that the discussion arose. If the council would • accent the amended order of reference, then the board would agree to the matter being put to arbitration, and would be prepared to share the cost of such. It was suggested that the appointment of the arbitrator should be agreed upon by the sub-committees of both bodies in conference. Cr N. H. Colquhoun stated that even Edmund Burke could not have written a more extraordinary letter to convey a twist that was calculated to delude the council and the public generally. “ They rvere prepared to supply the council Avith street lighting at cost price, and that had been the basis and fundamental principle upon Avhich the clerk had prepared the council’s argument,’’ ho said. “ They say their books and figures are open for inspection and that Mr Finch’s deductions are considered untenable. Then why are they afraid to go to arbitration regarding cost price?” Cr Colquhoun asked the question that if the porver board argued that its costs Avere correct, then Avhy did it persist in going to arbitration regarding the reasonableness or unreasonableness of its charges? “ Are we to haul doAvn our colours from the masthead and give in?” he asked. AnsAvering his oavh question, Cr Colquhouu said the council Avould fight the board and fight it on the question of costs. He moved that the letter be received.

Or Butterfield said he thought the letter should go to the Lighting Committee. The public Avere demanding the facts of the whole argument ; therefore he considered Mr Finch’s letter should be published. Mr Finch’s letter, he continued, showed in fact that the figures were perfectly correct. No matter how the position was vieAved or from what angle the figures Avere calculated, an overcharge Avas shown every time. Cr Hodge: We might be a little hurried in our methods. Should avo not give them an opportunity to make a rebate ? The Mayor: No. They will not do so. Cr Hodge: Then go for them. The Mayor said in the first place that he had tried to take up a neutral attitude, but he had a duty to the citizens of the town; therefore he Avas hoat prepared to fight. It had been said at the Power Board meeting that the council would be given street lighting at cost price. That statement had been made by Mr R. Milligan. Now the board Avished to make it known that Mr Milligan did not mean that. As he represented the head of tho parent body of the town, he hoav considered it his duty to take the matter up and pursue it to a definite conclusion. Cr Macrae: It amounts to this: The son tries to rule the father of the house, but the father has the longest head in the finish. He considered the council should accept arbitration on the question of cost price. Cr Wilson said the Power Board had made a significant omission in that they had pAirposely left out the statement of “ cost.” .. “ It has never been denied by the board that that statement is untrue,” said Cr Colquhoun. Cr Wilson: Silence is consent. After further discussion it was agreed that the letter be referred to the Lighting Committee, and on the motion of Cr Butterfield it was decided to hand all the correspondence concerning street lighting to the Press. MR FINCH’S REPORT, In his report to the joint committee Mr R. Finch stated, inter alia, that the results of a “cost” investigation could be expressed in a simple manner, and in such a ivay as to be readily followed and obviously capable of proof, provided fundamental facts were adhered to and the reasoning was stated dearly and ivas unclouded by technicalities and irrelevancies. He would set out these fundamental facts, and proceed to show ivliere Messrs Dalmer and Denford had departed from them, and consequently had presented figures Avhich were definitely wrong. The use to which any consumer put the units of electricity supplied to hiih could not have any bearing on the unit cost of electricity to the supplier. There were only two factors under the control of the individual consumer which had any effect on the cost per unit to the supplier;—(.l) The quantity of electricity he draws, and (2) the time at which the demand is made. In his opinion Messrs Dalmer and Denford’s arguments re'/ealed some confusion of thought, inasmuch as they apparently clung to the idea that varying rates of charges to the consumer affected the cost of electricity to the supplier, and actually this - Avas incorrect. The fundamental reason for the developnient of any public electrical generating or distributing authority was to place a sufficient quantity of electrical current at the disposal of consumers, and such generating plants and reticulations Avere constructed solely for this purpose, and not to make profits and accumulate large reserves. Mr Finch Avent on to point out that for power, electricity had to compete with other economical forms of power, against coal, coke, etc., for Avater heating. Electric lighting Avas so convenient and efficient that competition from other sources was not felt to any great extent, and consequently the charge Avas comparatively much higher than for other uses of electricity. The Public Works Department shoAved its “ cost ” in terms of units generated, units distributed, and units sold, and it Avas ohvioAis that as far as cost of supplies to the consumer Avas concerned

(in this case street lighting), the units sold was the correct basis to adopt. His instructions from the council were to arrive at “ cost price,” after he had conferred with the Power Board officials. He agreed that he was told otherwise by Messrs Dalmer and Denford, and that there was no resolution by the board to supply street lighting at cost, but he submitted that such an agreement was a policy matter for the board to decide, and was, in fact, beyond the jurisdiction of its officers, who were merely servants of the board. If it were not the board’s intention to supply at “ cost,” then it was the obvious duty of the board to state that fact definitely when it replied to the council’s letter of April 3, 1936. Messrs Dalmer and Denford stated that it was surely clear that a street lighting supply was the same as an ordinary commercial or domestic supply. This was not correct, as it had to be rememberedthat these lights were consuming current during the five hours between 11.30 p.m. and 4.30 a.m., during which period the general demand for current was the lowest. Another point which confirmed this difference, and further emphasised the fact that the borough was paying more than “ cost,” was shown on section 7 of the statistical return on which h« had based his report, whioh_ showed the average revenue per unit sold as follows: —Water-heating, .23d; domestic, 1.59 d; commercial, l.lOd; electric motors, 1.20 d; street lighting, 2.09 d. This meant that the board charged per 100 units as follows:—Water heating, Is lid; commercial, 9s 2d;' electric motors, 10s; domestic, 13s 3d; street lighting, 17s sd. If they deducted the cost of maintenance, or 3s per 100 units, which was borne by the board, it still left the net charge for current alone for street lighting at 14s 5d per 100 units, which was higher than that for any other purpose. Mr Pinch dealt in turn with interest charges, sinking fund, and depreciation, and stated that his figures allowed for depreciation in proportion to that adopted by the board itself as being adequate. He also examined at some length statements made by the board’s officers, and definitely challenged the Statement that 2,118,050 units sold for Water-heating actually cost £2,250. Unless Messrs Dalmer and Denford would produce the calculations showing the details making up the actual • cost of £2,250, he respecfully submitted that this statement should not be accepted by the committee, as no opportunity was given to examine the figures. The figure of £2,250 was of vital importance to Messrs Dalmer and Denford, as the correctness of their statement of cost, and their final figures, depended to a vety large extent on its accuracy. Messrs Dalmer and Denford stated that the total cost for street lighting was £1,501, and the amount paid by the council £1,271, leaving a deficit of £230. He would restate that the basis adopted by them to arrive at cost was definitely wrong in principle and possibly also in the figure consequently the amount of £1,501 is necessarily wrong also. The loss stated of £230 was absurd on the face of it. The board’s own balance sheet as at March 31, 1936, showed an accumulation of nearly £70,000. in reserves and profits in 12 years’ time, of which this year contributed over £5,500,' the whole of which presumably has come out of the consumers’ pockets. That fact in itself was proof of the capacity of Mr Dalmer to run the undertaking on most efficient and profitable lines, and it was unthinkable that he would deliberately recommend his board to continue a contract that resulted in a loss of £230 in 12 months.

In conclusion, Mr Finch stated that his figure of £855 was the correct figure of “ cost of street lighting without profit to the board ” for the 12 months ended March 31, 1936, and any comparison with charges made by other boards had no bearing on this point; the method he had outlined to give effect to the undertaking to supply current for street lighting at cost without profit to the board could be readily carried out year by year, and in compiling their figures, Messrs Dalmer and Denford had departed from fundamental principles, and, consequently, their results were not supported by the facts of the ease.