BOROUGH ELECTRICITY.

Hauraki Plains Gazette, Volume XXXVIII, Issue 5122, 6 May 1927, Page 4

BOROUGH ELECTRICITY.

BULK SUPPLY V. FLAT RATE.

POSITION OF THAMES &TE AROHA

The vexed question of the supply of electricity in hulk to the boroughs of Thames and Te Aroha was advanced a further stage at Tuesday’s meeting of the Thames Valley Electric Power Board.

In a lengthy report submitted by the engineer (Mr N. G. McLeod) the supply to the two boroughs was worked up from data obtained from ne-'v measuring apparatus installed at the points concerned. The figures indicated that for the. period under consideration the board made a profit on the Thames Borough supply at the rate of £242 a year and a loss on the Te Aroha Borough supply of £279 a year. The figures also indicated that under possible conditions there, could be a loss on the Thames supply oi £758 a year and on the- Te Aroha supply a loss of £299 a year. Four suggested methods of charges were indicated in the report, and the engineer recommended method No. 4 for tne board’s favourable consideration as being protective to the board and likely tao appeal to the boroughs concerned, in that the water plants could be used not only to the advantage of the boroughs, but to the advantage of the district generally.

In opening the discussion the chairman (Mr F. M. Strange) said that he thought it should be taken in open -meeting and Mr McLeod’s report made public. Mr W. E. G. Willy (Hauraki Plains) said ire did not think all the information in the report should be given out to local bodies.

Mr H. R. Bush (Thames) thought that the report should be dealt with in committee and the discussion only made public. Mr C. A. Arthur (Te Aroha) was of the opinion that the report and discussion could not be separated. Ihej were all ratepayers, • and as such should be given all information on the matter.

It was agreed to deal with the whole matter in open meeting.

Mr J. Price (Matamata Town Board) moved that before the report was discussed, Thames and Te Arolia be given six months’ notice of the termination of the present agreement. The chairman said that it was desirable to be In a position to tell the boroughs when giving that notice what the. new charges would be. He thought it was necessary to first accept the engineer’s figures as a basis on which to discuss the matter, and then to move the resolution. Tlie resolution lapsed for want of a seconder.

The. chairman then moved that the engineer’s figures be- accepted as a basis for discussion.

Seconded by Mr McCormick and carried.

Mr F. E. Flatt (Paeroa) pointed out that the report showed that Te Aroha was credited with 94 k.v.a., the return of which was £756. Yet in making the comparison the engineer had shown a consumption of 104 k.v.a. in the next clause of the, report. The engineer explained that the figures had been taken on a yearly basis for the purpose of comparison, but no doubt there would be variations.

Mr H. M. Corbett (Ohhiemui'i County) asked what power actually cost the board. Mr McLeod said that assuming there, was a level demand Thames would be paying £8 per k.v.a. on the peak and £6 off the. peak load of. the board. The rate was profitable to the beard, but if any profit was made the difference was split. Mr Flatt: Supposing Te Arolia chose to use its own supply for three months, would the board’s charges be held up for that time ? Mr McLeod replied that as the board had no guarantee that would be the position. Mr Flatt said that the board should have a minimum charge. Mr Price said that Mr McLeod was making the position as easy as he could for the two boroughs. Taking To Aroho, the engineer had said that the power on the board’s peak load -cost £756 at Waihou and further on he had said that the Herrievville supply cost the. board £152. The first 200 k.v.a. taken by the board cost £lO per k.v.a., and as no provision -was made for Te Aroha, which took l-26tb of the board’s supply, paying its share of the. higher cost of 200 k.v.a., which ought to be charged at the rate of £lO and not £B. The totals had to be reduced by more than £2o' against capital charges. He assumed that tne board was still bearing the loss in transmission which, even at 12% per cent., amounted to £96, so that with the conditions existing the- loss would be £395, and not £279. It was obvious to him that some juggling had been going on, when the board was going to receive on the present figures only £1254, as against £1370 under the old arrangement. Dealing witli the Thames Borough, Mr Price said that the power paid for was 236 k.v.a., returning £lBBB. Thames was taking one-sixth of the board’s total demand at Waikino, and this proportion of tire first 200 k.v.a. was approximately 33 k.v.a., which at £lO gave £330. This left 203 to be taken at £B, giving £1624, and making a total of £1954. If the board also took the loss on the line of T2% per cent, there- was also a further sum of £232, so that instead of showing a profit of. £242 a year the Thames Borough was showing a loss of £46. The engineer had also stated that the borough’s demand of 350.2 k.v.a. was equal to 394 k.v.a. at Waikino, a difference of approximately 12% per cent. Mr Price said that he was out for a straight issue, both fool and wise-proof, so that each side would know what to expect, and no matter how it was jostled the purpose of the agreement could not be altered. What better argument could they have than that proposed with a charge of £lO on the borough proposition for the first 200 k.v.a. and £8 for the balance, plus capital charges on a fair adjustment aiid line losses in transmission. With Thames the charges should be fixed on the following basis : 350' k.v.a.. allowing for a 12% per cent, loss, would bo equal to 391 k.v.a. Taking 200 k.v.a. at £lO they had £2OOO, and 194

k.v.a. at £8 gave £1552. Adding capital charges at .9d per unit (£1072), a total was given of £4624, as agafnst Mr McLeod’s. £4347. The position for Te Aroha should be: 126 k.'.a., plus 12% per cent, equalled 141 k.v.a., which at £lO gave £lllO ; adding capital charges they had £2035, as against Mr McLeod’s total of. £1657. On that basis they would be paying approximately Id per unit.

Mr Price asked whether it would not be better to give the surplus cuirent to the board’s own consumers in some way which would give a direct return. He asked why should the board place itself in the position of selling at less than cost price. It was obvious that the only reason why the board could sell the boroughs cuirent at £6 per k.v.a. was because the consumers had utilised it for some time, and if the whole of the cost had not been paid it had been defrayed in part.

The board was also collecting up to £4 10s per horse-power a year lor motors that were not used, and it also collected -minimum charges for othei power, continued Mr Price. He pointed out that the boroughs could draw on the board at any time for. whatevei amount of power required with no extra charge. He much preferied to see the whole of the boroughs under one control. It was suicidal to have the towns working independently. If there were any deficiencies on the national undertaking they had to be made good from the consolidated fund. There was no reason why any particular section should have an- advantage over another. The position was unfair, and no doubt similar conditions prevailed at Paeroa and Morrinsville. Another serious question that would arise- if the board’s interests were not safeguarded was that other to" ns oi boroughs might fight for- similar conditions as obtained at Thames and Te Aroha. Supposing Matamata secured power on the same terms as Te Aroha, the nine miles of power lines, valued at £3OO a mile, would be- worth £2700, on which the-capital charge at seven per cent, would be £lBO. The cost no 80,000 units for 12 months at Id a unit would be £333, making the total cost £522 for the year, under the present system the return was £2202, which provided the board with nearly £l7OO to play with. In his opinion the inclusion of the towns would be an advantage to everyone, as the further development of the country was dependent on the enlargement of the towns. At present the board had no say in restricting the- load of the boroughs, and also no say in framing their charges. The boroughs in turn had representation on the board and had assisted in framing the board’s charges. In 'his opinion all sides should be on an equal footing. He was quite satisfied that a grave- mistake had been made with regard to the terms given to Thames and Te Aroha. While quite willing to take his share of the blame for the mistakes made, he could not let the conditions go on without entering his protest. The chairman reminded Mr Price of the- position Thames and Te Aroha were in when the board commenced to function. It was not much use dealing with the past. Thiames and Te Aroha had the licenses and the board had the electricity to sell, but it was granted that the returns from those boroughs had not been so satisfactory as had been expected. The two boroughs concerned were on the box seat, and the board could not compel them to sell, desirable as it was to arrive at an agreement.

Mr McLeod corrected Mr Price and pointed out that to the demand figures quoted had already been added the losses.

The chairman said that Mr Price had been given a. good deal of latitude, and Mr McLeod had explained the position fully. The chairman moved that the first portion of the report, up to the position of the two boroughs, be adopted. Tliis was agreed to.

Dealing with the methods ;>f. charges, Air McLeod stated that the present system was £lO a k.v.a. for the first 20'0 and £8 for all exceeding that number so far as the two boroughs were concerned, but the board was not sufficiently protected. Thames and Te Aroha were concerned only with- keeping their peak load down. The power supply was cheaper off the board’s peak load than on it. The position would be quite different jvere- the load steady throughout. The chairman moved that the board adopt method 4 as the system for charges.

Mi- J. W. Anderson seconded, in-o-vfded a clause relating to mininium charges was included. The engineer explained that the minimum charge would have- to be sufficient to- protect the board in the event of the two boroughs not taking power during part of a year. Mr Price said that the minimum charge altered the position and saved him moving an amendment. He thought that such a provision would lessen the chance of a loss to the board.

The engineer said that he failed to see how the minimum charge could be increased. If the boroughs did not take power the- board would not suffer a loss. It was not “plus” a minimum, but simply “with.” a minimum charge to cover the capital cost, if the boroughs did not take- power tire board would receive its capital charge.

Mr Price thought that the resolution should contain the- information

that the minimum charge to Te Arolia would not be less than £625,. and Thames £1072 a year.

Mr C. A. Arthur said that when the board was first formed certain estimates had been put to the boroughs? concerned. It was to be remembered 1 that the board’s lines throughout the area had cost between £30,000 and £40,000 less than the original estimates. The board was a co-operative concern, and should not be out to make a profit. Had Thames and To Aroha not come in other rates would have been struck. If the engineer had worked out the figures for the farming community it would be' found that that was a losing proposition. As a co-operative concern the board should approach the boroughs which were also shareholders, and

point out where the losses were being made. The boroughs would then turn

round and help. The two boroughs held their licenses, but had linked up with the board so as to lighten the burden on the farming community. Mr J. B. Thomas said that if Mr Arthur’s arguments were correct it would be just as reasonable to suppose that the farmers had materially helped the two boroughs.

Mr Flatt agreed that any profit made should be handed back to the consumers. He only wished that the board could show the profit tnat Thames and Te Aroha had. It was a great pity the two boroughs could not come in as a whole. Reductions all round would have to be faced in the near future-, and yet the board was making no profit ; but someone would have to assist the revenue. Mr Arthur had said that the board should not expect to make a profit, but if that was so the boroughs should be in the same position ; ye.t with the board’s turnover of £76,300 its profit was under £l4OO, while Te Aroha with a turnover of £6980 for current showed a profit of £lBOO.

Mr Bush thought that a -more satisfactory arrangement would b,o arrived at if the board met the two boroughs in conference. So far as Thames "as concerned, it was quite prepared to pay for what it had, and if it could be shown that the board was losing money by supplying power to the Thames Borough it would be. quite willing to pay a fair price. The resolution was put and carried, Messrs Bush and Arthur voting against.

The chairman congratulated the members on the full and friendly discussion that had ensued on so contentious a matter.

Mr Price moved and Mr Corbett seconded that the Thames and Te- Arolia boroughs be given six months’ notice of the termination of the present agreement. —Carried. Mr Flatt moved that if the Thame-' ami Te Aroha boroughs required any points cleared up or explanations given that the chairman, manager, and engineer be empowered to meet the councils, and if necessary call the executive of the board together. Seconded by Mr J. Pohlen and carried. The question of the length of the term was then discussed, and Mr Anderson moved that the. new agreement be for a term of five yars. Seconded by Mr Price and carried. SYSTEM OF CHARGES. The No. 4 method referred to by the engineer is a special rate to encourage the boroughs to take their own load during the board’s peak loads. This system offers considerable possibilities of advantage to both the board and the boroughs, and is used for a somewaht similar purpose by at least one large supply authority in New Zealand. The, rate suggested under this head is a charge of so much per k.v.a. of maximum demand, no matter when it occurs, plus an increased sum for the demand on the board’s peak, plus a small unit charge, of %d per unit.