PURCHASE OF GAS WORKS.

Manawatu Herald, Volume XXXII, Issue 895, 22 September 1910, Page 3

PURCHASE OF GAS WORKS.

MEETING OF RATEPAYERS. FAVOURABLE RESOLUTION CARRIED. No doubt the extremely bad state of the weather was responsible for the very small attendance of ratepayers at the statutory meeting held in the Masonic Hall on Tuesday night for the purpose of discussing the proposal to purchase the Foxton gas works, and raise a loan of £9OOO for that purpose, and a further £2OOO for extensions to the works. His Worship the Mayor (Mr G. H. Stiles) presided, and Crs Speirs, Gibbs, aud Adams occupied seats on the platform. There was a mere handful of ratepayers in the body of the Hall, The Mayor, in his opening remarks, said that the meeting was called to consider the proposal to purchase the gas works which were at present under offer to the borough. It was now four years since a similar meeting of ratepayers was called to discuss whether the borough should erect their own works and both the meeting and majority of the Council favoured a concession being given to a company. He had been strongly opposed to such a course as he always considered that if a company could make a works pay the Council could also do so. This accounted for his present position as an interested person, and through out the present negotiations he had taken no part. The Council had appointed a committee of the Council to investigate and arrange a satisfactory price, and he would call on Cr Speirs as chairman of that committee to make his report.

Cr Speirs, who has acted as chairman of the sub-committee appointed by the Borough Council to go fully into the mailer of the proposed purchase ol the works, has a thorough grip of the whole question, and alter briefly outlining the steps taken by the Council in bringing the matter to its present st rge, proceeded to state why, in his opinion, the Council should take over the works. The speaker said that in Saturday’s issue the editor of the Manawatu Herald had put several questions which it had been stated should be answered at the meeting. He would endeavour to give an answer to all he could. The first was “ What the approximate difference is in the purchase price now and at the expiry of the first optional period ?” This question, Cr Speirs said, was very difficult to answer, and he thought the best way to do it would be to quote the experiences of other boroughs in this connection. They all knew what the cost of the works would be at the present time—,£9ooo. The cost of the erection of the works, according to the Company’s books, was £7,500, and prior to the last three months there had been very little —if any —profit. He had been told, however, that the profit for the past three months had been about £7O per mouth. Referring to the experience of the Hamilton Borough Council, the speaker said the works there were erected on exactly the same conditions as Foxton —the Council having the right to take them over at given periods. Some time after their erection the Council approached the Company in reference to the purchase of the works, and the price asked was ,£19,000. As the cost of erection was only ,£II,OOO or ,£12,000 the Council thought this price excessive, and it was decided to leave the purchase over until the first optional period. When this time came round the matter was referred to arbitrators, but the price fixed by them was not acceptable to the company, who took the matter to the Supreme Court. The Court upheld the arbitrators’ discision, and the company, still unsatisfied, appealed to the Privy Council in Eoudon. Their appeal was upheld, and as a result the Council, instead of having to pay ,£19,000, were forced to pay something like ,£38,000 for the works. If Foxton waited until the first optional period, they might have the same experience as Hamilton, as if they had to force the position is meant a fight, with consequent loss to either one side or the other, therefore, in his opinion, it was far better to purchase now at the price offered. In reference to the second question, “The approximate cost of gas production and administration,” he did not think it was a question for him to answer, as all he could do would be to obtain the figures from the company’s books, and this would be hardly satisfactory. (Question number three “ the effect of this as concerning the cost of gas per xooo feet for lighting and other purposes, after allowing for re ceipts from sale of by-products,” was also one that he did not think he was called upon to answer. The fourth question was, “the number of consumers at present, and the probable increase.” This was a matter he had not enquired into, but he understood the number of consumers at present was about 140, and he knew that connections were still being made and others were now waiting. Question number 5, “what increased consumption will be necessary at the present price to meet all charges on the loan without calling on the ratepayers to toot the bill for deficiency ?” He thought this question was pretty well answered by some ol the previous answers. As a further reason why the ratepayers should take over the works he would refer to some figures which had uwu obtained from adjacent boroughs that had their own works. In kevin the price charged was the tsame as Foxton —10s per 1000 f-

bat as the works had not been gong a twelve-month, and it was impossible, therefore, to ascertain if they were making a profit or not. The amount of gas that was being manufactured in Levin was about 12.000 feet per day, as against 10,000 in Foxton. Taking Woodville, which was manufacturing about the same amount of gas as Foxton, the price there was 9s 2d per i.oooft., and the profit on last year’s working was £l9B. The price charged was tenpence per 1000 less than the price at present being paid in Foxton, and yet Woodville had to pay seven shillings per ton more for their coal than Foxton did. If Woodville can sell their gas at 9s 2d per loooft, after paying seven shillings per ton more than Foxton for their coal, and still make a profit, was that not proof that the local works could be profitably run by the municipality ? asked the speaker. In Marton, the price charged for gas was 8s 4d per 1000 ft., and the amount manufactured was about double that of Foxton. Taking the prices charged for gas where the works were controlled by companies and by municipalities, he would prove that the consumers got cheaper gas in the latter cases. In Nelson, where the municipality owned the works, the price charged was 6s 8d per 1000 feet for lighting and 5s for cooking purposes. Wanganui, also municipally owned works, charged 5s per 1000 for lighting purposes, and 4s gd for power. Since the Wanganui Council had purchased their works from the company they had greatly extended and improved the works, as well as reducing the price of gas, and in the few years they had controlled the works the profits had amounted to no less than £i3,000. He understood that last year’s profit was £7,000. In Palmerston North, where a company controlled the works, what do we find? asked the speaker. The price charged there was 8s 8d net per 1000 feet. Since the company had erected the works, all the extensions and improvements had been paid for out of profits, and at the present time the reserve fund amounted to no less than £28,000. The position in Palmerston now was such that it was practically beyond the Council’s means to purchase the works, and it was possible that if Foxton did not seize their present opportunity they would also find themselves in a like position at the end of the first optional period. The speaker briefly referred to Wellington’s position, which he said was practically the same —the Council would like to purchase the works, but the price was too big a hurdle. Referring to the price of gas, Cr Speirs said that it was important that it should be reduced, but in any case it was not the intention of the Council to reduce it for the first twelve mouths. They wanted to see how a year’s working panned out before making any reduction in the price. However, his opinion was that inside of three years the price would be reduced to 7s 6d per xooo feet. In conclusion, the speaker urged the ratepayers to seize the present opportunity, as he was certain they would never get another chance as good. The company was at present making a profit, and this capitalised would be a big sum at the end of the first optional period. His estimate of the cost at that time was somewhere in the vicinity of .£15,000. Cr Speirs was loudly applauded on resuming his seat. The Chairman then invited those present to ask any questions, Mr Hennessy asked if ,£7,500 was the bare cost of erection of the works.

Cr Speirs said that as far as could be ascertained the cost to the company for the erection of the works was £7,500, but this amount included contracts let to individual members of the company. In his opinion, the actual cost, if these contracts had not been let, would have been about ,£6,500. MrHeuuessy: “It means then that we are called upon to pay ,£2,500 more than was actually paid.” Cr Speirs said that under the circumstances he considered they were getting the works cheap. The extra price they would be called upon to pay could only be put down to the mistake made by the Council and the ratepayers about five years ago, when they refused to sanction a loan for the purpose. At that time he had advocated municipal-works. He said it would certainly be cheaper to purchase now than at the end of the first optional period. Mr Clemett said he was thoroughly in accord with all that had been said and was satisfied that it was in the best interests of the borough that the works stxould be taken over by the Council. He agreed with Cr Speirs that it was not to the Council’s advantage to delay the matter. Cr Speirs said be had omitted to mention that the Council had a definite offer of the money required at per cent. Mr Clemett then moved that this meeting considers it would be in the best interests of the borough to take over the gas works at the price offered and that a vote of the ratepayers be taken. Mr Henuessy, in seconding the motion, said tuat he had always advocated municipal works. The Chairman said that as a member of the company it would hardly be right for him to say anything. If he strongly urged them to buy it would look as if he had an axe to grind. His own stralghtout opinion was, however, that it would be a good thing foi the borough 10 take the works over. At the present time the sale of gas etc., was about ,£l4O

per mouth and the expenditure approximately £7O, leaving a profit of £7O, or say £'B4o per annum. The consumption of gas can be greatly increased as fully a further 50 consumers could be got. He was certain that not a penny of the rate struck would need to be collected. He also pointed out that in all the figurest hey had allowed for a sinking fund of two per cent. He had always been an advocate of municipal works as he was satisfied that if a company could make them pay, then, surely a municipality, which was right on the spot, could do the same. Mr Clemett asked what percentage of losses for bad debts there was.

The Mayor said that in the case of the Foxton Company, during the 2\ years they had been going the bad debts were practically nil. He estimated the cost of production of gas at 5s per 1000 ft., and that price would also allow for a profit. He however agreed with Cr Speirs that no reduction in price should be made for at least 12 months. Mr Hennessy said that as the vote was to be taken over the whole borough he thought the ratepayers should be given a guarantee that the price would not be reduced within twelve mouths. Those who were outside the area should be given some inducement to support the loau. He also considered that there should be some hard and fast rule in reference to extensions of mains, otherwise they might have extensions being made for one consumer and in other cases several consumers would be refused an extension of the main, jou the ground that the estimated consumption would not warrant the extension. If a bard and fast rule were laid down it would prevent any “point working.’’ The Mayor said that the works would be run on business lines and that a gas committee of the Council would be set up. Mr Clemett said that as it was suggested that £SOO should be spent ou the erection of extra retorts, he would like to know if, when these were erected, they would be sufficieut for Foxton’s needs if the whole borough were connected. The Mayor said they would be quite sufficient for very many years to come. The motion was then put and carried unanimously. The Mayor said the poll would be taken on October sth. The meeting concluded with a vote of thanks to the chair.