WELLINGTON GAS COMPANY.

New Zealand Times, Volume XXXI, Issue 4834, 19 September 1876, Page 2

WELLINGTON GAS COMPANY.

A special meeting of the Wellington Gas Company was held yesterday at noon at the Odd Fellows’ Hah. There was a good attendance of members, and the Hon. C. J. Pharazyn, Chairman of Directors, occupied the chair. ADMISSION OP REPORTERS. The Chairman said he observed that representatives of the newspapers were present, but without wishing to be discourteous, it struck him that the shareholders might be averse to the proceedings being published. Mr. Hunter remarked that it was usual for all public companies to admit reporters to annual meetings or special meetings, and he

did not think that the company had anything to keep from the public.

The Chairman said he now observed for the first time that the object of the meeting had been made public by advertisement, and therefore personally he withdrew any objection to the reporters remaining. However he should put the motion “ that reporters do remain.” The motion was carried. SALE OP WORKS TO THE CORPORATION.

The Chairman, in bringing before the meeting the resolution passed by the directors, accepting, subject to the confirmation of the shareholders, the offer of £l4 per share made by the Corporation, explained that he had taken no part in the negotiations, but had agreed to concur in whatever arrangement might be come to by bis brother directors. The only question before the meeting was, would they confirm the action of the directors? He should say nothing on the subject either way, for the shareholders were quite capable of judging whether in the event of the Corporation carrying out their bargain—which he very much doubted—the bargain would be a good one for the shareholders and advantageous to the town. He moved that the resolution of the directors be confirmed.

Mr. Hunter said he simply wished to say he thought it the duty of the shareholders to confirm the resolution which had been come to by the directors ; but at the same time it appeared very clear to him that the Corporation would not be in a position to purchase, and therefore that the resolution might practically be regarded as so much waste paper. It was quite true that a Bill had been introduced into Parliament; but there were considerable doubts as to whether it would be passed, especially seeing that recently there bad been an expression of public opinion against the purchase. For his own part, for the sake of the town he was opposed to placing the gasworks under the management of the Corporation—even had that body the money in hand enabling them to make the purchase. The hands of the Corporation were quite full enough without their meddling with gas; and there were very many ways in which the money proposed to be devoted to the purchase could be spent more beneficially to the town and its inhabitants. Still he should vote for the resolution, as he considered they were bound to confirm the action of the directors; hut the resolution might be regarded as one which would never take effect, as the Corporation would never be able to carry out the purchase. The Chairman said he quite agreed with Mr. Hunter. The resolution might be passed, but there the matter would drop. If the Bill which had been introduced into Parliament managed to pass one House he did not think there was the least probability it would pass the other House. Mr. Bannatvnb inquired whether the directors were of opinion that it would be desirable to sell if the Corporation had the money wherewith to purchase ? The Chairman : Individually, or collectively ? Mr. Bannattne : Collectively.

The Chairman : I believe there is a majority in favor of it. However, most of the directors are present, and they may afford you more particular information if they choose. Mr. SoHULTZE inquired whether the proposition for disposing of the company’s interest to the Corporation emanated first of all from the company or the Corporation ? The Chairman replied that the proposition came from the Corporation about three months ago, Councillor Dransfield having carried a motion affirming the desirableness of the Corporation taking the works over. Mr. Schultze said his impression was that the directors had been the first to start the idea by having, twelve months or two years a"0, suggested the proposition to a meeting of shareholders.

The Chairman said neither the manager nor himself had any recollection of the occurrence.

Mr. Hunter said Mr. Schuttze was correct In his recollection. The Chairman himself had at the annual meeting of the company, held on February 1, 1875, as reported in the Times of next day, submitted the following resolution : meeting of the shareholders that the works and plant be offered to the City Corporation for the sum of £17,200, payable by debentures, bearing 7 per cent., and payable in ten years ; the debentures and interest thereon to be a first charge upon the property and also upon the gas rates.” He (Mr. Hunter) had opposed it, and was reported to have said : —“ There was no likelihood of the Corporation purchasing, and they were thus showing their hand. He had always advocated cheap gas, and he believed they would be able to maintain a monopoly by reducing the price, and thus keeping other companies out of the field. They had a largely increased plant ; they had acquired the freehold of a greater extent of ground to work upon; and they should be prepared to meet all the requirements of the public. They undoubtedly could do so if they chose ; and he looked upon that as the first course to be adopted for their own safety. They should not go to the Corporation ; the Corporation should come to them.” Mr. Hunter continued—lt was quite clear that the proposal had emanated from the Board in the first instance, although it might be perfectly true that Mr. Dransfield had brought the proposition forward on the last occasion. He must say ho considered the conduct of the directors had been weak in regard to this matter ; and the fact of the chairman of directors and the manager of the works being members of the City Council, had placed the thing on a very unsatisfactory footing—the public and a portion of the Press of Wellington had conceived the idea that the company had been endeavoring to get rid of its property at a price beyond its value. He was firmly convinced this was a very wrong idea, and that it was not beneficial to the company to sell its property at £l4 per share. Some shares had been sold at £lB 10s. per share. (A Shareholder ; £2O a share.) Mr. Hunter was not aware the price was so high; but it was very clear when shares woukf bring £2O in the open market that it was not a good bargain to sell out at £l4. Still the directors, in view of possible opposition and possible coercion, agreed to sell. He had never thought they could be coerced; however, they must now confirm the action of the directors. The Chairman said he was much obliged to Mr. Hunter for having drawn his attention closer to the matter. He had not remembered the occurrence, but he was so far right, that

the resolution was negatived, and really the offer never was made to the Corporation. Referring to the offer lately made by the Corporation, he said he had been told distinctly that the Corporation could take over the gasworks or erect new works if they pleased, and was not aware there had been obstacles in the wav. Under these circumstances the directors thought it as well to sell to the Corporation at a fair price. The price named was £lB, which however was pooh-poohed. Then the Empire Gas Company was promoted, and the affair assumed a different feature, and it became a question for the directors whether they would go further with the thing. Of course the lesult of opposition would be a decrease in the value of the property, and for a time a reduction in the price of gas, with a' corresponding reduction in the amount of dividends. Fresh negotiations were then entered into. He had not taken any part in the negotiations, owing to his relations with the company and the Council, but he had addressed to the directors a memorandum of his opinion upon the, subject, on being asked to do so. In that memorandum he had named the minimum price of £ls per share—at the same time opposing the sale altogether—with the alternative of allowing the question to be settled by duly appointed arbitrators. However, the directors having agreed to £l4 he fell in with it ; but he hoped the purchase would not be made. He considered the position of the company very strong, and had not the least fear of opposition. The property was worth more than £l4 per share, although the Mayor had expressed the opinion that £lO was full value. Such talk was preposterous. The motion was then put, and carried unanimously. INCREASE IN THE CAPITAL, AND REDUCTION IN THE PRICE OP GAS. Mr. Hunter moved, — (1.) That the capital of the company be increased from £30,000 to £50,000j; (2.) That the price of gas be reduced to 10s. per 1000 ft. He said although these resolutions had been given notice of as one motion, and could be more conveniently discussed as one motion, he should desire the Chairman when the matter came to the vote to put each resolution singly, because some shareholders might approve of one, and not of the other. The first resolution he had brought forward because he considered it was absolutely necessary for the company to procure larger plant, and to more thoroughly occupy the town than it now did. Of course everyone was aware that the price of gas depended entirely upon the consumption—the quantity which the company could work off—and in looking at this matter it was well to direct attention to what was being done in other places. In his hand he held a copy of the Argus of July 22, containing a report of the last annual meeting of the Melbourne Gas Company. The paid-up capital of that company amounted to £250,000; money raised upon debentures amounted to £30,000; and on what was called debenture redemption account, £22,000; so that in all there had been about £300,000 invested by the company. For some time past, as was probably well known, that company had had to fight against serious opposition; for some years only 6 per cent, had been received in the way of dividends, and there had been a hard struggle even to get that. His (Mr. Hunter's) object was to show that neither in this nor in any other community where capital was not plentiful was it a question for the citizens to consider whether competition in the supply of gas would be a permanent benefitto the town. At the meeting of the Melbourne Company, to which he had referred, the chairman of that company had very forcibly said—“ It is obvious to all acquainted with the subject that competition in gas supply does not tend to the ultimate advantage of the consumer, and it will be immaterial whether that competition is fostered by municipal or private funds, as the result will be the same. When it is remembered that upwards of half-a-million sterling has been expended in gas undertakings in Melbourne and its suburbs, with the sanction and authority of Acts of Parliament, common justice demands that reasonable consideration should be given to existing interests. ... It was almost scandalous to see so many gas mains laid, burying capital, where one main would have been more than ample to supply the requirements now being met by three. All that capital need not have been wasted. . . . However, the interests of the shareholders in their company had at stake were too large to allow their business to be trifled with, and they were determined to meet the opposition in every possible way.” That was the decision of the Melbourne Gas Company in the face of opposition, and the Wellington Gas Company must take np a firm position, and adopt steps to prevent opposition. If they did not, they must expect opposition. The Chairman of the Melbourne company had, in reply to some remarks, added :—“ The directors had a definite policy, and that policy they had determined on, and made up their minds to carry out. There was no analogy whatever between banks and gas companies. A gas company had its capital buried under ground, and could not pick it up and walk off with it to another district as a bank could with its money and notes. The directors had given the matter their fullest consideration for years past, and they had come to what they considered a wise conclusion. Of course if the shareholders did not think the directors had done right, and had forfeited their confidence, they would readily • give place to others whom the shareholders might elect. Whatever portion of their business they might give up, they would be giving up so much of their capital as had been spent on that portion, and no one could shut his eyes to the fact that three gas mains lying together in a district was utter waste.” Some remarks in the Argus summary for August last were also cited to show how injuriously competition was working. Mr. Hunter called attention to a debate which had taken place in the House of Lords on June 22, on a Bill entitled the Gas Lighting and Coke Company’s Bill, explaining that larger dividends than 10 percent, were not allowed in England, unless a company could first show that it could sell gas a at lower rate than the minimum. The Chairman : 3s. 9d.

Mr. Hunter : Yes, that is the price. The Duke of Richmond and Gordon was reported in The Times as having said during the debate on this Bill —“ It was very inconvenient and a great disadvantage to consumers that gas should be supplied in one district by several different companies. . . . He doubted whether it would be for the benefit of the consumers that the gas and water companies should be bought up by public corporations.” He (Mr. Hunter) quite agreed with these views ; and his conversion had not been of a late date, for on the 3rd February, 1874, at a general meeting of shareholders, he had expressed very much the same views as he entertained now. He then said—“ His own opinion was that the capital of the company should be increased, so that they would be in a position to enlarge their operations. . . . The only way to make the business profitable was to reduce the price of the gas and induce a large consumption. The only way to succeed in making a good business and in securing a monopoly—a fair and legitimate monopoly—was to fix such a tariff as to enable everybody to share in the advantages of a cheap supply. He would like to see the price even lower thanit was at present, and, if necessary, more capital should be called up to enable that to be done. The time might come when they would be required by law to transfer their property to the Corporation or some other body, but the more the value of the property was increased the greater interest would they get upon their outlay. The increased value of the plant had already raised the price of shares in the company to £lB 10s., and the best course now to pursue would be to reduce the price of gas to such a price for one thousand feet that it could not be challenged. He referred to this to show that two and a half years ago he had expressed precisely the same views as he now held, and could not be accused of being influenced by anything which had taken place lately. He thought then that the course he suggested was the best course, and he thought so still With regard to the establishment of a new company it _ must be very clear that it involved double expenses of management, and it involved.

what he was told was a very serious item —a double waste of gas, and a large waste of money in laying down unnecessary mains and keeping works in repair. This might all be prevented if the Wellington Company would increase its capital, increase its manufacturing powers, and its means of supply. No proof was needed that at present the demand was too close to the supply ; but if evidence were necessary, the fact of the company being unable to supply gas to the General Assembly buildings the other evening might be cited. No doubt the company had a large extent of mains, but the extension was not far enough. He should like to see a different policy pursued in the future as to the laying of mains. Let mains be laid at once wherever gas might be required. His theory had always been to occupy the town. Although people might not take the gas at first, when it had been laid to their doors and they were canvassed, they would soon become consumers, more especially it it were supplied at a reasonable rate. '1 he proposition to make the price 10s. per 1000 ft. was intended to refer to the net price; and though he was not prepared with figures, ho had no doubt every information would be given by the manager. The companv must show the public it bad every desire to meet the wants of the town. He was quite sure if the citizens would give the matter thought they would find that a wrong impression regarding the company was abroad. The company was entitled to a good deal of consideration. They had undertaken to supply gas at a time when the requirements of the town were not largo; money had been invested at a great risk; and it was rather unfair that now when there was a prospect of a return for the investment an unfair cry should be raised and opposition promoted. Still the company had its duty to perform, and its present object should be to extend its mains all over the city, and carry the supply to everybody’s door rather than paying large dividends. How the capital was to be increased was a matter for consideration. The new shares might be absorbed by the old shareho’ders, or placed before the public at a certain premium, the profit going to the credit of the company. It had been said that new shareholders should be let in at £lO, but that would be manifestly unfair. The Chairman : You have no data to go upon as regards the reduction in the price of gas. Mr. Hunter replied that he had not, but he had seen the estimates of the proposed new company, who were promising the public gas at 10s. No doubt some of those estimates were unreliable. They must be, for a gas company could not at the outset foresee all the expenses to which they would be put. For instance, the Wellington Company had commenced with a capital of £10,000; that amount soon had to he increased to £20,000, and then £30,000 ; and now £50,000 was required. But still he had no doubt that with the increased supply which an extension of the works would allow they could supply gas at something like 10s. They must not" look to increasing the reserve fund and paying high dividends, but rather study to occupy the town and maintain their position ; and he was certain the public would be satisfied with them if they did this. Mr. J. Borne said he should feel great pleasure in seconding the first resolution, and also the second if a proviso were added to it to the effect that the directors should reduce the price of gas to 10s. as soon as -they saw their way to do it. He quite approved of increasing the capital of the company, and as for the proposed reduction in price, he had always advocated it. He had always been anxious to see the price of gas brought down to the price of kerosene, for it had continually been an argument brought forward that kerosene was cheaper. If the reduction were made, he felt sure the increased consumption would more than recoup the company. The Chairman said more importance would have been attached to what Mr. Hunter had said if he had gone into figures and shown how the company could supply gas at 10s. per 3 000. The point he (Mr. Pharazyn) had always considered when discussing these proposed reductions was what effect would it have upon the dividends. The last reduction —that from 16s. to 14s. per 1000—was made at the suggestion of Mr. Hunter, and it was a remarkable fact that it had not tended to increase the consumption. The consumption had increased steadily, but there had been no spasmodic increase consequent upon the reduction as reasonably might have been anticipated. He quite approved of the proposal for increasing the supply, and he had been informed by the manager that the £SOOO worth of plant and material, now on the way out from England, would be sufficient to supply all the wants of the town for three or four years to come. He wished to point out that the increase of capital to the extent of £20,000 would have the effect of greatly reducing the dividends. However, if the company decided upon taking this course, it would be a matter for consideration whether it would not be better, instead of issuing additional shares, to borrow the money in the London market at 5 or 6 per cent. Certainly if the shares were increased to the extent preposed the dividends would be very low. He should like to know if Mr. Hunter was aware of the amount each thousand feet of gas cost 1 Mr. H enter said he was not.

The Chairman would like the meeting to know that the coat to the company waa Ba.—this was irrespective of office charges, which were met by the profit arising from the aale of coke, tar, etc. Thus the profit to the company waa 4s. per thousand feet. It was estimated that this year sixteen million feet would be manufactured, the total profit to the company for the year being estimated at £3200. £SOO would be paid to the reserve fund, leaving a divisible profit of £2700. The expended capital had at present reached £27,000, but with the £SOOO being expended in new plant it would before the end of the year reach £32,000; so that the dividends would represent but 8 or 9 per cent. This he contended was not sufficient in view of the risk there was in investments of this character. With reference to alleged complaints from gas consumers, he thought too much was made of the complaints. He had had conversations with many consumers, and most people seemed to be quite satisfied. Mains had been laid down over a large extent of ground, and no doubt would have been laid down over a larger extent if encouragement had been given to the company. The mains had been laid to the Terrace, and what had been the consequence ? —there was scarcely an application for gas. The Manager : Only four applications.

The Chairman : Only four. That was not proper encouragement. It was the same even in Moles worth-street. There were many private houses, but in scarcely any was the gas used ; in fact the use of gas seemed to be confined to the publichouses and shops. If people wanted gas they should apply for it, and then the company would know where it would pay to lay the mains. Even on the Tinakori-road a number of new houses had been recently built—houses in which one would expect to find gas laid on, but no application had been received. The Manager : The mains have not been laid so far.

The Chairman ; They have never asked for it. Then it was said there was grumbling on account of the excessive price. He had heard no grumbling, and as a consumer he thought the charge reasonable. As reference had been made to the failure of the gas supply at the public buildings, he could only say it would be much better if there were a little economy observed in regard to gas at the Government buildings. Every night the gas was wasted in a wholesale manner ; even waterclosets were extravagantly illuminated. Mr. Brandon called attention to the complaints made as to the overcharge by the company, imperfect meters being suspected as the cause ; and suggested that the company should in respect of new shares adopt the principle npon which the Empire Company had been started, and issue shares of small amounts. He thought if £2 shares were issued at a premium of £1 many consnmerswould take them np, and a new interest in the success of the company would be awakened. It would be very wise to fight the Empire Company with its own weapons. The shares might be got rid of

gradually, £SOOO worth at a time being placed on the market.

The Chairman said so far as meters were concerned it might be that errors crept in one month; but it so the mistake would in due course bo corrected the following month. He had heard of a gentleman’s bill one month bein" £14 —much below the ordinary amount; but next month he found it £24, the error being made up. Generally speaking the mistakes were against the Gas Company, but in any case the mistakes rectified themselves. _ The Manager offered n explanation similar to that given by the Chairman. He added that all meters were tried at the Government testing department before they were sent from England and must be correct, or at any rate any de f ect must militate against the company. He suggested that a teat might bo arranged in the colony, the consumers bearing the expense of testing if they felt dissatisfied with the meter. . ,

Mr." Brandon thought that air might get into the meter.

The Manager remarked that if there was 8 per cent, of air in the meter it would be discernible from the bad light given by the gas, for if there was 20 per cent, there would be no light at all. Lieut.-Colonel Alodle suggested that the new capital should be raised in £1 shares, at a premium of 10s. per share. After some further discussion on this point, the first resolution was carried unanimously. Colonel Mocle thought some definite time should be fixed at which the proposed reduction in price should come into operation. This was generally deprecated. Mr. Hdnter said the addition which had been suggested by Mr. Burne met his approval. He had never intended to hamper the directors.

The second resolution as amended was also carried unanimously. The meeting then adjourned.