POWER BOARD’S ESTIMATES.

Shannon News, 24 May 1927, Page 4

POWER BOARD’S ESTIMATES.

fJ- WORK OF THE CURRENT YEAR i;-. “TORECASTED. K METER RENTS TO BE ABOLISHED. '.V - OTHER CONCESSIONS. At' this week’s meeting the Horowhenua Power Board had hefore it the estimates for the year l 1927-28, land also the Finance Comp,., mittes’s recommendations as to I* 1 what'concession could he given in | rates .and other means, of disposal of the profit of over £6OOO made last year.. These included the rev> mission of half the meter rents for ’l, the year—a matter of £BOO and t,-, better /terms for the dairy factories ih would bring a loss of revenue of £2OO, while £2OOO was placed to a dey preciation reserve for renewals of ' . poles and lines when required, and V £2373 .was utilised to repay to the loan account interest and sinking fund'paid during construction out ( of loan. The importance and mag- ’ nitude of the undertaking may he ; - Board has to date spent £189,C00 cn ' i\ reticulation and that its estimated 3' . revenue this year will he £36,000. „ ESTIMATED RECEIPTS —1927-28. '} Electricity Sales: '££ ' s d Lighting 12,800 sL Healing 4.000 *=. , Power .14,600 r * Street Lighting .. 1,300 Wn tor-heaters ... 2,300,

r . ESTIMATED EXPENDITURE.. •. : £. s d

SPECIAL COMMITTEE’S RECOMMENDATIONS. The special Committee, set up to consider possible reductions, recommended:— 4 (1) —That meter and M.D.I. rents be abolished after the first three bimonthly payments due in respect to the current year, except the weekend sea-side rates, which, shall con- ■ tinue to tile 31st December, 1927; but shall thereafter cease. (2) —That after meter, rents are abolished, there shall-be a minimum ■ charge for heating of 1/4 per month. (3) —That from the 31st December until otherwise determined, the seaside week-end rate, and churches, etc., which are also on this rate, the minimum charge shall be £2 per annum. For this sum the consumer shall be entitled to 40 units for lighting and ■3O units, for heating. Excess units shall be charged for at the rate of 9d pOr unit for lighting, and 4d per ■v unit for heating. In cases where no ■ current is used for heating, the minimum'charge of £2 per vear shall entitle the consumer to use up to 53 units for lighting. Beach cottages in which ranges are installed will be supplied with electricity at ltd per • unit, provided the consumer guarantees a minimum return fo the Board under this rate of £5 per annum. . . . (4). —That from the Ist April, 1927, the Iv.V.A. charge to dairy factories be reduced from £5 10s to £4 per annum. (5). —That the following appropriations be made from surplus at 31st March, 1927: —(a) Depreciation reserve, £2000; (b) Repayment of sinking fund and principal paid during construction out of loan, £2373 16s. NEW LOAN EXPENDITURE.

f lt is not an easy matter to say what will be required until it is ascertained what work the Board will authorise. After consultation with the engineer, and allowing for slocks already on band, the estimate given below should be somewhere near the mark fdr carry--77:. ing out the following reticulation dur?V ing the year: — ; Complete Matai Road, Raumati. Complete Soldiers' Settlement Road, Paraparaumu. Otaihanga Road, Paraparaumu. Off Shannon-Foxton Road (by Ausi tins’). Foxton main north road, extension. Swamp Road,. Te Horo. Otaki Gorge road extension. _ Albert Road, Tokomaru. Victoria Road, Tokomaru. Whitanui flaxmill. . - . Extensions to existing low tension lines. - Details of the expenditure on these works totalling £9500 were given. Chairman’s Comments. The chairman said the Finance Com* - mittee had very carefully considered the pros and cons of each item. These were merely estimates and could not be absolutely accurate-except in regard to rents and salaries. If they erred, however, if would be on the safe side. The e chairman reviewed the estimates, remarking that the revenue from light- ' -■ ing was estimated at £6OO more than . last year, and from heating at £250

more. There were always a number of ranges coming on. Receipts from power were not increased very much as there was always the prospect of big power users going off for awhile, and of course there were others coming on. Ptrcet lighting was put ,down at practically the same and water-heaters increased by £IOO. Apart from the revenue from sale of electricity, the receipts from meter rents would be redr ced by half from £I6OO to £BOO. The anticipated profit from trading was reduced from £6OO to £2OO, as they could not expect to sell the number of ranges and water-heaters in view of the number of people already supplied with these conveniences.

Coming to the expenditure, the chairman said they expected to pay. the Department £15,500 for electricity. This might be exceeded, but in that case there would be a corresponding increase in the receipts. The payments for current to the Department during the past four quarters had been as Mlows, each showing an increase:— £

March last 3945 . December -• • • 3730 September ‘3233 Juno 3.111 The actual payment last year was £14,019. Interest and sinking fund would absorb £12,000, wages £3OOO and salaries £3385. Transportation £ISOO. was one of the things that had given the Board a-good deal of concern, bid. apparently it always would be high owing to the fact that they had a long narroAV district. The chairman expressed the opinion that the estimates would be found to be framed on a safe basis. New Consumers and Meter Rents. Mr.., Petherick asked whether it was quite fair that people .who had boon hanging off‘should now be able to co me in and escape the meter rent when consumers who had been linked up earlier had almost bought their meters'by having to pay rent. He thought new consumers should have to pay meter rent: for a period. The chairman said that applied to people in places that had been reticulated for some time, „,but there were others avlio would have come on if the lines had been erected. It was, no! their fault that they Avcre not taking the. current. He did not think the amount of meter rent that Avould be collected from new consumers would be Avorth considering as against the amount of heart-burning it would cause throughout the district. Mr. Barber: lam a little disappointed that we are putting off the remission for six months.

The secretary said some of the con sumers had already paid tAvo months meter rent.

“A Bone bf Contention.”

Mr. Barber: The meter rent liabeen a bone of contention the Avhol time. It has-been the greatest difficulty I have had t,o contend Avith. However. I suppose the Finance Committee has gone into it most carefully'- and AVO have to accept it. Mr. Seifert said the Committee hardly felt justified in recommending a bigger reduction. He admitted the estimates "were a little - conservative. They were putting £ISOO on to the payment for current from the Department and not shOAving the reflection of it in the receipts.' It AA’Ould be most unfortunate if they had a loss Avhich the property owners would have to make up bv a rate. But he had no fear of that if they Avent on as they had done, especially in view of the strength built up in the past. The chairman said the revenue Avas wanted and personally he would have liked to see the rent kept on a little longer. However, it Avas redeeming a promise made by the Board and they felt that remitting the meter rent Avouki help everybody. Mr. Bryant said that from the remarks he had heard the remission would please the consumers. Consumers Will Be Satisfied.

Mr. Morse thought the consumers would be satisfied, though he would like to see it abolished at once.

Mr. Vincent said the Board eyas playing safe and he was quite satisfied -t Avas the correct policy, and the consumers Avould be satisfied when they knew the meter rent Avas coming off.

Mr Blenkhorn said that, as a new comer, he gave the Committee credit for having given the matter every consideration and accepted the recommendations. Mr. Petherick thought the fact that che estimates showed they were going to make a loss was against any reduction. He would like to see the Board in a little better financial position and to have continued the meter rent another 12 months. The Dairy Factory Rate. The chairman said the Committee was not satisfied with the proposed reduction to dairy factories. They felt they would like to do away with the K.V.A. charge if possible and they had asked the .engineer (Mr. Smith) to go into it. In the meantime they were giving a remission of £2OO on a revenue of £ISOO. It must be recognised that the dairy factory load was a big factor in increasing the Board's peak. Peculiarity of Dairy Load.

In answer to Mr. Blenkhorn the engineer gave an explanation of the K.V.A. charge.. Instead of pavingstraight out, so much per unit, there was an indicator in each factory which showed the maximum demand the factory had asked for during the quarter. This instrument took about 20 minutes to work up to the maximum and it could not be affected therefore bv the extra demand occasioned by starting up a motor. The factories paid so much on what was indicated and then a unit rate .’n addition. This made a standard charge which varied according to the demand, for power. That demand fixed the Board’s demand from Mangahao and the Board paid on the highest average peak load during any half-hour in the quarter at the rate of £2 10s for the first 100 horse power and £2 .for the balance. All the factories came on the Board’s peak load. A consumer might put a heavy load on for an hour and it might increase the Board’s peak, with the result that the Board would have to

pay for the quarter for that one hour’s load. The Iv.V.A. charge Avas intended to prevent that occurring. Mr. Vincent said that he had been speaking to an expert avlio specialised in dairy factory machinery and he said quite definitely that electricity could not compete with coal for factory purposes. The chairman: ; ,That is from the L.s.cl. point of view. There are other advantages of convenience. Dairy Factory Case Fully Represented.

Mr. Seifert said he wished to congratulate the dairy factories on having such an able representative as Mr. Vincent, who, if he had had his way, would have carried the rest of the Board with him. The trouble Avith the dairy factories Avas that their load was not continuous. The flax mills on the other hand used a steady load throughout the day. The dairy factories might .take their maximum demand for one hour only. The Board’s engineer Avas to look into the matter, and see whether they could do anything. He Avas afraid it was impossible to do away Avith-the K.V.A. charge without some other pro- 1 taction for the Board. The flaxmills had to take 60 per cent of their peak load. Mr. Vincent had put his case very avcll but circumstances Avere against him. getting a bigger reduction OA\ r ing to the peculiar nature of the dairy factory-load. Electricity was a very convenient form of power that enabled Avork to be done at any point with ease and efficiency.

Mr. Vincent explained how dairy factories were adversely affected through' their peak load in one quarter coming in April. For the .folloiving tAvo months the factories Aver 6 working intermittently but still had to pay on their April peak. The same thing occurred in the following quarter, when they had to pay for the slack months of July and August on the peak created in September by the commencement of the season. Then again they still had to run their boilers for washing purposes. The fact was that electricity was not suitable for dairy factories. Mr. Barber said that from the experience of the Shannon Dairy Factory lie could endorse Mr. Vincent’s vieAA r s. it had not proved economically finan3ially, but: there was the convenience ro be considered.

The chairman agreed with Mr. Seifert that Mr. Vincent had. put up a very good case, but he had not solved :he'Board’s difficulties. Providing For the Future.

The chairman said it was also proposed to establish a depreciation reserve, Avhich was most essential.’ The committee felt that, now was the time

lo start it. They were establishing a reserve at the rate of £1 per cent, on 1:200,000, which would be the total loan expenditure in a year or two’s time, this could be used when they had

.icavy expenses in the replacement of lines, poles, etc. The money avoulu have to bo invested and should be earning interest, or it might so happen that that they would invest it in their OAvn work. The committee considered setting up a reserve Avas the only safe policy to follow at the present juncture.. Mr. Blenkhorn hoped they Avould sec that the fund Avas not a paper one and that it was where they could get it when they wanted it. Repayment to Loan. The chairman next referred to the proposal to repay £2373 from the revenue account to the loan account. This Avas interest and sinking fund paid out of loan, as they tvere entitled to do under the statute, in the earlystages before the. work was revenueproducing. £IO,OOO More Required.

Mr. Blenkhorn: Did I hear you suggest that Ave Avould have to borrow more.money. The chairman: Yes, about £IO,OOO. Dealing with the loan account, the chairman said the' money Avould only be obtained as required, and there would be no surplus' of unused loan in hand. Authority was given to raise £260,000 by way of Joan, but apparently £200,000 Avould complete the reticulation of the district at present. The authority then taken was always there, and if satisfactory inducement Avas offered for the extension of the lines they, had the power to borrow the money. It had been Aviso policy to get. the full authority. Lots of Boards had had to go back to the ratepayers with further loan proposals—not a very nice thing to have to do as it placed the Board in a very unenviable position. It bad been the policy in the past;, and it Avould be in the future, to keep the loan expenditure down as-.low as possible. - . .

The secretary (Mr. Goldsmith) said that if it was decided to go on with the roads in the schedule or other roads to take their places, it would be essential to have authority to borrow more money. They had practically spent the £.180,000 so far raised, but had in hand stock t.o the value of pretty well £SOOO. They should therefore have authority to approach the lenders of money and find out the best terms.

The chairman: This will be : our test year. If we come through it, we can say the undertaking is safely launched. The revenue appeared to be buoyant. “This district has been wonderful in the way it has linked up with the system. We are a scattered district, but speaking generally we have got everybody. * Some districts have not been so fortunate. There is not much room for, expansion and it looks as though it will be a long time before our revenue reaches £50,000, but w T e anticipate reaching £40,000.” Mr. Gunning said they had taken the cream of the district. Now connections be very scattered and they •would only about pay their way. The Minimum Amount. Mr. Blenkhorn said the repayment of the £2700 did not scorn to have been taken into account when the Ipan estimate w r as framed. The chairman: It was kept in mind. The secretary said it was always better to have a little over what was required than a little under. The chairjnan: We expected to'

spend £IO,OOO on construction last year, but nearly doubled it, notwithstanding that we went into the estimates very carefully. Mr. Blenkhorn said that in framing a loan estimate contingencies were always allowed for. By taking in the £2700 as well it looked like adding a contingency to a contingency. He did not think they could look for the rapid progress of the past to continue. Mr. Blenkhorn said he was only seeking information. “I have full confidence, as yet, in the Finance Committee,” he added.

The chairman said his experience was that they could not got the loan estimate down to the last £IOOO. Mr. Barber seconded the motion for the adoption of the recommendations. He did not think the loan was too much. Enquiries were being made about other roads for reticulation.

The engineer said the roads in the schedule would be' reticulated or other roads in their place —which ever paid best.

The estiniates and recommendations were then adopted without alteration and authority given for the raising of the £IO,OOO required.

35,000 0 0 'V ' Meter Rents (byear) son 0 0 Cottage Rents 2C6 0 0 Penalties 100 0 0 -’v /-.‘Trading Profit 1150 0 0 -*■' Recoveries and Sundries, say 114 0 0 'f £36,530 0 0 Balance brought forward £6,730 0 0 £43,260 0 0

Electricity , 15,500 0 0 Interest & Sinking- Fund 12,000 0 0 Salaries 3,385 0 0 Wages • • 3,000 0 0 Maintenance 500 0 0 Transport 1,500 0 0 Public Lighting 150 0 0 Board Members 400 0 0 Office Rent & Cleaning ... . 215 0 0 Printing, Office Requisites 220 0 0 Phone, Postages, Insurance 450 ' 0 0 Outside Collectors £100, Audit £40, Rates £60 ....... . 200 0 0 Meter Reader's Gar ..... . 200 0 0 Contingencies . 500 0 0 Depreciation Reserve .... 2,000 0 0 £40,220 0 0 Less Loan Account's share of Salaries and Transport 800 ■ 0 0 £39,420 0 0