POWER BOARD DEVELOPMENT.

Shannon News, 23 April 1929, Page 4

POWER BOARD DEVELOPMENT.

Strand Position Shown for Year.

Nett Profit on Working, £604.

Light and Power Affected by Unforeseen Factors.

In dealing with accounts and returns the report omits shillings and .pence, for the sake of convenience. The outstanding features are given below: INCOME AND EXPENDITURE. Total income £40,396 Total ■ expenditure .. 39,792 Nett credit £604 The income was made up as follows: Sale of electricity £38,933, penalties . £313, interest on advances £267, interest on deposits £319, rents and sundries £4lB, tra(dinjg account profit I (gross) £146. THREE TEAR COMPARISON OF RECEIPTS. The table which follows shows how the income compares with 1927 and 1928 respectively. Meter rents helped to swell .t(he incqjme for tjhose two

The returns from power fell away considerably owing'-to'the flaxmills be- : ing idle for a portion of the year on account of labour troubles. However, the proceeds from the sale of electricity as a whole exceeded those of the J>r«vious year by £468. The classifica■tion of increase or decrease is as fol-lows:-—Lighting,; £53 increase; power, £1152 decrease; heating and cooking, £915 increase;, water-heaters, £519 increase; street lighting, £133 increase. The street lighting in the preceding year was restricted for a time, hence last year’s' returns are higher. EXAMPLES OF EXPENDITURE.

In .a statement giving some particulars of the expenditure, the following were the principal items shown: —Power purchased from Mangahao, £ls, 263; operating wages £lßl2, distribution charges £124, maintenance charges £315—£2250)' meter reading—-wages and transport £396; transport charges, £777; salaries —ladministrative arid clerical and operating, £3119; Board members —fees and travelling, £381; insurance premiums, £230; depreciation account, £3171; interest, sinking fund, and principal repayments, 1 £12,763. EXPENDITURE IN THREE YEARS !' The following table shows how the expenditure for the past year compared with the two preceding years:—

The coat of bulk electricity was less ,by £854 than in the previous year. The lessened demand for power at one portion of the year accounted for this. Wages were ■'considerably less than in the previous year, but salaries were some £4OO higher. This was in a measure accounted for by the fact that the amount of one officer's salary was in the previous year charged to the wages list, whereas last year 'it was classed ■ with the salaries. Small increases to junior members of the staff accounted for the balance of the increase under this head. In comparing the various items with the previous year’s list, it is found that in a number of instances •thte expenditure has been curtailed. In reference to the interest, etc., paid during the year, this, of course, will increase in proportion as the Board borrows money. The amount paid last year Was £12,763, which was £597 more than in the preceding year.

■ ANALYSIS OF DEPRECIATION. A return was included, prepared by the accountant (Mr F. J. Ramsay), showing how the amount of the depreciation fund,was arrived at for the year. It was as follows: Primary Lines—Capital outlay, 1929,

The meeting of the Horowhenua Electric Power Board on Tuesday was the last of the financial year, also the last before the election, and on this occasion the terms of office of all the members expire, pending the results of the poll. The annual report was presented by the Secretary and Treasurer (Mr P. W. Goldsmith), and the opportunity was taken by the Chairman and others to comment on facts contained therein, refer to phases of the Board’s work during its seven years of existence, and extend to one another expressions of good feeling. The report, which disclosed a steady growth, of the electrical system, offset by some adverse circumstances affecting the revenue from lighting and plower, gave general satisfaction, the finances and the undertaking as a whole being in a healthy condition.

£50,063; rate, 2 per cent.; 'amount, £lOOl.

Secondary Lines —£51,360, 3 per cent., £1541.

Main sub-s'fcatlions (indoor)— £5254, less for Shannon sub. buildings £795, £4459, 3 per cent., £134. Distribution, (charges) /subs, (outdoor) —£14,591, 4$ per cent., £693. Public Lighting—£lsl2, 4$ per cent., £72.

Trucks, motor cars, tools and equipment —£7082, 18 per cent., £1275. Meters, instruments, and office equipment —£10,910, 3 per cent., £327. Buildings (concrete) —£8426, add Shannon sub. £795, £9221, I per cent., £23

Totals—‘Capital outlay, 1929, £149,198; amount of depreciation, £5,066. Deductions —Sinking ;fund. investment £IOOO, principal repayments £738 8s 7d, loan guarantee policy investment £156 16s 6d, total £1895; balance, £3171. ' ! '

The amount, therefore, to be set aside this year and shortly to be, invested with the Public Trustee is £3171. The amounts so invested in the two previous years were: 1927, £2000; 1928 £2784; and with this year’s amount the total is £7925. ' k The common' fund of the Public Trustee is at present paying 51 per cent., and interest amounting to £2OO has already been earned. Thus in a few years, unless there are substantial calls made in the meantime, this depreciation reserve will represent a large sum or money. TRADING ACCOUNT. This account now assumes only small proportions. At the beginning of the year the stock on hand was valued at £429. The purchases and charges amounted to £741 and ‘the sales to £982, stock on hand at the end of the year £334. ■ NETT REVENUE .ACCOUNT. The expenditure side shows for interest, sinking fund ancl principal repaid a total of £12,763, depreciation reserve £3171, bad debts £ll4, and bad and doubtful debts reserve £250. On the other side there is a balance from income and '/expenditure aceounjt of £16,317; to this is added interest on advances to consumers, £267, and interest on fixed deposit,. £319. This leaves a small nett credit for the year of £604. The amount. brought down from the previous year was £7165. This sum, plus £604, viz., £7769, is the amount carried to the balance sheet for the year. NOTES ON BALANCE SHEET. Sundry debors totalled £9255, as against £14,026 in 1928 and £19,706 in 1927. The sundry debtors for electricity stood at £4989, the previous year at £5591, and in-the year before that at £6179. There has been a gradual improvement in this respect, but as the large quarterly accounts are outstanding on March 31st, the sundry v debtors for electridity must always loom large on the yearly balance sheet. Sundry debtors for Installations and services, etc., the balance for the previous year, £8596, was added to during the year for new installations, services and charges .to the extent of £3105, making £11,701 the total amount due. Of this jamount there has been collected £7185, and thus the balance outstanding on March 31st stood at £4516.

Sundry Creditors. —Amount £7495. The Mangahao, account for last quarter yet to be paid comes to £4788, and there is interest accrued to the extent of £2417. These two items pretty well dispose of the amount due to sundry creditors i

STATE OF RESERVES. The position of the reserves is summarised as follows: — Amount of Amount

BANK ACCOUNTS. At the clofe of the year the Board’s accounts at the Bank were in credit to the extent of £16,119. Of. this amount, £II,OOO is on fixed deposit and earning interest. This is a satisfactory balance; but liabilities in respect to the Mangahao account for electricity and the payment shortly to be made to the Depreciation Fund Commissioner will reduce the Bank balance by about £BOOO. CAPITAL ACCOUNT. The position of the capital account is as follows:

Loan money raised to date £190,000 Advanced from revenue account 802 Owing for goods 118 £190,920 Expended to March 31st, 1929 186,730 Stock in hand 4,098 Cash at Bank .......... 92 £190,920 An analysis shows that £B2B of the new £SOOO loan will be . wanted to square off loan account indebtedness to the 31st March, 1929. The capital expenditure for the year was £6534, less the amount recoverable for' service lines, £1179, making the nett expenditure £5355. The largest items which make up the stock in hand are transformers £1389, wire £798, and poles £6lB. NEW LOAN AND EXCHANGE OF DEBENTURES. During the year the Board agreed to exchange £SOOO worth of debentures with the Central Electric Power Board, Hamilton. This course was taken for a double purpose —one as a means of raising a further loan of £SOOO, and ■the other providing one source of investment for a portion of the Board’s reserve funds. The necessary steps for bringing about the completion, of these transactions are proceeding. EXPIRING AGREEMENT. FOR EULK SUPPLY.

“The year has passed,” tlie Secretary added,, “without any very startling happenings, but fair progress can be reported, and there is no doubt, I think, but lhat the financial position of the Board is quite sound. The Board ha 3 now entered into the last year of the agreement with the 'Government with respect to the bulk supply from Mangahao, and it'is to be hoped more favourable terms in the new agreement to be made will enable' the Board to (mss on any benefit to the consumer. The position of the Board to-day, whilst sound, does not as yet warrant any very great reduction in charges, although, after due consideration, the Board may see its way to make some concession...’’ CONCLUSION. After referring to the recent’ establishment by the Board of a superannuation scheme for its employees, and mentioning that the meeting next month would comprise a new Board both from the borough and couuty districts, the secretary recorded that 1 there had been harmony in the work carried on throughout the year, members of the staff in every branch of the service having the desire to make the undertaking' successful and to do efficient work. He conveyed to the chairman and members of ihe Board the best thanks of the staff for the courtesy and encouragement extended throughout the year. THE BOARD’S DISCUSSION.

The report was received with hearty applause. The Chairman (Mr G. A. Monk) con-

gratulated the Secretary and the accountancy slt-aff on having produced such an excellent report of the Board’s operations. It showed that they had taken a real live interest in the work

and had a thorough knowledge of' the workings and requirements of the Board’s operations The Chairman alluded to the difficulty encountered by the Board last spring through the flaxmills being idle, and took the /opportunity of acknowledging how well the Public Works Department had come to the Board’s aid when the mills were ready to start. Had the Department not come to the Board’s aid, the members would probably have found a debit balance instead of a credit at the end of the financial year. The Board had had various little difficulties during the year, but they had been overcome; and he felt justly proud of the operation.; of the Board up to date. It had paid its way, and had endeavoured wherever possible to give concessions such as it thought were the most justified. The Board had not been able to give all that were justified, but after those which it had given it had

been able to come out with a small

credit balance and .was able to pay it* wav. One of the outstanding matters was that of reserves. On top ; of the ordinary reserve, the Board harl created a depreciation reserve. This was ' started some three years ago, when it was decided to place £2OOO aside for that year. Legislation had followed which made that course somewhat compulsory. It seemed to him that, with the growth of that reserve, the Board would. probably in the future accumulate a vety large sum of money; in ten years’ time, unless a very large call came, it would ■ probably approximate close on £30,000. There was a clause in the Act which provided that the Board could cease contributing when the fund reached an amount equal to one-quarter of its capital expenditure. He was not expecting that the Board was going to attain that; but it did appear that, unless there was some big call, the percentage which . the Board was asked to contribute would bring about the accumulation of a very large sum. In addition to that, the Board had its sinking funds, which were invested and were earning interest. It looked as ,though the Board was probably in some measure duplicating this question of reserves when it kept the whole reticulation up to date out of revenue. An accident such as a tempest blowing out half a dozen transformers would create a just charge on the depreciation reserve. The depreciation allowed for motor vehicles was a just charge. With regard' to the lines, he thought it would be found that, where the lines were as stable as in this Board’s district, the reserve allowed by the Act was rather liberal.

LIGHTING REVENUE PUZZLING. Dealing with the income, the Chairman said he had been particularly struck by the fact that, whereas the revenue from lighting rose from £12,193 in 1927 to £13,168 in 1928, it only showed an increase of £53 last'y*ar •a the latter figure. Mr O. Blenlchorn: Daylight saving. The Chairman: It cannot be alto-

gether that, because we had an hour in the previous year. Wc have had the usual extensions and the usual new consumers, which probably run into two or three hundred a year; yet the amount of revenue, plu3 the community lighting, is only £53 higher. It it the writing on the wall —that is to. say, is there a feeling that people are more careful? There 4s a reflection of something there, and it is a matter that is worthy of consideration. A factor exists in the question of the minimum charge. We have now only one minimum charge where there are two meters —that is, where there i 3 cooking and lighting—and probably the reduction is reflected in the increase of only £53 on the lighting. POWER FACTORS. 'The chairman added that power revenue showed a falling-off, which wa3 due to the temporary closing of the flaxnlills. That industry had been a very valuable asset in this Board’s operations; but ho was of opinion that the Board had to lean more away from the flaxmilling industry, as time went on; than it had done in the past. In regard to the water-heaters there had been a satisfactory increase, but some of the Boards were complaining that this was not a payable load, and they were taking steps to see that it was made payable. He did not think that this Board had any grave cause for complaint. Street lighting was up, even though the Board had made concessions. As for the meter rents, when these were abolished the Board conceded an amount equal to £2OOO a year. Where there were t]wo minimum charges —lighting an|d cooking —the Board had conceded the lighting minimum.' Then daylight saving came in'. Hundreds of people who had been paying the minimum were to-day paving below the minimum. Coming to the subject of trading profit the chairman said there had been considerable agitation regarding Power Boards trading. He thought that if they had traded as this Board had done, with a legitimate profit and in three lines —water-.heaters, motors and cookers—there lvould not have been any cause for discussion to-day. Another concession‘ given during the past year was the minimum charge on | h.p. motors, affecting a number of people engaged in dairying and other industries, and the chairman thought it had been very much appreciated. NO IMMEDIATE REDUCTIONS. The chairman added that he considered the position satisfactory. He did not think, irrespective of how the Board might be composed after the election, that they need try to lead consumers to believe that there was any likelihood of any great reduction in charges. Peo: pie might say that the Board was accumulating a great deal of money; but that was clone to safeguard the Board’s interests. There were probably not. many concerns, if they trading to-day as this Board was, with its capital expenditure, that could claim .to be as sound and to have paid their way as well as the Board had done. One factor that the Board should take into consideration was that it did not appear to have quite the revenue it was justified in having according to the amount it wais paying for electricity. He had discussed this matter with the Engineer (Mr J. A. Smith), who had undGi* consideration some means by which the Board might be able so to handle the electricity received as to reduce its account with the Public Works Department a little, and increase its revenue by that amount. Touching on the fact of a new agreement with the Public Works Department being necessary after this year, the Chairman said that the result of the Department's operations at Mangahao last year did not lead him to believe that any great amount of reduction could be given, unless Waikaremoaina hatbeen established on a very much lower cost basis than Mangahao; but he did think that the Board could expect some concession, especially as the Hon. E. A. Ransom was the Minister in charge, he having been a very staunch advocate of the reduction of the price of the first 200 k.v.a. to £lO. RELATIONS WITH DEPARTMENT.

The relations existing between the Board, the supply authorities and the Department had been of the happiest. A very trying time was experienced last year when Mangahao ran dry, but even under those circumstances the Department had been ready to meet any rquest put to it, and by that co-oper-ation the Board had been able to carry on. The Board last money, and the Department lost a considerable amount, but in adjusting accounts the Department met the Board very well. In conclusion the chairman, congratulated Mr Goldsmith and his staff- on the very lucid report placed before the Board. SUPPORT, OF THE FLAXMILLS.

Air A. Seifert.. added his congratulations. He said that he took a good deal of pleasure in being a member of a Board that had managed its affairs so well. The profit of £604 was not too large* but it was \'ery satisfactory, when one considered the difficult time through which the Board had passed. As a flaxmiller he could say that the mills were paying a low rate for night current; they wanted work in the daytime at a higher rate, but the Board suffered more than the millers did, by taking id instead of l|d a unit. The Board did save a certain amount, because of the reduction given by the Public Works Department. The reserve fund was a very satisfactory feature of the Board’s operations. It had always been one of his strong views that public concerns should set aside a reasonable reserve fund, because they did not know what the future might bring. He had heard some members of other Boards soy, “We are keeping our lines up and should not be compelled to put aside reserves.’’ It should be pointed out, however, that while there’ would be very little expenditure on maintenance for 10 or 15 years, those Boards would give concessions for which there was no provision, and when, in course of time, renewals had to take place, there would be no money with which to do them. Mr Seifert added that he would again be a candidate for

the Board. From a- business point of view rhe operations of the, Board had been carried out in such a way that the people should feel satisfied; the balaneessheet spoke for itself. SUBSTANTIAL RESERVES. Mr C. Blcnkhot’n remarked that the Board seemed to be very well supplied with reserves. It had a general reserve of a very considerable amount. iTlic Chairman: The Board had a sinking fund in the first place, for the redemptioit of loans. Then the Board decided to have a depreciation or, renewal reserve, and eventually legislation was passed and it became statutory to set the money aside. Mr'Bleak-horn: I am touching on the general reserves. I would like to know what contingencies the Board has in view for which this particular provision is made. It seems to be getting to a very large amount, .bearing in mind the sinking fund and depreciation reserve.

The Chairman: The first reserve created was known as the interest reserve. Wo had authority in the early working of the Board, before we were revenueproducing, to pay interest and sinking fund out of loan. With regard to the sinking fund, that already has been repaid out of revenue to-,loan; but this £BOOO interest reserve was an amount taken from revenue when we were still able to pay interest out of loan. We created this reserve with the idea that there might be hard times, possibly; we had no idea that the revenue would reach the height it has done. This has not been an absolute loss to the Board; we have not accumulated a Reserve That is not earning anything. Mr- W. E. Barber congratulated the Treasurer on. his report; also the chairman and the Board, expressing the pleasure he had experienced in boing with them. He intimated that he would be standing again. AN ECONOMIC THEORY.

Mr T. G. Vincent complimented the Treasurer and the office staff on the excellent manner in which they had prepared the accounts in a short time,. He noticed that the Board would have to enter info a new agreement with the Public Works Department. He would like Ihe new Board to bear in mind that what the Board had paid to tjho Department represen!tecl| interest on £300,000. They could have put up a plant to serve this district for less money than that. The C hair man: Yes, but you have not got a license.

v Mr Vincent: I am just pointing it out; I think it would generate all the electricity wanted in this ditrict. Depreciation is 3 1-3 per cent on capital and 12i per cent on gross income, which is a very big tax. I feel, that, in an undertaking of this description, we should have as much reserve' as possible commensurate with giving reasonable service to the consumers. I am going to offer mv services again. CLOSING REMARKS.

Observing that, this was the last meeting of the Board as then constituted, the Chairman said he thought that members had done-their very best. If defeated at the election, they would know that they had left a clean job that anyone else coming in could understand. Ajs Chairman’ during the Avhole of the Board’s existence, he would like to express very sincere appreciation of the -efforts of the members and the support they had give* him. In every case . where anomalies had been , brought under the notice of the Board, there had been an earnest desire and endeavour to rectify them. The Board could justly claim that good work had been clone and that the results were satisfactory. He could not have achieved the , work he had done as chairman if he had not bad the support of the members. He also had, to acknowledge the loyalty of the staff, both ir. the clerical and engineering departments. No matter what information he had wanted it had always been there, and in such a form as to be readily understood. Thanks were also due to the Press, through which the views of members reached most of their constituents. The papers of the district had been most impartial and had been able to convey the news to the people in a few hours. The metropolitan papers could not give the same space as the country papers. to local bodies’ affairs, their alternative boing. to take out the “meat” and give it prominence. The Press had given the Board absolute support and had been very helpful. The Chairman added that-the Board’s affairs could not have reached the satisfactory -state they were in t-o-day without the support of the people who used the “juice.” The consumers had readied the number predicted by Mr Overton, the Board’s first Engineer, at - 3000. In conclusion, the chairman thanked the members for -their kindness to him in the past, and their support. Therehad been differences, but they had been at the Board table—genuine difference on policy matters —and when the members had gone outside they had not taken their differences with them. ' .

years: — f • 1927 1928 1929 Electricity £13,671 Lighting £12,193 £13^618 Heating and cooking (3,747 5,183 6,098 Power'’ 34,548 15,676 14,524 Watcjr-ieirters 2,173 2,806 3,325 Street lighting 1,228 1,182 1,315 £33,889 £38,465 £38,933 Meter rent|S% 1,697 1,091 'Trading, profit (gr) 648 387 1,46 Penalties 125 263 313 Interest on deposits 35 138 319 .Rents and sundries 385 388 418 Interest advances 802 621 267 Totals £37,5&1 £41,353 £40,396

1927 1928 1929 Power ; £14,020 £16,117 £15,263 Working expenses 8,376 9,750 8,595 Depreciation 2,000 2,784 3,171 Capital Charges— Interest, sinking fund, and principal repay's 11,603 12,165 12,763 Totals £35,999 £40,816 £39,792 SUMMAKf. Nett Income. Expenditure. Credit 1927 ... £37,581 £35,999 £1,582 1928 .. 41,353 40,816 537 1929 .. 40,396 39,792 604

Depreciation Sinking funds Reserve. £8155 Invested. £4984 6232 6232 Interest 8000 — Debenture redemption 2409 — Totals £24,796 £11,216