POWER AT ITS SOURCE.

Shannon News, 22 November 1929, Page 4

POWER AT ITS SOURCE.

BOARD REQUIRES NEW AGREEMENT WITH DEPARTMENT.

NO INDICATION OF REDUCTION IN PRICE.

A report on a conference between representatives of the Ilorowhenua Power Board anil the Public Works Department, relative to the making of a new agreement for the supply of power to the distributing body, was presented at the meeting of the Board on Tuesday, by the Secretary (Mr Goldsmith). The conferences had no immediate result, but after a discussion of the position by the Board it was decided to enter into negotiations with the Department with a view to the drawing up of a fresh agreement. The report was as follows: —

As directed by the Board,, the Chairman (Mr Monk) with the Secretary, waited on the Chief Electrical Engineer, -(Mr" Kissell) on Thursday, October 24th.'

AGREEMENT NOW IN FORCE. It will be remembered that tho Board’s present agreement with the Department is for five years ending on March 31st, 1930. The maximum supply is not to exceed 1200 k.v.a. The rate fixed under the agreement is:— For the first 200 k.v.a. of maximum demand taken at the point of supply during any quarter, £2 10s per k.v.a. per quarter. For all over 200 k.v.a. of maximum demand taken at the point of supply during the quarter, £2 per k.v.a. per quarter. “Maximum demand” means twice the number of units (kilo-volt-ampere hours) measured at the point of supply and supplied to the Board in the half-hour during which the number of units (kilo-volt-ampere- liours) is the maximum for the quarter. Quarters commence on the first days of January, April. Juiy and October In each year.

BASIS OF FURTHER AGREEMENT,

Mr Kissell pointed out that in the first instance that, if tlie parties interested so ..desired, after five years had elapsed, the agreement could ga on or continue on the same terms until either party gave six months’ notice of its desire to have a new agreement. On the other hand, the Board might desire to have the term “decided upon forthwith. Asked if there was any chance of a reduction in the rate charged by the Department, and particularly bringing down the. rate of the first 200 k.v.a. by 10s per quarter, Mr Kissell thought mere was no likelihood of any kind of a reduction at the present time. It seemed to him that the depreciation funds and general financial position of the Boards were much better than the Department’s own financial position. Until the Department’s affairs we»* in a sounder position so far as electrical undertakings were concerned, a reduction in charges would not be justified.

Mr Kissell pointed out what has since appeared in the Public Works Statement, that in the past two years the Department was forced to expend a very large sum of money- in the purchase of power from various local supply authorities. This was brought about by the heavy demands for power made by the Boards, and as the Department’s generating stations were not sufficiently ready to meet the demand, buying from outside was necessary and proved a very expensive item. However, this is now a thing of the past and there should now be power available for all requirements for ,a long time to come. If the Board desires to proceed with making an agreement with the Department for another definite term when, tho present one terminates, it will bo necessaiy to communicate with die Department to this effect.

LOAD MAY NOT. INCREASE FOR A TIME.

The Chairman (Mr Monk) said that probably Mr Kissell had put forward a fairly good argument in reference to the contract with the Department; and the Chairman presumed that that was the argument that would be brought in by the Minister of Public Works, who had said that if he could not give the Boards a reduction in the charges he would give them a very good reason. The point which this Board had to consider was tho question of a new agreement. Apparently they were not likely to get a reduction, but it appeared to the speaker that this agreement would come to an end. They had at [.'resent only a guarantee of 1200 k.v.a. Go did not expect that the Department would try to keep them down to that, out the Board could endeavour to increase that amount somewhat. If they were to expect a reduction in the flaxmil! load, they would probably not increase their load much above the present requirements for some years to come. In the event of the mill business declining, the class of load to follow would not be so readily consumed; the load would be a little, more widely spread, and the Board would not increase the maximum demand. - The Board should open this matter with the Department and get from it in writing the* terms on which it would make a fresh agreement. He suggested that they instruct their Secretary to write to the Department with a view to opening negotiations and obtaining a fresh, agreement. Probably their Engineer, during the time that negotiations were taking place, could arrive at something pretty • definite. The Chairman moved in the direction he had outlined. FIVE-YEAR TERM FAVOURED.

Mr Seifert, who seconded the motion, said that the Board should have some arrangement regarding future supplies, and perhaps it would be better to have a contract for a stated term, rather than for six months. The Secretary (Mr Goldsmith): Another term of five years? Tho 'Chairman: I think w'e are justified in that. If there is any reduction, we would get it just the same. Mr Vincent said he thought that Mr

Kissell’s argument that the Power Boards’ finance was better than that Of the Department showed that in the Public Works Department there were some long-headed individuals, seeing that it had been made statutory for the Boards to set aside depreciation funds. The Government were the onlj’- people from whom the Board was allowed to buy power, and he did not think that Mr Kissell should bring forward that argument. The Chairman: Some of the Boards have not been in a position to set aside depreciation funds.

LOWER CHARGES IN OTHER CASES Mr Vincent: The Government made it mandatory for it to be done in a specified time. They should not advance that as an argument against a reduction. Our argument is that other Boards are getting the supply at a much reduced rate.

Mr Seifert mentioned the Auckland City Council. Mr Vincent: They are keeping them dark.

The Chairman: The only one kept dark, I th'nk, is Wellington. No one ever got to the bottom of that. Mr Vincent: I don’t think they should be treated differently from any other Board. The Chairman: The Department made the contract at Auckland and then started to build Arapuni, on which there was a loss. DEPARTMENT’S FINANCIAL DISABILITY. The Secretary stated that the Public Works were supposed to have a depreciation fund up to a certain extent, according to regulations, but the position was such that that fund was in a bad position. Altogether a reduction in rates would not be justified till the Department’s own affairs had righted themselves somewhat. Mr Kissel contended that, on account of the extraordinary demand coming on so quickly, before they were .ready to supply it, the result had been disastrous to the finances of the country, and only in time could they recover. The Chief Engineer did not seem to think that that time would be long. WHEN POWER WAS SIOARCE.

The Chairman: The Department did everything possible. Mangahao practically failed, in a very dry Season, and I do not think that' any Department or anyone could have done more than they did. Mr Seifert: It cost them £70,000 for eight ‘ weeks. 1 The. Chairman: Every plant in the district that could generate electricity ran. Even the little plant at Feilding, which was sold the other day for about £SOO, was brought into operation, showing that the matter was one of very great urgency. The Department could have said to us, “Our guarantee is only twelve hundred,’’ and where would we have been? A NECESSARY PROVISO.

Mr Seifert: I don’t think they will be able to supply “juice’’ at a lower rate for some time'; but they have the three plants and can switch in, and that is/why we should have the proviso that if a reduction is made we should get it. ■ The Chairman: The question is whether the whole of the concerns supplying electricity should not be under one head, like the railways. They have made contracts with Christchurch and Lake Coleridge which are very milch more favourable for the supply authority than is the case with us. 1 think that, if we open negotiations, something may - turn up in time. I did not go there to argue the point with Mr Kissell, but to get his side of it.

The motion, that steps be taken to open negotiations for the purpose of arriving a a further agreement with the Public Works Department, was carried.

Mr Hyde remarked that if a fiveyear agreement were entered into, it should contain the suggested proviso ensuring to the Board the benefit of any reduction in the charges.

Mr Seifert said it had to be admitted that the Department had been in an awkward fix in building a large plant at Arapuni for a large load — about 100,000 horse-power. The Chairman: They will have to close IJf'.rohora in the meantime and just ii.".■ o.ie. Mangahao and supplement a./ plants built a load for Waikaremoaua.