The Timaru Herald. FRIDAY, MAY 8, 1925. WHO PAYS THE LOSS?

Timaru Herald, Volume XCVIII, 8 May 1925, Page 8

The Timaru Herald. FRIDAY, MAY 8, 1925. WHO PAYS THE LOSS?

Not unnaturally the Ckristcßurcli mnvspupea'd are* Ueligutea Avion tlio now contract concluded by tiie Uuy of Clmstclaui'cli with tne Public W oriis Department 10* tde supply of hydro-electrical energy iur the next twelve years. The retiring Mayor observed a sphinx-like secrecy until the election issue had been determined. But now that Mr Mealier is among the “outs,” he has broken the silence and published the terms of the new contract. Unquestionably the people of Christchurch, should he pleased with the outcome of what have been very protracted negotiations. Nevertheless the Department has made an extraordinary surrender to our northern neighbours. The spokesmen for the Cathedral City were amazingly successful with their bluff. As one Christchurch journal says:

. . . if this policy of self-help has not yet brought about the ideal of a city-owned power plant, it has at least borne fruit in stabilising the rate which the city has to pay the Government for its requirements in the next 12 years. Indeed, without tho Hawley report on Waimakariri possibilities, - the city would have been in the hollow' of the Government’s hands, when it came to the signing up of the new contract.

In other words it would appear that the Christchurch civio authorities held the Waimakanri pistol at the- Minister's head, 1 Knowing perfectly well that the: Ufovernnient whioii had expended so much money on the Lake scheme would not sanction the * harnessing of the Waimakariri. The, tactics of the civic authorities have been wholly successful. Not only has . Christchurch; obtained a very favourable and j unpayable rate as far as the I State is concerned, but the Department guarantees the supply to Christchurch. Here is the verdict of one journal: j The rate per kilowatt per annum : declines gradually from £6.45 in j 1928 to £4.13 in 1937, and with these terms the city has no cause ! for complaint. As ,a matter of fact the real danger that the Council had to guard against was a shortage of supply, and on this point a reasonable degree of protection has been secured for the critical years this side of 1930.

It is clear that the Department has entirely ignored the claims of other parts or Canterbury in concluding negotiations with the Chris tchurcn City Council. It is recognised, of course, that the Lake (Station is quite incapable of providing an ample supply for the whole of the province. This fact was borne in mind by the Christchurch authorities in their insistence upon a definitely-stated guaranteed supply. The point is stressed by one Christchurch journal which says: . . . The people of Christchurch have never felt confident that th*> Coleridge scheme is equal to the joint demands of city and country at a price interesting to industiy; and in point of fact they are not confident yet. They will accept this contract as offering them a reasonable degree of security for ten or • twelve years, but it is satisfactory that no undertaking has been given, express or implied that the city will bind itself to Coleridge indefinitely. Long before 1937 it will begin to be plain whether the original defects of the Lake scheme can be overcome at a cost that it will be permanent good business to pay; but the city must hold itself free to look elsewhere if Coleridge prospects are not good.

The principal advantages of the contract accepted by the Christchurch City Council can be stated in a few lines:

The point which interests consumers in other parts of the province, and should interest the average taxpayer, is that if the Department can supply tho City of Christchurch with zZ,I)UU k.w. of electrical energy at ±'4 .13 per k.w., entailing an annual payment of £91,U1)0, which section of the community is to be loaded with the loss suffered by the State in carrying out such an arrangement-. The last Labile Works Statement issued by the Hon. J. C. Coates showed that the accumulated deficiency in Lake Coleridge Profit and Less Account amounted to +£3,178. The financial results of the yea 1 ’ were summarised as follows:

Profit ... £ 703 It will bo noted that no provision was maue lor suiliing- iimtl, uiOiougn tile State b apply oi mieeuicity Act requires uie payment oi 1 pen- cent, alter 'a iicJiciuo lias reucbed a qiufitstiaring- stage. Added to the capital investment—alter 1 192 U sliouid be £3bl,oUU —the estimated cost of the duplication at Cake (Joleiidge, to give a total output ' of k i jUtKJ li.w. at the station, not to- mention wostiy transmission lines. This, additional capital outlay will involve further heavy charges of something like £32,01)0 annually. 'dims Lake Coleridge will be costing the State about ,£120,000 per annum to generate 27,000 k.w., and the Department has undertaken to supply Christchurch. with 22,000 k.w. for which, the city will pay only £91,000. Who tlion, we ask Mr Coates, is to bear the less'? The Christchurch newspapers arc

quit© equal to the, occasion.! Of the new contract one journal said: If tho city guarantees to support Coleridge for a further period of tw r elve years it carries the scheme on to a period at which the extra-city demand should be substantial enough to keep the price at a usable level. Beyond that period Christchurch, which has paid heavily for Coleridge, if it has also received a great return, is under no obligation to sacrifice itself for tho rest cf tho province or the rest of the Dominion. This, of couise, is pur© blurt ! According- to me, Tear Book me total coso to the (State per k.w. at the sub-station of Luk©i Coleridge current is ilB 4s. How then can Lake Uoleridge be nude to pay if C'kristchurcn is supplied in i9if(J at £5.89 per k.w., with a gradually lessening charge until me bedrock of £4.13 per k.w. is reached in 19871' Apart from the question of supplies ■■ for. ether parts of the province as against that definitely guaranteed Christchurch, the question naturally arises as to whether the HuiLo Works Department, has entered into an arrangement with the Christchurch City Council which must inevitably result, as has been the case in previous* dealings with the Christchurch authorities, in heavy loss to the i State.

Annual Rate Year. Payment Supply per k.w. £ k.w. £ 1927 44,000 9,750 0.78 1930 72,000 12,220 5.89 1933 83,000 15,070 5.51 1935 87,000 18,150 4.79 1937 91,000 22,000 4.13

Capital investment ltovenue £ 893,801 78,508 Expenditure— £ "Working expenses . . 20,777 Interest . 44,444 Depreciation . , * . 12j584 77,805