t).—l.

Operating Results. For the year just closed the number of units generated in the Government stations showed an increase over the previous year of 10-62 per cent, in the North Island and 11-56 per cent, in the South Island. Financially the year has been a successful one, and the whole Electric Supply Account has been able to earn 6-78 per cent, on the operating-capital after paying net operating-expenses. The position of the account is summarized in the following table, and the result since the State commenced operation in the electric-supply business is shown in the following graph : —■

Percentage earned on Operating-capital after paying Working-expenses.

In the North Island the Depreciation Reserve required by the State Supply of Electrical Energy Act—viz., 12| per cent, of the capital invested—has already been reached, and a considerably reduced amount is therefore chargeable to depreciation, with a consequential credit balance of £244,140 on the year's operations. This balance has been used to reduce the amount of deficiency which has been accumulated in earlier years and which now stands at £155,175. In the South Island, _ where in the past the Depreciation Reserve had reached the limit mentioned above, the addition of a large amount of additional capital has necessitated the resumption of full payments into the Depreciation Reserve Fund, with the result that the year's operations show a loss of £108,106. This deficiency is greater than that shown for last year, and is accounted for by an operating-loss of £19,496 on the recently acquired Southland Electric Supply System, on which the full depreciation charge of 2 per cent, has been paid, and by a non-recurrent payment of £26,420 as the cost of raising loans during the year. To meet this loss the General Reserve has been drawn on, and has consequently been reduced to £67,703. The general position to date is that the Electric Supply Account has been able to meet all operating and interest charges, has provided £1,265,796 towards the statutory requirements of £1,420,971 for depreciation, and, in addition, has provided £327,044 to sinking fund and £67,703 to General Reserve from profits made from time to time on Lake Coleridge system. In other words, the Electric Su PPly Sys.tem as a whole has paid interest and operating charges and provided £1,660,543 in reserves, of which £313,614 has already been utilized by Treasury for the paying-off of loans which formed part of the original capital.

XXI

Average Percentage of - - Operating- Gross Working- Net Net Balance capital. Revenue. expenses. Balance. to Operatingcapital. £ £ £ £ Per Cent. North Island system 8,489,741 887,410 144,315 743,095 8-750 South Island system 6,085,985 329,058 85,829 243,229 3-996 Totals .. 14,575,726 1,216,468 230,144 986,324 6-780