POWER BOARD LOAN

Ashburton Guardian, Volume 48, Issue 142, 27 March 1928, Page 6

POWER BOARD LOAN

PROPOSALS EXPLAINED. FINANCE AND DEVELOPMENT. EXPENDITURE OF £90,000. The first of a series of addresses in connection 'with the Ashburton Electric Power Board’s proposal to raise a special loan of £90,000 to. carry out certain works and to distribute electrical energy to consumers, was held at the Lauriston school last evening. There was a fair attendance, including Messrs H. Morris andt E. 5 - Nicol of the Board). An apology was received from Mr H. J. Crothers. Mr F. E. Amos presided, and intrc- ? duced Mr F. W. Watt (chairman of - the Board). Mr Watt first gave an outline of the ’• earlier stages of the Board’s work in | the County’ loading up to the present, and went into detail, a large number of slides depicting many phases of the Board’s activities. 1 Sanction by Loans Board. Mr Watt stated that the proposed lean had been very carefully considered from all points by the Power Board and had been very thoroughly investigated by the Local Government Loans Board at two meetings. The Loans Board had then given its :. sanction to the raising of the loan subject to the condition that before the Power Bo aid spent more than £30,000 >'■ it would apply to the Ixian Board ior further sanction. The interests of the .ratepayers had therefore been doubly protected, first by the careful scrutiny tf by the Loans Board and secondly by the continuing control to be exercised * by the Loans Board over the rate of ■expenditure. Ratepayers could rest .assured that a loan which had received the sanction of the Leans Board could undoubtedly be- considered necessary and be comfortably carried by the y Board without prejudicing its sound financial position. Original Loan Proposal. ■ ; Referring to the original loan proposal of July, 1922, and to statements made during the series of meetings held prior to the poll, Mr Watt said that their most optimistic statements •had since been more than borne out S, by results. The map of the distribu■:i tion system showed lines carried into “ every corner of the district, while the “blue area” map showed that the Board had erected 280 miles of line in blue areas to serve 340 consumers.

This had necessitated the expenditure 6 of £42,000 in supplying blue area while the old proposal had allowed only £lo,ooo,which would have built about 60 ; miles of line to supply 80 consumers. This was one result of the Board’s endeavour •to give a supply of electricity to every consumer who could be economically reached and where the new business appeared' sound. £161,000 had been allowed for lines in white area, while £176,031 had been expended. Interest during construction was estimated at £15.000 while £16,169 had been spent, but the loan raised was 10 per cent, greater than fnlicipated. Loan flotation expenses were only £3,612 against an estimate ' ■ of £17,000 and advances to consumers stood at only £4,795, while provision bad been made for £20,000. To 31st January, 1928, the Board had spent £321,000, but had a system which in equipment and capacity was a vast improvement on the system originally contemplated. The Board was now opcrating 805 miles of line, supplying 2950 consumers, while the original report proposed 340 miles to supply 2,500 consumers.

Rapid Development.

The increase in maximum demand was shown as rising from 160 K.W. in January, 1924, to 1280 K.W. in January, 1928. A load of 1400 K.W. was & expected in May, 1928, and 1700 K.W. ? j u 1929. An estimate made in 1924 ijad ©laced the demand in 1929 at 6UO K.Yvh, only 35 per cent, of that now probable. '■ Ultimately, loads of over 8000 K.W. were expected within the V next few years. , . . . The system had been designed in 5v 1923-24, based on the estimates of de- %. jnand apparent at that time. A great change had come over the electric supply business due to the vastly greater requirements of electricity for domes'tic purposes. When they realised that a system designed for 600 K.W. m 1929 was carrying 1300 K.W. now '> they would appreciate the difficulties of the Board in providing the necessary capacity. 11l the past it had involved a continuous expenditure of capital in providing extra copper and transform- % ers and switch-gear.' A number of slides showing the changes necessitated at the Ashburton, station, including the 5,000 K.Y.A. Bank of Transformers of the Public Works Department. Originally 700 K.W. was provided, then 1050 Kva., and finally 5000 Kva., which should be sufficient "for some time. The Board s ovm banks at Ashburton totalling 1350 Kva. were shown, these having been recently installed at a cost of about I £I6OO. , i x . . .. More slides showed most clearly the rapid growth of .the number of consumers from 828 to 2950 in less than five years and that the capital outlay per consumer was now standing at £101.5, at which figure it was expected to remain. , The result of the energetic sales of appliances and of the good service given to consumers was illustrated by the growth of connected load per consumer, which was as follows: — 1924 .. - 1-33 K.W. 1925 1-75 „ 1926 2.15 „ 1927 2.62 „ 1928 3.00 „ The total connected load increased from 1,356 K.W. in 1924, to nearly 9.000 K.W. at present. The success of the Board depended on its being able to continue this progress m the future, hut to do so it must have more capital to provide the heavier main lines and transformers to carry the ' "' units purchased per consumer had increased from 620 per annum in 1924 to 1650 at present, another striking increase in growth. Consumers per mile of line had drop- . ped sharply as the Board s construction programme in the countiy progressed, but since 1926 showed a slow "but steady improvement which was expected to continue. The present average is 3.67 consumers per mile of A* further series of views followed showing the alterations to substations,

switchgear, etc., necessitated by the <rrow til in the past. Special equipment such as automatic reclosing switchgear and automatic voltage regulators, were illustrations of the class of equipment provided, to give the best possible setvice to consumers. Mitcham substation was quoted as an example of the effect of growing loads Originally the line was operated at 6600 volts, although built of 11,000 volts, find 6,000 volts was supposed sufficient for about five years, m 2| years, 11,060-volt, supply was necessary with a 100 jvva. transrormer, whilst recently, only o- a years from supply being given, the capacity had to-be increased to 200 Kvu. This station is now fed from Springfield. The Aslibuitoii-Spiing held line is loaded, to full capacity and relief will be given by connecting Mitcham directly with Ashburton. the Springfield-Mitc-bam line will then serve as a reserve loop line. The history of the Willowby supply was similar to that at Mitcham, the substation transformers having recently ibeen increased to 200 Ivva. M-yheld nad been increased fnm 100 to Kva., and iVLethvon from 12u to 1/6 ivva These capacities would, not be sufficient for more'than 12 montns, m some cases, and 300 Kva transformers v/ere now beiug obtained When loads of 300 Kva. were reached it was proposed to build additional substations. Future Prospects.

Mr Watt then dealt with the ability of the Board to carry further loan expenditure, taking a graph Showing estimates of revenue and expenditure ud to 1931-32. In that year, interest and sinking fund would account lor £22,000, cost or power for £18,500

general operating expenses, £BOOO and depreciation £SSuO, a total of £so7,oLo. Revenue was estimated at £60,000. In arriving at this estimate, an allowance of £15,000 per annum for additional loan expenditure was made. It showed tiat, £iven an opportunity of developiug its system by the judicious expenditure of a little more loan money, tne Board could give a full supply of electricity, yet make full provision for depreciation and all other charges without tiiere being the slightest danger of having to fail back on the ratepayers, The next graph showed the growth of connected load, number of consumers and revenue month by month. Lonlmcted load was rising in a straight line while, the present increase m consumers was comparatively slow. Ibis result indicated excellent business results. in that the use of electricity was being extended among the existing consumers where: the return to the Board was obtained with the least .additional expenditure. Monthly revenue followed connected load and

emphasised the necessity for continuing the growth of the latter. Each kilowatt of connected load was worth £4.68 of revenue during the present financial year. Over tne last two years, ill spite of the ruling adverse financial conditions, the connected load bad increased at an average rate of 17C0 k.w. per annum and the amount of new load offering showed no 6igns of falling off. Should further loan money not be made available owing to the rejection of the Board’s proposal at the poll, thes© increases in revenue could not be continued. Some of the main lines were already operating at full load and if additional capacity in those lines i were not shortly made, the new load I offering must be turned down as the capital necessary to provide that additional capacity would not be available. Again, in many cases, additional transformers and wires were required to give service to consumers for ranges etc., and additional capital would be neces-, <sary for this purpose. He anticipated j that further revenue averaging £SOOO j per annum would be available as long, as about £15.000 per annum of additional capital could be expended m reinforcing the main feeders. It seemed to him to be very poor business to turn that possibility down.

Cheaper Electricity. A very striking graph showed tho continuous fall in tlie cost of current to the consumers. In the last year or the Supply Company’s operation, the average price charged per unit was nearly 6fd. During the-Board s first vear the price fell to 4-2 d, and it will be approximately 2 l-3d. iff the current year. The actual •prices year by year were:— 1922- 6.70 d. 1923- ' 4.49 a. 1924- 2./6d. 1925- ... 2./6d.. 1926- 2,46 c!. 1927- 2.30 d.

Such a result became all the more striking when it was remembered that the Government Statistician’s index for all retail prices actually rose during the period. The index stood at 1580 in 1923, reached a peak of 1636 m 1920 and at this date is still at 1612, 32 points above the 1923 figure. The .graph was a very telling reply to those people who were asking when the Board would reduce its charges. The Board was charging this year on an average only about one-third of the price ruling when it took over the old plant. It was expected to continue the reduction year by year, for the Board realised that the only way to increase its revenue' was by reducing the cost per unit to the consumer. Even on its present rates a much lower average price could be reached as exemplified by the cost of domestic supply to the Ealing people who were paying an average rate per unit of only 1.78 d. The increase in total revenue was next shown as rising from £7496 in 1923-24 to £31,891 in 1926-27, and estimated at £36,000 for the current year. The analysis of operating revenue for the current year was clearly demonstrated by each section being represented by coloured segments of a circle. The following are the proportions of the several items:—

Per cent. Interest and sinking fund ... 53 Cost of power 26 Distribution maintenance ... 11.5 Office maintenance and general 9.5 ICO The slide emphasised the present heavy charges for interest and sinking fund. Hie Board’s aim was to reduce the relative value of this item by increasing that of “cost of power” by which much greater revenue would be produced. Loans Raised. A tabulation of loans raised gave, year by year, the sums raised by the Board under its old loan authority,

and the rate of interest paid. The following were the figures:— Per Per

The amount raised at 5£ per cent was £136,550 and at 5J per cent £189,600. The Board had not . paid more than the lowest ruling rate for its fund, and had raised money only as it was required. On one occasion, a loan had been authorised fit 5J per cent, but although debentures were printed, yet, on money becoming available at 51 per cent., resolutions to destroy those debentures and issue sJper cent debentures in tlieir place were put through by the Board. Reference had been made to the proposed rate of interest for the new loan at “not exceeding 6 per cent.” In the old loan proposal the rate of interest was exactly the same, but the table showed that the Board was careful to raise money at the lowest possible rate.

Reserve Funds. The growth of reserve funds was shown to have reached nearly £IO,OOO fin sinking fund and £13,400 in, rej newals and contingencies reserve. Both funds were invested in local body debentures with the exception of a small | part of . the renewals reserve. ' which j was on fixed deposit. In every case | where the Board had purchased deben- , tures, they bore a rate of interest A per cent, higher than what the [Board itself paid on its loan at that time. I Mr Watt said that the slides had l been designed to show the wonderful progress the Board had made in the past, that its financial position was sound and that its future prospects were very bright. Only one thing was required and that was for the ratepayers to authorise the proposed loan so as to enable the Board to continue its development. Not one penny had been taken from the pockets of the ratepayers in the form of rates in the past, and if they would permit the Board to develop its possibilities there was no chance of a. rate in the future. The Board could pay all its expenses out of its revenue from the sale of electricity. Air Watt concluded by expressing the hope that they would not put the Board in tho absurd position of being unable to take all the profitable business offering, but would all make a very definite point of voting on polling day in favour of the proposal.

Confidence and Approval. At the conclusion of the address, Mr H. Norris said Air Watt had shown very clearly why the Board wanted to raise more money. They would agree with him that power and light had been a great factor in the life of the County. He urged everyone to support the poll, and he was confident that it would be carried by a large majority, if not unanimously. Air W. AY. Goodwin sprang a surprise on the meeting. He commenced [by saving that a great deal of what Air | \Yatt had said went on to show that the Power Board had no right to come to Lauriston and ask them to sanction a loan of £90,000'. Lauriston had been honoured with the first meeting of the series, and he was sure the eyes of the County were centred on the district, fto see how tho people took it and looking for a lead. The Board was asking jthe ratepayers to sanction ai loan of j £90,000 when the ratepayers were 'poorer than the Board itself. What had -the Power Board done for Lauriston ? Had it given the light it had promised ? What he wanted to say was that, generally speaking, had the Board given satisfaction? He had honestly to say that it had! The Board stood second to none in the Dominion, and could they expect it to make money while it carried out the improvements it proposed without giving the Board money to go on with? He moved that the meeting had every confidence in the Power Board, and approved of the taking of the poll. This was seconded by Air H. P. AtcNeill and carried unanimously. A hearty vote of thanks was passed to Mr AVatt for Bis interesting lecture, and in his reply Mr A T v T att said he was grateful for the vote of thanks to the Board, which was a vote he had not expected. He was sure the loan would be granted, and was equally sure that the system that would follow would be a model for the rural Power Boards of New Zealand. [Extended report published by arrangement.]

Year. Amount. £ cent. cent. 1923 ... 92,300 53 1924 ... 85,000 54 and fra 1925 ... 70,000 53 1926 ... 59,600 53 1927 ... 14,000 53 192S 5,250 53