HYDRO-ELECTRIC POWER

Auckland Star, Volume LIX, Issue 120, 23 May 1928, Page 10

HYDRO-ELECTRIC POWER

*MfXZING STATE OF AFFAIRS"

TODERESTIMATED COSTS.

THE ARAPUNI CONTRACT.

(By JOHN S. FLETCHER.)

In a leading article recently the "Star •aid: "A large note of interrogation ii shaping itself over the railway system and what has happened at Arapuni sug gests that hydro-electrical development may not be quite so desirable an invest ment as the Government claims it to be.' I venture to say that it is long pasi the interrogation stage, and I shall dis close a state of affairs that, in opinion, calls for immediate investiga tion, an investigation that is going t( make the business men of the com munity sit up and rub their eyes. Before discussing the larger questioi I want to call your attention to a mos' interesting and amazing state of affairs About a week ago you called attention t< a statement of Wellington's municipa accounts, showing that despite an esti mated increase in expenditure no increasi in rates would be required, as the City Council had made a profit in its supplj of electricity to the' Government of somt £20 000. A profit of £20,000 in a few short months, supplying power to the Government, raises immediately in one's mind. w ho mad* this bargain for the Government? Inquiry will show this arrangement was made by the Public Works Department officers, and doubtless approved by the Minister of Public Works, and for the reason that the « Mangahao hydro scheme failed*, owing to the dry weather, to supply the jpower the Public Works Department had undertaken to produce. But this £20,000 profit is only a small portion of the cost. Every power board that had a plant, even as far away as Napier, was called on to help out. What is the total cost of all this? Do the people of Auckland realise their share in the alleviation of Wellington rates is approximately f3000? It matters not that the profit (please note not the total cost) of this transaction will be put on the capital cost. Auckland with a seventh of the population, has to pay l-7th of the £20,000 Wellington has made in profit. But that leads to the bigger question. litbutH and Costs. J™ & ?* ew Zealand Year Book, 1028, coSt of the estimated k ■ For horse-power k £438,664. In the H peeper ltd twlHrr. ® fi nd for horseB Mtimata to March, 1

1927, the expenditure is £2,449,457, and: this dry summer has clearly shown that the scheme cannot be relied on to give the power estimated.

Who is to blame for this colossal e under-estimating? I say frankly that the Government that can indulge in such I reckless expenditure of public funds is t due to appear at the bar of public t opinion for sentence. I willingly admit 3 that in the 1926 Year Book it is stated « that, since the estimat, costs have considerably increased. The man who made this footnote surely had his tongue in t his cheek. Does he assert that motors j 1 and generating gear are dearer to-day t t than in 1918? Will he assert that labour | is dearer to-day than in 1918? Will he ( ' say that the materials for concrete are ( ■ dearer to-day than in 1918? If not where , ; are the increased costs to come in? : In connection with these estimates it ] ' is interesting to note that this Depart- j t ment and the Minister for this Depart- < - ment, i.e., the Public Works, turned down ] r the tender for the Tawa tunnel* because - the tenders were above the Public Works i j estimate. I Mangahao Scheme. 1 The whole scheme has been one costly ( t blunder. But the people of this country , , were induced to agree to expenditure on . 0 hydro-electric schemes on these estij mates, and not in one single case has the . cost been kept within the estimate. A e most remarkable state of affairs is re- „ vealed on page 864, 1928 Year Book. The „ amount of expenditure authorised on e Mangahao is £1,600,000, but the amount expended is £2,449,457. Is this overspending not a matter for serious consideration ? Where is the Opposition ? j Only once have they done anything in connection with these hydro-electric schemes. When the Arapuni contract g was referred to by Mr. Holland, the 9 Labour leader, Mr. Coates asked that cas the contract was the subject of e negotiation, it be left to hiiu, on the grounds that his past services were a ® proof of his zeal for the country's wel- ' fare.

Where the Opposition fell down was in not insisting that it was not a matter of Mr. Coates' patriotism, but a question of his and his Government's ability to handle this matter. Let us now consider Arapuni. The original estimate for 96,000-h.p. was £1,078,700. Not half of the work is done and it had "cost £1,216,032 up till March, 1927.

But is the country not entitled to know the truth as to why Armstrong, Whitworth and Co., got out of the contract ? When it was first mooted in the Press that there was trouble at Arapuni, the Public Works engineers pooh poohed the idea and precious time was wasted at an interest coat of at least £5000 per month. At last- came the final show down and Armstrong, Whitworth were relieved of their contract. If the Public Works engineers were right that all was as specified in the contract, why then should this wealthy organisation be relieved of it» responsibility, at the ax-

pense of the taxpayers of New Zealand? The Government can perhaps explain, or is their silence on the subject due to the fact that the Public Works Department engineers were again wrong?

There are but the two alternatives. Now the question arises, if, and when, the Arapuni scheme is finished, what will the cost be? Is it to be a repetition of Mangahao costing over six times the estimate. Subsidised Production. In connection with this scheme we again find the Public Works Department in a strange position. Recently there appeared a report of an agreement made by the Department with the Waikato dairy factories, to subsidise their production of electric energy. This production in the factories' own plants is necessitated by the Public Works Department's failure to deliver the goods from Arapuni, according to schedule, but one would like to know under what legislative authority the Public Works Department has power to subsidise the dairy industry in the Waikato, out of public funds.

One case more. In connection with [Waikaremoana, power is to be carried to Gisborne where the total load is approximately 1000-h.p. This has been sold at a price of about £8 10/ per horse-power. But the transmission lines alone (leaving out the cost of the dam, depreciation, and so on) will be in the vicinity of £200,000 at a very low estimate. In other words power has been sold for a number of years showing a dead loss of about £3 10/ per horse-power, or £3500 on the total per annum, if we take the interest at 6 per cent on the money required for lines alone. j

In view of these facts is it not timel that the Press should demand an impartial examination of the North Island hydro schemes, and that the whole business should be put in the hands of a department capable of handling it on business lines?

The question is purely a business one.] If a scheme is payable on an estimated basis, if that basis is multiplied by six, as at Mangahao, is it still a sound proposition ?

, ote should be made of the necessity that has arisen for all sorts of subsidiary plants to augment and insure the supply of power. If these were added to the cost of the . schemes mentioned above, we feel sure that hydro-electric power is a bad bargain for the people of the North Island.