REPLY TO CRITICISM.

Auckland Star, Volume LIX, Issue 161, 10 July 1928, Page 20

REPLY TO CRITICISM.

PRICE OF ELECTRICITY.

lITPPLT FOR TRAMWAYS.

POWER BOARD EXPLAINS

HOW COST IS DETERMINED

With a view to removing misunderstandings that might have arisen as a result of recent Press criticism concerning the, cost of power to the corporation tramways, a statement, prepared by the general manager (Mr. R. H. Bartley), was issued at yesterday's meeting of the board, covering details in relation to the supply since the time the Auckland City Council ceased to generate power for its own requirements. It was denied that negotiations were being conducted regarding power charges, but it was stated that officers of the board had suggested that in the future an amended system might be arrived at in order to assess the actual cost of power to the tramways department. This proposal had been submitted to the City Council for consideratiqn. Mr. Bartley said the original decision to combine the generation of all the electrical requirements for the Auckland area was made in 1921 by the Auckland City Council, who at that time controlled the King's wharf power station as well as the tramways power station in Hobson Street. Following this decision a loan was raised by the council to provide the necessary additional plant, approximately £300,000 of which was earmarked for tramway requirements. In order to secure the money at that time the loan had to be State guaranteed and the high rate of 6| per cent interest was demanded. Heavy Interest Burden. The Power Board when formed took over this loan and carried to a conclusion the council's policy of amalgamation. Practically all the other power board loans had been raised at 5 per cent interest, and hence the board had the first factor which contributed to the high cost in Auckland—an additional interest burden of £4500 per year. "Add to this the greatly increased cost of plant and machinery in 1921 and we find that these two items alone account for l-10th of a penny per unit of the total cost being charged for tramway power to-day," added Mr. Bartley. "In order to meet additional tramway requirements the total sum now involved is approximately £475,000." In making comparisons with other centres it must be borne in mind that owing to the peculiar requirements in Auckland, supply has to be given from five different points—King's wharf, Hobson Street, Kingsland, Newmarket and Epsom, with the necessary station, land and buildings, plarft and machinery, and connecting cables to each point, together with the necessary staff to provide for twenty-four hours' operation. Method of Aaseaaing Costs. The tramway cost is determined under two headings:—(l) Operating, or working expenses, which vary according to the actual costs of operation annually; (2) capital. charges, which are a fixed annual sum representing interest and other charges on the capital involved. "It will be found that the operating cost in Auckland compares favourably with other centres, notwithstanding that Auckland is the only station now operating a steam-driven plant, and that the higher cost in Auckland is accounted for almost entirely by the additional annual charges payable on the capital involved. Finally, it should be noted that under the board's agreement with the council, power for tramways must be charged at actual net cost, and the council have right of access to the board's books and accounts in order to satisfy themselves that this is being done. I strongly urge that any further comment in connection with the cost of power to the tramways in Auckland should be withheld until such times as the report of the representatives of the council, who have recently investigated our costs, is made known," continued Mr. Bartley. Question of Negotiations. Dealing with the relation between its charges and the building of new premises Mr. Bartley said it would be seen from his observations that the latter departure in no way affected the tramway costs. The building, for which the board had waited for six years, was being financed out of reserve fluids provided annually against contingencies. The chairman (Mr. W. J. Holdsworth) said that the Press lately seemed to have misunderstood the whole position. Statements made had tended to mislead the public, who, as a rule, took up the wrong viewpoint. Particularly were the statements misleading as they related to the tramways undertaking. It had been stated that negotiations were proceeding regarding tramway charges, and they had been successful in getting the price of power reduced. That was not right. "There are no negotiations going op about the price of power for the tramways," he explained, "but this board's officers have suggested that in the future it might be possible to get at the actual cost by another method, which has been submitted to the council and which they are considering." The inference to be drawn from the statement was that the board was charging high prices for its supply. Actually the board gave the council an approximate price for its power, and this was subject to adjustment Before the final position was ascertained. "Tied Hand and Foot." Mr. T. Bloodworth said the principal agitation appeared to centre on the new premises the board was building and the fact that the board would have to let some of its space. The board, however, was only making provision for the future. Mr. S. I. Crookes pointed out that the board's charges to the tramways department were arrived at by means of a forecast budget, and in several instances the latter, had paid less than the actual amount originally computed. "We are tied hand and foot in connection with the tramway charges," declared Mr. Eoldsworth, and we cannot charge anything we like."