TAURANGA CLAIM

Auckland Star, Volume LXXIII, Issue 236, 6 October 1942, Page 4

TAURANGA CLAIM

POWER SUPPLY CASE

BOROUGH COUNCIL V. BOARD

An action between the Tauranga Borough Council (Mr. Coonev and Mr. Henry) and the Tauranga Electric Power Board (Mr. North and Mr. H. Butler) was commenced before Mr. Justice Smith to-dav, in which settlement is sought of a "longstanding dispute with respect to the terms of contract between the parties for the supplv of electricpower.

Mr. Cooney. in opening the case for the borough council, said the council was one of the first in New Zealand to generate electric power for supply to farming areas, the plant, being inaugurated in 191::. In 1923 the Tauranga Electric Power Board was constituted, and in 1926 it entered into a contract with the Tauranga Borough Council for sale and purchase of the power generated by the borough council plants. In 1929 the parties entered into a contract for 10 years, the terms being as formerly. To 1931 the power was ample for all purposes, but that year the board got a concession on unmetered water-heating units, the charge being the very low rate of 3d per unit. Since then the" power board's consumption on water-heat-ing units had soared remarkably, having Increased from 2,000.000 units in 19.32 to over 8,500,000 units in 1942. Eventually, the demand became beyond the capacity of the borough s plants, and it was necessary to purchase power from the Government to supply the power board.

His Honor: Could you not have told the board to purchase the extra supply trom the Government 9 —No. We were legally bound to supply it under the terms of our license. Purchasing Outside Power Counsel said the effect was that the council had to pay the Government more for the power than it got from the power board, and also to be responsible for losses of the power in transmission from the point of delivery. The board paid for this only on the old contract price with tne result that in 1942 the borough &'. ot on| y a net return of 99 l or handling 13 million units. Mr. Cooney went on to say that an endeavour had been made to get the board to pay the Government for 70 per cent of the additional supply at the Government price, while ' the borough council paid 30 per cent. This failed, and demands were made by the council for the full cost of the extra power got from the Government. Eventually, in 1940, the power board, claiming to be acting as agents for the council, arranged with the Government to supply the western area known as Aongatete at. ,33d per unit. as against the id per unit charged the council. The board entered into a contract for this supply till September, 1913. on the understanding that the board's whole supply above the capacitv of the council plant should be taken by the board at the same rate at the end of September, 1943. That, said counsel, would leave the council with surplus power and nobody to supply it to. This agreement, it was alleged, had been made with concealment from the council. Then there were disputes between the council and the board as the council alleged the board was unfairly mixing the accounts of the Government-supplied Aongatete area with the other areas in estimating percentage payments to the detriment of the council. At one stage the disputes resulted in the Government power being cut off, but it was restored later. The object of this action was to determine if the power board should pay at a rate above the rates prescribed in the agreement of 1926.

(Proceeding.)