The Press. TUESDAY, OCTOBER 15, 1907. ELECTRICITY AND FINANCE.

Press, Volume LXIII, Issue 12935, 15 October 1907, Page 6

The Press. TUESDAY, OCTOBER 15, 1907. ELECTRICITY AND FINANCE.

In concluding our article yesterday on tha engineering aspect of the hydroelectric works at Chbvres, near Geneva, we promised to give some particulars as to tho financial results of the enterprise. This we are enabled to do with the aid of tho very full and admirably-kept accounts given in tha "Compto Rendu dos Services ludustriels, Villo de Geneve" for the year 1906, kindly furnished to us by the Director of tho Electric Service. As already mentioned, the capital cost of the works to date is, roughly speaking, half a million sterling. This was contributed jointly by the city of Geneva, the canton of Geneva, and the communo of Plainpalais, but practically five-sixths of tho capital was found by the city. U:nder tho agreement made between tho thrco parties, it is provided that tho net receipts, after paying working expenses, but without allowing anything for interest, depreciation, or sinking fund, aro to be divided among tho thrco in proportion to the capital invested by each, up to a return of G per cent. "When tho receipts arc not sufficient to yield this return, tho difference is carried to an "arrears of interest" account, to which also is to he carried any excess of receipts over fi per cent, in any year, tho latter to bo applied in reduction of the arrears. So much has been said as to the profits to he derived from electrical enterprises of this kind that our readers will doubtless ho surprised to learn that never once since 181*3 have the net receipts been sufficient to pay this 6 per cent., and at the end of 1906 tho arrears of interest amounted to no less than 769,569 francs, or, say, £30,782. Last year the net receipts after paying working and office expenses amounted to £'21,460, which on tho capital invested at the end of 1905 gives a return of 5.26 per cent. When it is borne in

mind that in arriving at these net receipts no allowance haa been made for interest, depreciation!, or sinking fund, it will be seen that ao far from th© works at Cherres yielding any profit, they are making a heavy loss every year.

To appreciate tbo full significance of these figures it must bo borne in mind that the installation serves a large and fairly dense population. As already mentioned, the power station is within four miles of the city of Geneva, so that the heavy capital cost of a. long transmission line and the loss of energy en route are both avoided. The city contains e> population of 115,000, but tie Chovres service supplies the whole Canton of Geneva, which has a total population of 150,000. We n«ed hardly remind our reader* that it is a perfect hive of manufacturing industry, so that there should be no lack of demand for current. It ia used for the tramways, for electric lighting, for the waterworks, for electro-chemicil works, served by special cable, in addition to a large number of private subscribers. Glancing down tbe list of these latter, we find printers, founders, butchers, jewellers, shirtmakers, hatters, minora I water makers—in fact, almost every conceivable type of industry ia represented. But in the majority of these cases tbe amount of power required is very small, the motors ranging from one-tenth of a hors*-power up to 12 or 14 horse-power. Turning to the revenue account, and noting the gross receipts in detail, we find that the City of Geneva takes electricity in bulk, for which it paid £18,000 in 1906, using it for lighting the streets and supplying it rot ail to private customers for electric lighting and motive power. The tramways paid £10,816 for their supply, and the waterworks £465. The subscribers supplied by special cables—i.e., the largo electro-chemical works—paid £3295 during the year, and the private consumers supplied from the main lines contributed £3747 to the revenue. The total gross receipts amounted to £38,918.

The lesson to be derived from these figures is, we think, plain enough. In the first place, they thoroughly shatter tho pleasing illusion entertained by many " people that electricity from water power can be got for nothing, or next to nothing. In the second place, they are calculated to act as a damper on the rosy visions which fill the minds of thoso optimists who think that if you onoe provide power industries will spring up as if by magio, requiring an unlimited amount of current. Mr Dobson, the city engineer of Christchurch, in his report on the Waimakariri scheme, takes as the basis of his financial calculations a demand for 41,190 unite per day of twenty-four hours, which at Id per unit, allowing 300 working days in the year, he points out, would give a gross revenue of £51,487 per tTuutm. We hwß shown that the Chevree installation, serving a population nearly three times that of Christchurch, yields a gross revenue of only £38,918. To appreciate the comparison it must further be remembered that in Christchurch most of the industries relied upon to furnish profitable customers for the electric current would havo to be created; Geneva is an. old-establish-ed centre of manufacturing enterprise, situated in one of the most active industrial districts in Europe. At present there are legal difficulties in the way of carrying out the Waimakarin scheme, but the example of Geneva shows the need of very careful consideration, both of the engineering and financial aspects of electrical supply works before embarking on their construction. In the case of the Chevree works, an. eminent engineer waa dealing with a river which had been under observation for centuries, yet he seems to have seriously overestimated tho power available under his scheme, and to have under-esti-mated the amount which it would ultimately cost. The present review of the Geneva accounts should show, at any rate, that before embarking on. the Waimakariri scheme, the oity ought to satisfy itself by something like reasonable evidence as to the probable financial results to be achieved instead of dealing with hypothetical cases, wbicb may prove woefully astray in practical experience.