£150,000 TO BE RAISED

Press, Volume LXXVI, Issue 23002, 23 April 1940, Page 8

£150,000 TO BE RAISED

CITY POWER SUPPLY FIRST INSTALMENT OF £60,000 DEVELOPMENT OF DISTRIBUTION Authority for the Munici|>al Electricity Department to raise a loan of £ 150,000 to meet capital . expenditure was granted by the Christchurch City Council last evening. That sum is part of the loan of £375,000 sanctioned by ratepayers in 1924, and known as the Electricity Distribution No. 6 Loan. The £150,000 will be made available as required, with a first instalment of £60,000 to meet immediate requirements. Members of the council were unanimous In their decision, only three councillors speaking on the motion—Crs. J. S. Barnett (chairman of the electricity committee), M. E, Lyons (a former chairnian), and G. Manning (chairman of the finance committee of the council). The motion to raise the money has been before the council previously. At the last meeting the proposal was discussed in committee, but was held over on the advice of the Mayor, Mr R. M. Macfarlane, M.P., for further consideration. The report of the municipal electricity committee on March 11 referred as .follows to the loan proposal:— “The council at its last meeting requested information regarding the purpose for which the proposed loan expenditure was required. The continued growth of load on the department’s distribution system requires regular extensions to the various portions of that system to ensure satisfactory supply to consumers. This work covers, in particular, extensions to both the high tension overhead lines and the high tension underground cables; the purchase of land and the provision of new substations with the necessary switchgear and transformer equipment, and extensions to the low tension overhead reticulation system; also the purchase of meters and Instruments. and the provision of stores and workshop building. In general, the loan is required to enable the department to carry out all those works which are necessary to ensure satisfactory supply to all consumers throughout its supply area,” Details of Scheme Last evening, Cr. Barnett gave details as follows of anticipated capital expenditure for the year ended March 31, 1941. to be partly met out of the proposed loan of £60.000: Land .. .. ~ goo Buildings .. .. .. 11,250 Converter station plant ~ 550 Substation plant .. .. 27,400 Transformers ~ ~ 13,500 Underground cable .. 14,200 Cable and stores (aerial) .. 23,300 Meters, indicators, etc. ~ 5,900 Total ~ .. 97,000 “We need this loan for capital outlay, said Cr. Barnett. “Over the years during which the service has been operating there has been constant expansion in many directions. Capital invested in the undertaking has steadily increased over the whole period. The last annual report shows that In the period starting April 1, 1920, and ending March 31,1939, the capital outlay advanced from £302,000 to £1,006.000, ah average of £35,000 a year. A large amount of this expenditure has been met out of balances from the sale of ?^ rc L n i- approximate amount beIn S, 1937, tlie dnnartmrnt 70,000,000 units; irv 1933 80,000,000; in 1939, 90,000,000. and in 1940, 100,000,000. ' ’ “Prosperous" “I think it may be said that the Municipal Electricity Department Is a tolerably prosperous enterprise, and a growing one. It must go on expanding if it is to discharge the purpose for which it is licensed. It has been made clear in previous discussions that the immediate need for Capital expenditure is occasioned by the requirements of the distribution system, so as to ensure a satisfactory supply to consumers. This was reported on a year ago, and the recommendation of the department as to the type of installation to be adopted was approved. ° ne t he Principal factors that has caused the department to pursue this matter of improving the distribution system has been the extraordinary success of the range sale campaign. Since its inauguration, the average sales have been 139 a month. In the period, more than 8500 ranges have been installed, saturation point has been reached in some areas, and this, in addition to watcr-heatmg installations, has made necessary the adoption of the network system of distribution. the iday is gone, in the meantime Cr. (Harnett said, "when the undertakmg can yield a sufficient margin of profit to provide fully the normal capital expenditure, unless the sale of current were increased in the same proportion as the increased purchasing price under the existing arrangements. And the alternative is not contemplated. The shrinkage of profits is entirely occasioned by the increased price of current purchased from the Public Works Department. In 1937 the department spent £91,000 on current, in 1939, £153,000. Profit in 1937 was £39,000; in 1939, £13,000. I am not going to say that borrowing at this juncture could not have been avoided. Large sums have been taken for general purposes from the department’s funds, the total being £176,800. But this process of providing funds for general or special works has not been the policy of any one council. The position is that if the department is going to give effectively the service to the community required of it by the Public Works Department, then the extra capital asked for by the committee should be provided. There are indications that it is possible that with the increased business, the profits will at least help to meet the capital charges in the future,” Councillors Agree Cr. Manning agreed with the motion to raise the loan. He quoted figures which, he said showed the sound position of the department, regardless of the need to secure more money for capital expenditure by loan. He said the tbtal indebtedness of the department could be paid and the department have £28,695 in hand. No other institution he knew of had such a good prospectus. Cr. M. E. Lyons said that the electricity users of the past were, in effect. handing a clear £1,000,000 to those using the system in the future. In order not to bleed the consumers by raising prices the council was entitled to borrow. The motion was carried unanimously on the voices.