M.E.D. FINANCES

Press, Volume LXXXVIII, Issue 26748, 4 June 1952, Page 3

M.E.D. FINANCES

Chairman’s Report To Council

SURPLUS OF £22,068

The financial outcome for the Municipal Electricity Department of all last year’s difficulties was peculiar, Cr. George Manning, chairman of the electricity committee, told the City Council last evening. Cr. Manning was reporting on the year ended March 31, 1952. “Revenue was reduced by an amount estimated at £19,400, but the resultant peak load was even more affected,” he said. “Consequently the lesser charge for bulk power meant a larger margin of surplus, which amounted to £22,068 against £12,950 for the previous year.” Commenting on this' point in a separate report, the secretary of the M.E.D. (Mr John Denford) said: “This surplus in relation to revenue was only 3.2 per cent., which is admittedly a fine margin when it is remembered that bad weather at the beginning or end of a quarter can adversely affect the cost of power by thousands of pounds. Nevertheless, the department continued to hold retail prices of electricity down to pre-war levels in spite of increasing costs, and this action must give satisfaction to both consumers and the City Council. With still rising costs and the negotiation of a new power supply contract on a higher cost basis, it is apparent that we may not be able to hold the present situation.” For the second time in succession, very heavy power restrictions and difficulties produced an abnormal year, yet the outcome had been more favourable than could have been expected, Cr. Manning said. Revenue amounted to £693,827, an increase of £38,109 on the previous year. Winter peak loads had been cut, and this worked to the financial advantage of the department. The result was a surplus of £22,068 against £12,950 for the previous year. There was also a profit of £4993 in the appliances and service trading departments, which compared favourably with £4789 produced in the previous year. The transfer to the appropriation account of the surplus totalled £27,061.

Record New Works Cr. Manning said capital expenditure on new works reached a record figure of £158,787. Even so, this amount fell short of the goal by over £lOO,OOO because of the waterfront strike and the dislocation of shipping. The latter amount would come to charge in the current year, and would necessitate further inroads on the department’s lesources. “These resources have been sufficient to meet the demand without the necessity of borrowing further lean money, and this position will continue for the coming year,” he said. Consideration had been given to the commitments for capital expenditure of £274,370 which faced the department, and the actual cash moneys which would be available for this work. The department had just enough liquid funds to meet proposed capital expenditure in the coming year. It was apparent that, the statement of a balance in the appropriation account did not clearly explain the factual position. To reconcile the book entries with the existing factual position, it was recommended to the council that the balance in the appropriation account be transferred to the general reserve account. This point was referred to the finance committee. The following table was given to show percentage increases in costs since 1939:—underground cable 300-350 aerial cable 280-300, poles 175-230. transformers 180-250, 11 kv switchgear 150, meters 110, wages 75 to 80. Procuring materials was extremely difficult, and only persistent effort was securing results,” Cr Manning said. No New Loans “The department fortunately is not adding to its loan burden, and thereby eliminates further interest and sinsing fund charges,” he continued. “In an endeavour to face the rising lever of prices, an added depreciation ,s being set aside. This fund, in addition to cash from maturing investments and deposits, is being used for new capital works. “The retail price for electricity remains at its pre-war level, in spite if increasing costs. This ability to hold the price down is only brought about by the continuing increase in the sales of electricity. The State Hydro-elec-tric Department is contemplating an increase in the price if bulk power, in which event it seems improbable that the department can continue with its present retail rates. The position is being closely watched,” Cr. Manning said.