SOUTH ISLAND POWER

Press, Volume XC, Issue 27442, 31 August 1954, Page 12

SOUTH ISLAND POWER

Drop In Water Storage M.E.D. BELOW ALLOCATION A further decrease in water storage for the South Island power system was reported by the State Hydroelectric Department yesterday.' At 9 am. yesterday toe reading was 36,930.000 units, a decrease of 3,740,000 untis in the week. In the back country there was little indication of an improvement in the situation. There was no rain in the week-end, and yesterday morning it was freezing. In the Municipal Electricity Department’s area, consumption during toe week was more than 2 per cent, below allocation. STATE DEPARTMENT’S BUDGETING “TOO CONSERVATIVE” Hie statements by the Minister in charge of the State Hydro-electric Department and the general manager recently presented to Parliament show that the budget for the last year was too conservative as the basis of a new contract, said the secretary of the M.E.D. (Mr J. Denford) in a report to the City Council last evening. The statements provided ample confirmation of the objections and protests raised by the council. The bone of contention was the large impost of taxation levied on an unfair and erroneous basis.' All that had been done (and to that extent valuable) was to modify the amount of taxation paid, while still leaving unpaid arrears for statutory loan repayments.

“It may have been hard to explain away the payment of taxation amounting to £760,000 which would have occurred if the depreciation rate had not been amended. The budget on the old basis anticipated taxation of only £350,000. Even so. these figures were arrived at after deducting from the current year’s surplus the previous year’s losses amounting to £595,000. Without this offset the taxation would have been £1,057,000.

“It seems ironical that the department should wish to escape its own fallacious reasoning in maintaining for so long an unrealistic method of accounting, and now at this stage seek to amend the position by inadequate half-measures. As increasing loan repayments are required in respect of additional loans, so must the bulk price be further increased to meet the statutory obligations.” Events no doubt' would ultimately force the issue, but it would have been much happier had the Government accepted with a good grace either of the two suggestions of supply authorities to bring loan repayments to account before charging taxation; or to increase depreciation and pay loan repayments from it, said Mr- Denford. Either action would still have ensured the department paying a moderate rate of taxation on surpluses arrived at after meeting the statutory charges applicable to it. The* Mayor (Mr R. M. Macfarlane, M.P.) said the questions of finance would be raised when the department’s estimates were before Parliament. LOSS OF REVENUE REMIT TO SUPPLY CONFERENCE “That an equitable method be devised of. sharing between the State Hydro-electric Department and the supply authorities the loss of revenue occasioned by power restrictions imposed by the State department," is a remit to be forwarded by the City Council to the annual conference of the Electric Supply Authorities’ Association. The note to the remit reads: “Under the present contract for the purchase of power, supply authorities npy on an averaged peak loacCand, as happened this year in the South Island, that peak was recorded for the ensuing quarter before restrictions were imposed on July 12. This means that the full charge for power will be collected by the Stale Hydro-electric Department, but supply authorities will bear the loss of revenue, as well as the expenses of imposing restrictions