N.Z. ELECTRIC POWER DEVELOPMENT

Press, Volume XCII, Issue 27795, 21 October 1955, Page 6

N.Z. ELECTRIC POWER DEVELOPMENT

Review By Department’s General Manager POSSIBILITY OF COOK STRAIT CABLE

Hanning ot eleetrio power development in New Zealand could no longer be considered separately for the North and South Islands—no report from now on could disregard the possibility of the electrical inter-connexion of the islands, said Mr A. E. Davenport, general-manager of the State Hydro-electric Department, yesterday when be gave an address on future power prospects to the annual conference of the New Zealand Electrical Supply Authorities’ Association. Mr Davenport hastened to remark that at present his department had no flrm plan, but one of the tasks set Mr M. G. Latta, chief engineer of the department, when he went overseas recently was to investigate developments which had taken place in such undersea cables as would be applicable to the crossing of Cook strait. "At the moment I am unable to express any opinion as to when such a cable would be a possibility,” Mr Davenport said.

”1 am making no attempt whatever to say just how the power problems of the next 20 years can be met or will be met,” he continued. “The intention Is to give you an objective analysis of the background of power development, so that there would be a better understanding of the nature and extent of the task which lies ahead. “The present address does not state how the actual power programme will be developed, and while it is thus circumscribed, it does not Imply and cannot imply any political commitments. But everyone will recognise that the carrying out of the programme as it develops must be the responsibility of government, as the development will affect the general economy of tha country and the well-being of every one of its citizens.” Consumer Usage Comparing the use of electric power in the North and South Islands, Mr Davenport said that since 1931 the usage “per consumer” had reached a common level apart from the effect of local restrictions. The ratio of consumers to population was likewise common to both islands. Thus it would be reasonable to assess the future requirements of New Zealand on a “per head of population basis.” The subdivision between North and South Islands became a matter ot population and occupation until the stage was reached where electrical interconnexion was possible, Precise estimates over a period of 20 years were not possible, he said. Any prediction must be based on increase in population, continuance of normal occupational activities and way of life, and continuance of utilisation of electrical power in conjunction with other forms of energy. “At present we have estimates from the electrical supply authoritites only up to 1958, and the over-all long-term estimates that have been prepared wore designed to maintain the same position of New Zealand’s power in relation to the other developed countries of the world,” Mr Davenport said. Increase in consumption of electric power was not proportionate to population, because consumption a head of population was increasing at a fairly rapid rate. Tables produced allowed for some rather startling increases in the development of power, said Mr Davenport. For instance, New Zealand was approaching its first 1,000,000 kilowatts of installed, capacity. Work in hand or scheduled for construction took care of almost another 1.000,000 kilowa’tts to be completed within the next 10 jmars. The 1975 requirement showed that New Zealand would have, to plan for 3,400,000 kilowatts in that year, allowing for no margin. "First impressions, no doubt, will call for cries of disbelief that such an increaso is either neceiaary or possible,” Mr Davenport said. "Second thoughts allow us to recollect that we are already firmly engaged upon a programme over the next seven to 10 j-ears which follows tho projected pat-

“Why then, if we find this acceptable, necessary and possible, should we query the further development which is projected on lesser percentages? Especially Is this thought commended to you In relation to our historical position with the United States and the United Kingdom." Mr Davenport asked: “Should we plan for more, or less, or should we essay the medium course of keeping our place in the world economy? “While we all recognise that shortages of electric power impede economic growth, it is pertinent to remember that although the provision of

electric power is of great importance, it is only one of the requirements of a country such as ours, and must be considered in relation to the whole economy of the country.” Cost of Development

In discussing the future cost of development, Mr Davenport said the type of development had a major bearing. Were It possible to continue construction of hydro-electric stations, there would be a large requirement of New Zealand manpower, with a minimum requirement of overseas funds. With fuel stations, the position was quite different. They needed a maximum of overseas manpower and expenditure, combined with a lesser need for local manpower and funds.

It was probable, he said, that power stations needing nuclear fuel would be similar to other fuel stations, and further would require overseas funds to purchase fuel.

As it was possible that future development might consist of any combination of those types, Mr Davenport said no-one could be dogmatic on costs, “With all this in mind, we can readily appreciate just what ft would mean if the North and South Islands were not separated by Cook Strait, as there would then be little cause for worry over the nature of our future electrical development,” he continued. “If time shows us a way to put an end to the electrical separation, then the insular disadvantages would disappear. The main development of generating stations could then be concentrated where nature has made abundant proviilon—ln the South Island, which by such development would gain in population and m prosperity. "Did anyone in 1940 consider that in 15 years the capital invested in the electrical supply industry would have risen from £40,000,000 to over £180,000,000. Yet, this is now history. “Why then should we query the future when in the 10 years from 1055 to 1985 we are already engaged on a progrimune that would Increase our capital investment to £378:000,000 if carried on at much the present rate.

“By 1975, on the assumption that the cost of doing the work is stabilised at estimated 1900 prices, the total capital investment would reach about £680,000,000. This figure is sjrua t «« £730,000,000.” To provide a IS per cent margin of supply over demand would require an additional 500,000 kilowatts by 1975 which at £2OO a kilowatt overall would involve the industry in yet another £100,000,000 in addition to the £680,000,000 already scheduled, he said. “In view of this, we can readily understand why the United Kingdom has not made provision for such a planning margin, nor have we.” In general, the requirements were large and becoming larger year by year, Mr Davenport said, so smallscale development should only bo undertaken in its proper Place. In that, as in all other problems, the industry must think nationally ana act accordingly.

Capital Structure On capital structure. Mr Davenport stated that the present custom was to lirovide capital for development argely by way of loans. Distributing authorities had derived a quarter of their capital requirements from revenue, but his department had been limited to the employment of its depreciation funds for capital works“Is it not time to ask ourselves whether a financial policy which has served well enough during our formative years and tor an investment ot £112,000,000 will suffice for an investment by 1975 of five times that sum?” he asked.

We must all recognise the significance of the continued need for more and more funds for capital works associated with our industry, and it is important to investigate the extent to which such funds should be provided from internal sources, as distinct from loans. Nevertheless, loan money will still be required to provide the bulk of the necessary capital. The provision of a reasonable part of such capital from internal sources must tend towards stabilising the cost of power.” Mr Davenport said he had avoided estimating the cost of power a kilowatt hour or a unit in 1975. That cost would be governed by the nature of the development and the proportion of hydro and of fuel stations. However, it seemed that by the continued exercise of prudence in the development and utilisation of electric power, the cost in 1975 would still compare more than favourably with the same product in most Other countries.