Hint Of Increased Charges By M.E.D.

Press, Volume CVI, Issue 31091, 21 June 1966, Page 7

Hint Of Increased Charges By M.E.D.

Unseasonable weather at the end of the third quarter of last year had increased the cost of power, and although there was not a deficit in the net revenue account there had been insufficient surplus to meet all demands on the appropriation account. Cr. W. E. Olds, chairman of the electricity committee, told the City Council last evening when reporting the annual accounts of the Municipal Electricity Department. The final result was a deficit of £39,017, he said. He hinted that an increase in charges might be necessary.

It has been obvious for some time that this position must eventuate, Cr. Olds said. Since the last increase in retail rates for the sale of power was made in 1961, considerable increases in wages and materials had been absorbed. The weather during the year had been normal and the Increeses in both bulk power purchases and unit sales had been generally as expected, he said. However, an unseasonable period at the end of the third quarter resulted in an increase in the cost of power for that quarter of approximately £96,000, with little if any increase in the sale of units. Fortunately the second and fourth quarters were more seasonable and the peaks were lower than anticipated. £46,914 More The end result was an Increase in the total power bill for the year of £46,914 more than estimated, while the sales of power were almost exactly as forecast The gross transfer from the income and expenditure account was £638,472, Cr. Olds said. To this was added the combined profit of the showroom and wiring department (£9312) and interest earned (£12,344), bringing the total to £660,129. From this there had to be deducted £394,344 invested in the undertaking for capital works. From the remaining £265,446 there was deducted

interest on loans (£89,276) and sinking fund repayments (£156,238), which left a net surplus of £19,332 to be carried to the appropriation account.

When the surplus of £13,651 from last year was added, it made £33,583. This was insufficient to meet the transfers of £32,600 to the loan redemption reserve and £40,000 to the district fund account. Discussing increased wages and costs, Cr. Olds said that since the retail rates were increased in 1961 the unit rates for salaries and wages had increased by approximately 21 per cent and the unit costs of materials In a range between 15 per cent and 80 per cent. “It is obvious that this state cannot continue any longer and a sub-committee is at present considering the position very carefully,” he said. Increases Nearly all the major power supply authorities in New Zealand had increased their rates substantially in the last two years and the Auckland Electric Power Board had had a very large deficit this year, he added.

A more pleasing feature of the year’s operations was a recovery in showroom sales and an increase in the wiring department’s turnover, Cr. Olds said. Both departments had satisfactory profits. He listed the average revenue a unit for the three classes of consumers as:— domestic, 1.047 d; commercial, 2.9 d; industrial, 1.669 d. For each £ of revenue from sales of electricity and rents, Cr. Olds said, bulk power this year cost 13s Hid, against 13s 9}d, capital charges

or depreciation 2s 5d against 2s 3}d, working expenses 2s 10jd against 3s 4d and the balance towards loan repayments 9|d against 6}d. The distribution system had been maintained and extended considerably during the year, he continued, but once again in many areas it was working on over-load for periods. No reduction in the rate of extension of the system could be contemplated if satisfactory supply was to be maintained.

Reviewing the year, the general manager (Mr J. P. Shelley) said there had been a further increase in the rate of development of new subdivisions. The number of consumers increased by nearly 2.6 per cent, compared with nearly 2.4 per cent last year. All private subdivisions involving new streets were now being provided with underground cable and it was unfortunate that it had not been possible to reach agreement for this to be-done in State housing subdivisions in the Waimairi county on the terms that applied to private subdivisions.