‘No Justification To Raise Capital Levy'

Press, Volume CVI, Issue 31330, 29 March 1967, Page 14

‘No Justification To Raise Capital Levy '

(New Zealand Press Association)

WANGANUI, March 28.

Because of the latest agreement with Gomalco, it would be very difficult for the Government to justify any increase in the capital levy incorporated in the bulk supply electricity tariff, Mr D. J. Boswell, general manager of the Wanganui-Rangitikei Electric Power Board, said last night.

Mr Boswell said it had been mentioned that the Government intended to increase the levy from 25 per cent to 50 per cent. This would result in retail tariffs being increased by at least 10 per cent. “All supply authorities will welcome the statement by the Minister of Electricity (Mr Shand) that the latest agreement with Comalco will enable the Government to post-

pone spending £55 milion over the next four years. “However, as the increase in capital levy would bring in considerably less than the £55 million expenditure the Government has now been able to postpone, it will be very difficult for the Government to justify any increase in the capital levy at present.” Increase Planned Mr Boswell said his board had expressed its concern at I the suggested increase and • had written to the Electrical • Supply Authorities’ Associa- - tion. The board already planned - to increase its retail tariff

by about 9 per cent as from Saturday because of rising costs and a new agreement with the Government on bulk supply. When considering any further increase, it was essential to remember that the electricity consumer was already providing more than 25 per cent from revenue. Last year it had been 30 per cent. “Already Subsidised” With the addition of investment from reserves the percentage was considerably higher. “The huge capital expediture on electricity is not solely to meet the demand of supply authorities,” said Mr Boswell. “To quote the Prime Minister (Mr Holyoake) . . . ‘and we are engaged in planning for the tremendous additional electricity development at Manapouri and Tongariro to provide for major aluminium and steel industries’. “The electricity consumer is already subsidising these industries by providing some of the capital by meeting the interest on the capital invested and the provision for the reduction of the capital liability. Below Cost “Expenditure to the Manapouri project up to March 31, 1966, was £12,820,000,” said Mr Boswell. “The State Supply of Electrical Energy Amendment Act, 1964, makes provision for supplying selected industries at reduced tariffs. “These industries, including aluminium and steel industries may be supplied at below cost of production, and the elec-

tricity account—that is, the electricity consumer—will be providing the subsidy.” Mr Boswell said the increases in the cost of electricity were reflected in the costs of production at a time when these costs should be reduced. An increase in the domestic tariff increased the cost of living and this was reflected in general wage orders. Board’s Revenue “Secondly, more than 40 per cent of my board’s revenue comes from commercial and industrial consumers. “Increased costs in some of these industries —fertiliser and freezing works for example—must be passed on to the primary producer. I “It is less than four months ago that, after long negotiations, the price for the next five-yearly contract was completed. It is difficult to comprehend that the loan position has deteriorated so rapidly in such a short period.” Mr Boswell said the various factors he had mentioned should be given serious consideration by the executive of the Electrical Supply authorities’ Association before it agreed to an upward revision of the capital levy.