M.E.D. efficiency report to cost $67,500

Press, Volume CXII, Issue 32847, 22 February 1972, Page 2

M.E.D. efficiency report to cost $67,500

A management consultant company was engaged by the Christchurch City Council last evening to report on savings to be made in the Municipal Electricity Department.

The work is expected to be completed within about 12 months and the fee is $67,500.

•' W. D. Scott and Company believed from its preliminary start that substantial reductions could be made by a co-operative programme and considered the savings potential to be a minimum of $150,000 a year at the end of 12 months, the development, finance and electricity committee reported.

The proposals were summarised as:

To merge and share common activities and facilities of the M.E.D. and other council departments.

To organise a cost reduction

programme. Improve planning and con-

trol of field work. Introduce improved management information systems. Seek and employ methods of improving total sales of energy and the associated load factor. "The Labour council has inherited a disastrous state of affairs,” Cr D. R. Dowell, chairman of the committee, said. “I believe it is fair to

say that the previous Citizens’ council deliberately allowed the finances of the M.E.D. to get dangerously out of hand in an effort to mislead the consumers of electricity in order that they might be re-elected at the -recent elections.” Deficit estimated

The department began the financial year with a trading surplus of $123,165, but the previous council was prepared to estimate for a $226,240 deficit, he said. When he assumed responsibility for the department he checked its finances and in discussion with the general manager was advised that a 20 per cent increase in tariffs was necessary. Because he could not accept such a large increase, although it was an easy way out, he had recommended the engagement of consultants, and at the same time approve a tariff increase of only 10 per cent, said Cr Dowell.

Major cost Electricity was a major household cost and could be I quite a burden, particularly to the pensioner and those on fixed incomes, and it also represented a significant proposition of business overhead costs. However, even though economies could be made, it would be a difficult job to get the M.E.D. finances in a satisfactory condition again, said Cr Dowell. “The more one investigates, the more obvious it becomes that the council will have to look seriously at the costs and tariffs structure of the M.E.D.,” he said. “My view is that a special meeting of the council will be necessary to consider nothing else but this subject. “I charge the previous Citizens’ council with gross negligence.”

“Disservice”

: Cr P. D. Dunbar said that Cr Dowell was doing himself a disservice when he attacked la previous administration at a time when he was seeking economies and consultants to try to achieve them, about which no councillor was going to quibble. Cr Dowell was criticising the staff of the M.E.D., even though he was trying to blame previous councillors, said Cr M. R. Carter. There iwas no loan money available for capital work and that was the basis of the department’s problems. Cr Carter said Cr Dowell had said that there would be 5C long-service employees who would become redundant. Cr Dowell: No he didn’t.

The whole set up of electricity distribution was being investigated by a commis-

sion, Cr Carter said. There should be no decision on consultants until the commission’s scheme was known.

There was no suggestion of dismissals of staff, but there could be savings by r.ot replacing certain longservice members of the staff when they retired, Cr R. M. Macfarlane said. The fee was far too high for a result that was not guaranteed, said Cr H. L. Garrett. The consultants’ preliminary report was far too vague. The Electricity Commission. should be invited to Christchurch as soon as possible and there should be no decision in the meantime. Loan moneys “It is almost laughable to think that we will get rationalisation of supply in the Christchurch metropolitan area when there is a commission charged with reorganisation of all power supply authorities,” Cr H. G. Hay said. Cr Dowell had tried to frighten people with millions. There was a shortage of loan money, but there was nothing to say that some money would not be raised by loan, Cr Hay said. There had been studies on computers in the past, but no-one should be deluded into thinking they would be the whole answer, Cr Hay said. “Let’s tread cautiously in this dangerous field of possible savings by computers.”

The M.E.D. was like Topsy. It had grown unevenly and without plan, Cr M. McG. Clark said.

Previous report

The Citizens council employed consultants about 1958 and the biggest thing recommended was three-monthly billing instead of two, Cr P. J. Skellerup said. No-one liked a consultant “running round saying: ‘What are you doing?’ ” and consultants did as much harm as good. If Cr Dowell had investi-

gated the M.E.D. for six months or a year he would have been better able to come up with new ideas, Cr Skellerup said. Crisis seen “We will want s3m by the end of the 1972-73 financial year unless the finances of the M.E.D. are to be in a very serious state,” Cr Dowell said in reply. “There is a crisis situation in relation to the M.E.D.”

To delay a decision for another month would be gross negligence. It might be a matter of years before the Electricity Commission came to Christchurch, Cr Dowell said. It was not concerned with the position of the M.E.D. now. It was dealing with an overall matter and the definition of boundaries.