THE PRESS SATURDAY, AUGUST 30, 1980. Before the lights go out

Press, 30 August 1980, Page 14

THE PRESS SATURDAY, AUGUST 30, 1980. Before the lights go out

Perhaps it is too soon for Cashmere residents to break out the candles and refuel the oil lamps, or to go in search of battery-operated television sets. The 5000 households in. the Heathcote County might be reduced to such measures before long if the Heathcote County Council pressed ahead with its refusal to sign the Electricity Division’s new bulk tariff agreement. In effect, the council is refusing to pay the price asked by the division for the power that it supplies to county residents. If the County Council, which is the supply authority for the consumers, refuses to pay up, the Ministry of Energy’s Electricity Division would have no alternative but to switch off the county’s power supply. County residents probably have some months grace before the lights go out in Hackthorne Road. The Municipal Electricity Department allowed a handful of consumers in the city to have pow'er for some time earlier this year, even though the consumers were paying only a portion of their bills as a protest against the cost of electricity. The Electricity Division would probably show the same patience with one of its smallest customers while the manoeuvres of protest are conducted. The Minister of Energy, Mr Birch, has said that he wants to discuss the county’s plan with councillors. A delegation from the South Island Luca! Bodies Association met Mr Birch earlier this week to ask for a 25 per cent reduction in the price of power to private consumers in the South Island. They got no immediate satisfaction, but Mr Birch said he did not reject the idea. It is likelv to be discussed further when Mr Birch addresses the association’s conference next month. In the meantime, the chairman of the Heathcote County Council, Mr J. M. McKenzie, who is leading the conntv’s camnaign for choaner nower, has time to organise a referendum on the issue. It could be held at the same time as the local bodv elections late this year. If Heathcote is to revert to the “dark ages,” it seems only fair to allow electors a say on the matter before the plugs are pulled. Many consumers who have faced what seem to be high power bills during the recent winter months probably share the opinion of the Heathcote councillors that electricity is too expensive. The question which is constantly overlooked, or dodged, by those who object to power prices is: if consumers . are; not going to meet the cost of production, who is going to pay? Some South Islanders, like Mr McKenzie, have argued that because South Island consumers are generally closer to the electricity generators, ’ transmission costs are lower and the price of power should also be lower. The -argument has appeal, but its advocates overlook that two distribution systems are involved. Power is sold by the Electricity Division, at a rate fixed by the Ministry. The 61 supply authorities retail it to their consumers. Each. authority pays the same price for power. Each supply authority has to meet its own costs from the price it charges to consumers. These costs can vary widely because of such factors as geography, density of population, industrial demand, and peak demands. If each supply authority attempted to negotiate its own price for power bought from the Electricity Division some South Island authorities might be able to buy cheaper power, but there is ’ a good chance that they would still have

to charge their consumers a higher price than supply authorities in the more densely populated parts of the North Island. Supply authorities in remoter areas such as the West Coast might find themselves paying a good deal more than they are now for bulk power if transmission costs for bulk power are assigned for each district. Mr McKenzie and his council appear to be in favour of the principle that the individual supply authorities should pay the cost of producing the particular power they buy from the national grid. That principle might be further applied within each supply authority’s area. Houses closest to substations would pay least; those at the end of the roads high on the Port Hills would pay for the extra distance the power has to be conveyed. In practice, it is probably virtually impossible to relate any retailing authority to a particular and consistent source of electricity within the national system. These are matters which Mr McKenzie will, no doubt, be eager to explain to Heathcote electors who do not want to have their electricity cut off. even though they may have paid their electricity bills at the present rates to the County Council. Perhaps he can also explain to the rest of the country whv consumers elsewhere should subsidise Heathcote County, which they will be doing as long as the countv receives power without paying its bills. Other remedies might still occur to Heathcote councillors or their consumers. For instance, Mr McKenzie has complained about the high price which the county must pay for extra power bought at times of peak demand. The Heathcote council could try encouraging its consumers to reduce their demand a little at such times in a manner similar to the M.E.D.’s campaign this winter. Otherwise, perhaps the county councillors can explain why Heathcote should not be asked to pay the cost of having the generating capacity to produce additional power at peak load times. Keeping surplus generating capacity in hand to serve at just such times is one of the most expensive burdens faced by the Electricity Division. It is not impossible that Heathcote, and less spectacular protesters, will succeed in getting a lower or differential rate for electricity, but they should rely on sound and persuasive arguments. One might be calculated to persuade the Government that the country as a whole will be better off if some areas get cheaper rates than others; the South Island industrial concession rate is a precedent. Another is that the country as a whole would be better off if borrowing (the National Debt) were increased so that less of the cost of' generating stations is met by consumers in the short run and more is met from loans. Consumers will pay in the long run for the loans and the interest on them. Alternatively, borrowing for other energy products could be reduced and a greater proportion of borrowed money could be diverted to electricity generation to relieve electricity consumers now. A public fuss about electricity prices is easy to create. The solution requires some • intense work. Mr McKenzie’s goal, of course, may be no more than that he wants supply authorities to have some say in fixing the bulk rate for power. - Heathcote may even be the first supplier to open up negotiations with consumers on the charges .it fixes itself.