Electricity for industry

Press, 2 August 1983, Page 18

Electricity for industry

Energy is a significant part of the costs of almost all manufacturing enterprises — as much as 13 per cent for some firms, according to the Canterbury Manufacturers’ Association. In Christchurch, with the city’s air pollution problems, most firms have no alternative but to use electricity for most of the energy they need. The price charged for electricity supplied to industrial consumers can be crucial for the success of a business, and for its capacity to expand and to employ more people. The Canterbury Manufacturers’ Association has approached the Christchurch City Council’s Municipal Electricity Department with proposals to change power pricing in ways that should stimulate business and create jobs. The proposals deserve a sympathetic hearing, even though they might eventually require a small increase in the cost of electricity to domestic consumers.

At present, domestic consumers pay only about two-thirds as much for their electricity as industrial consumers. A reasonable case can be made for the higher charge for industrial use, especially where there may be very large fluctuations in demand from manufacturers. Many other supply authorities in New Zealand do not give such a substantial benefit to domestic consumers. In Auckland, for instance, the average domestic tariff for electricity is only 5 per cent below the average industrial tariff.

Comparisons between electricity charges in different places, and between the costs of providing electricity for different purposes, need to be made with caution. Even so, the manufacturers have a good case for a review. As they point out in their submissions, where once the cost of energy could be passed on to

those who bought their products, this can no longer to done so readily when manufacturers have to compete successfully with firms elsewhere in New Zealand and abroad. Christchurch manufacturers receive a rebate now of 25 per cent on the price of their electricity, a recognition by the central Government that cheap energy in the form of natural gas is not available in the South Island. Even so, the retail price of energy in the North Island is still sometimes lower.

As a first step, the manufacturers support a proposal made recently by the Mayor of Christchurch, Sir Hamish Hay, that an independent consultant should examine the finances of the M.E.D. Much more needs to be considered than the apportioning of charges between domestic and industrial consumers. Much greater encouragement might be given to industry to reduce peak loadings of demand. The M.E.D. makes a profit, sometimes a substantial profit, and not all of it is used to improve the supply of electricity. The habit of. taking funds from the M.E.D. and applying them to other purposes in Christchurch has grown up over the last decade or more. It may be that all consumers would benefit if the finances of the M.E.D. were kept separate from other activities of the Christchurch City Council.

Last May the Christchurch City Council promoted an imaginative scheme to create jobs in Canterbury through a public charitable company that would foster the growth of small businesses. The council may find that it already has an ability, through the M.E.D., to stimulate employment, especially in larger firms that are among the city’s biggest consumers of electricity.