HYDRO-ELECTRICITY

Dominion, Volume 16, Issue 34, 3 November 1922, Page 8

HYDRO-ELECTRICITY

THE GOVERNMENT’S PRICES FLAT RATE NOT TO BE RIGID THE LAKE COLERIDGE INSTALLATION “A statement is being circulated, particularly in tho South Island, that the Government has adopted a socalled ‘flat rate’ for electric power over tho whole Dominion, and that this is going to result in a loss on the North Island schemes, which will be made up out of the profits ou the South Island schemes,” said tho Alinister of Public Works (Hon. J. G. Coates) yesterday. !‘This is not the position in any general sense. “The cheapest Government scheme is not Lake Coleridge, but Horahqra. On Alarch 31 last tho capital outlay on the Lake Coleridge scheme was £57 gir h.p., as compared with £42 at orahora. Alangahao will bo slightly higher than Lako Coleridge —£65 to £6B per h.p.—but Arapuni, owing to its large size, will be substantially less, viz., £4B te £5O per h.p., including all transmission lines at the first stage, falling as the output increases “Lako Coleridge started with an initial load for the first year of only 1500 h.p., as compared with 4500 h.p. at Horahora, which is again te the advantage of the North Island scheme. Alangahao and Arapuni will commence operations with an 1 initial load bearing a much higher ratio to their installa tion capacity than Lako Coleridge did. “As a result of its lower capital outlay and higher initial load, Horahora made a profit last year of £2522, as compared with £1498 for Lake Coleridge —in both cases without paying a .sinking fund, which at the statutory 1 per cent., would have amounted to about £2500 in the case of Horahora and £5OOO in the case of Lake Coleridge. Horahora is thus not only cheaper, but is already paying better than Lake Coleridge. • , , , “With regard to the standard rate which it is proposed to ask the Christchurch City Council to pay on' renewal of its contract in 1925, this is not a recent innovation. It has been in force since 1918, and all the local distributing authorities in Canterbury, with the exception of Christchurch, arb already paying it, and have been paying it for several years past. It is not reasonable to expect the city, in .view of the very profitable nature of its business, to receive better terms. “In the seven years since supply from Lako Coleridge commenced the city has paid the Government £92,213 for energy, which if the costs be assessed evenly over the output to all consumers, has cost the Government £148,692. The loss on the whole Government baseless has been £29,175, not including sinking fiind deficiency, the difference becig made up out of the profits on the other consumers business. Moreover, in these seven years the city has put aside in the form of reserves £97,004, and made a net profit oi £38,557, whilst the Government has on nearly double the capital outlay put aside only £49,800 as reserves and accumulated a loss of £29,175. The city reserve fund payments are at the rate of 5 per cent, on the capital outlay, whilst the Government has so far only been able to put aside 2 per cent. “The increase in charges in order to bring up the city te the standard rate is only slightly higher than their _net profit last year, which was £10,532, and it would thus appear that they can pay the standard rates without appreciably increasing tho retail selling price. “It will be noted particularly that all the old contracts between the Department and its’large power consumers, except three, have already been renewed on the standard rates during the past three years, and the total increase in revenue when all the contracts. including the city, have been brought up to the standard rate, will only be about. £lB,OOO, as compared with a gross income last year of £56,814. The inference that has been drawn by some critics that the Governments doubling its charges is thus verv wide of tho mark. “When the Lake Coleridge system has wiped off its accumulated loss of £29,171 and the accumulated deficiency on the sinking fend account and is paying its proper reserve funds m accordance with the law, the question of a revision of the charges will be considered on its merits. The standard charges, though a definite .basis for charging throughout the Dominion, are in no sense a ‘flat rate’ intended to cover up the losses on any unremunerativc scheme. Each scheme must show its own profits and losses, and when all the requirements of the law with respect to the Government hydroelectric scheme ha been fulfilled any one scheme which then shows a profit will have its rate reduced.”