STRONG RERLY

Evening Post, Volume CXX, Issue 17, 19 July 1935, Page 4

STRONG RERLY

HUTT POWER CHARGES

CHAIJIMANrS REVIEW

MR. ANDREWS UNDER FIRE

The Uult Valley Power Board decided at its meeting in June to iset up a committee to review all the board's overhead costs in order that a reduction in charges for current might be effected, and in moving a motion to that effect Mr. J. W. Andrews made a long statement in which the question of whether the board's overhead costs, particularly with regard to administration, were too high, was brought up, and some strong criticism was made by him. The chairman, Mr. R. W. Bothamley, who was absent from that last meeting through illness, made a long statement in reply at yesterday's meeting of the board, and following him some of the members indulged in strong criticism of Mr. Andrews.

Mr. Bothamley said that the "Evening Post" report consisted mainly of an unwarranted and unfounded criticism of the board's past activities by Mr. J. W. Andrews. The statements amounted to nothing more or ISss than a direct attack on the policy of the board and.its staff during recent years, and he felt that it was his duty to correct the misstatements and correct any misconceptions that might have arisen.

If Mr. Andrews had the welfare of the board and of the consumers at heart his procedure surely would have been to ascertain the correctness or otherwise of his facts and then to have given notice to have the matter discussed at the ordinary meeting. Mr. Andrews had been a member of the board for only one month when he made this statement, and he had not had as yet sufficient opportunity to obtain the. necessary knowledge from which he could expect to give a reasonable opinion on any activity of the board. Mr. Andrews's first statement was "That the board was steadily increasing its administrative costs each year." The general administration expenses were included in\ the board's accounts under the heading of "Management and general." v The following figures were extracted'from the ' respective annual statements of account and showed that expenditure under the heading of "Management and general" for the last five years was as follows:—

. £ s. d. 1930-31 ." ..- 9813 5 11 1931-32 .; 9468 18 3 1932-33 . 8630 12 8 1933-34 8982 13 0 1934-35 • ........'.,...,.... 9735 17 10

The increased amount for 1934-35 was accounted for by the restoration of the 10 per cent, salary cuts,' and an additional amount of £273 of . salaries, previously charged to "Distribution" being this year charged to "Management and general" on account of the extra work involved in the board's load-building scheme. ■. . •, •

..For all that,, the cqst_s of administration of.the board were still less than those .pi 193ff-31'. In. an organisation such as.the Hutt Valley Electric Power Board -it was ' to ■ bei expected that- administration expenses and overhead would steadily increase in proportion to the amount of extra work involved and in.particular in proportion to the increase in the number of consumers. The number, of consumers connected to the board's reticulation in March, 1930, was 9521 and that number had increase^ to, 11,779.at March, 1935. One would accordingly; expect to find -the administration costs increased by a somewhat: similar proportion. , Actually the expenses of management were not as high as in 1930-31.

SALARIES AND WAGES,

Mr. Andrews also said that "management, salaries, and wages have advanced." So far as M£ Andrews intended this to refer only to wages and salaries paid under the heading of "Management and General" he had already been corrected by the speaker's previous remarks. If Mr. Andrews referred to the general question, the chairman pointed out that the wages included under the heading of* "management" referred to all wages not directly chargeable to main transmission, main sub-stations, distribution, and engineering work. The total wages therefore included wages under these heads, and the general wages cost of attention to consumers' requirements by.'way'of disconnections, reconnections, ■ servicing, and special • readings. During the depression as many as 500 changes occurred in one month, and they now averaged 350 per month. To indicate the economy practised by the board and the consequent reduction in the amount paid, said the chairman, he gave the actual figures of salary and wages paid over the period of the last five" years, together with the number of employees on the pay y roll as' follows:— ■ ' 'l*eav. -No. of Salaries and . No. of employees, wages paid, consumers. ....,.£ 1920-30 95 23,077 0,521 3930-31 U .20,962 10,407 1931-32 75 . 18.93S ]«,8!>() 1932-33- 7S • .10,532 , . 11,192 1933-34 ; -09 . 10,172 11,44-1 1934-35 69 17,934 . . 11,779 In 1932-33 and 1933-34 there' was the 10 per cent. cut. With the single exception of the restoration of the 10 per cent, cut, the amount expended iii salary and wages had been reduced each year, while the-number of consumers had increased each year. Under this heading, too, came Mr. Andrews's further statement that "the board was building up an army of salaried officers and " increasing; their holidays." Mr. Bothamley said that to his definite knowledge there was only sufficient staff to enable the board's work to be carried out in an efficient manner. Extra holiday leave had been granted to only 17 employees, the period being seven days, and in each case they were men paid by the hour who had been in the board's employ for a number of years, the majority over seven years. ' .

If the ratio of "management and general" expenditure to revenue was to be kept at a constant or decreasing percentage, the price of energy sold must ,be kept at the same figure. It had always been the policy of the board to make concessions by way of reduction in heating rates and reduction of minimum charges throughout the whole area of supply. . This, by decreasing the revenue, must have an adverse effect on any percentage comparisons.

Taking the whole of the expenditure for each year, it would be found that the board's commitments have remained reasonably constant, the main charge for power purchase being increased, while interest payments had decreased, chiefly owing to legislation. The board had also increased the facilities to the consumers for payment of accounts by increasing the. number of receiving depots and by the opening of a permanent depot in Wellington city. • These depots had added to the "management and general'" expenditure. KH to. jfijjOtt, 3?pi: all

that, the cost of management is still below that of 1930-31.

TAW A FLAT DEVIATION.

A contract was entered into by the board for the supply of energy to the Public Works Department for the Tawa Flat railway deviation for five years, commencing in the latter part of 1928 and closing at the end of 1934. This contrast had considerable bearing on the annual revenue of the board. Daylight saying in recent years had also caused a loss of revenue, the amount of which could not be estimated.

It would appear obvious that although the power purchased by the Public Works Department in 1930-31 was over. £12,000 more than in 1934----35, during that same period the gross revenue from power sales dropped only some £4000. During the same period discount allowed rose from £5274 in 1930-31 to £13,897 in 1934----35. The, net revenue of the board dropped "from £105,832 in 1930-31 to £93,577 in 1934-35, the main reason being the increase of £8000 in discounts to consumers, and the loss of the Tawa Flat contract owing to its completion. These figures showed a steady increase of revenue and an increasing amount being passed on to consumers by way of discount in each year. It must be obvious that by reducing rates there must be a consequential reduction in revenue, while the amount of work involved was as much, if not more, due to the increase in the number of consumers. The ratio of expenditure to revenue under this heading must naturally increase, but the statement that the ratio was increasing out of proportion did not present the true position.

■Mr. Andrews further said that there was a large administrative' overhead for a merely distributing concern. The board's undertaking was certainly a distributing concern but it required in the major part a technical staff of experts, the balance of the employees having to be trained in special work. The board's engineering works were spread over nearly 600 square miles of country, and its distribution went over wild and rugged country.

Mr. Andrews also said "the board was apparently making no attempt to improve its position." A bald statement of this type without one single fact to support it merely led him to believe, I said Mr. Bothamley, that Mr. Andrews j was in complete ignorance of the board's activities. For all the adverse circumstances affecting the revenue of the board in recent years the revenue had been reasonably well maintained, while the cost to the consumer has been lessened. COMPARISON WITH OTHERS. Mr. Andrews next went on to say "that the board's rates were higher than those of any other power supply authorities of its size in. New Zealand." This was another statement impossible of proof.inhere was no doubt j that there was a differentiation in the! rates charged for energy between! various supply authorities. Selling of J energy depended to a great extent on peak demand, and this differed considerably in each area of supply. Likewise no two distributing bodies could be similar for their, loans, capital costs, contour of area of supply, industrial and other factors, that had to be taken into consideration. In rating their charges accordingly there was no other board with which the Hutt Valley Electric Power Board could be reasonably compared. Some of the board's rates were lower than those of Wellington City, and the board's rates for water heating were the lowest in the Dominion, and its other rates com-, pared more than favourably with any other supply. Mr. Andrews further stated that "he regretted to say that it: was the most extravagant body he had ever been associated with." "He had attended only- two meetings, at•,the ; ,time of his. statement," said, the chairman, "so I think we can take: this statement for, what 'it is worth and ignore it."'

Mr. Andrews also said' "that the board spent a large sum on superannuation each year,'' which was additional salary to the officers and should be taken into account when salaries were considered. The board inaugurated . a superannuation scheme • for the staff and employees during 1930 similar to that now in operation by the Government and most local bodies. The large sum.mentioned by Mr. Andrews and expended: by the board; was £237 Is 2d for the year 1934-35, the employees' contribution for the same year being £525. Fifty-nine per cent, of the employees of the board were members of the superannuation scheme. . ■■ ' ~*

Mr. Andrews thought that 17J. per cent, discount was too high, and that ,the gross charge should be reduced to enable the discount rate to be reduced to 5 per cent. On the other hand, the Wellington City electricity department allowed a discount of 50 per cent, off ils charge for domestic lighting. It seemed obvious that Mr. Andrews's idea' would result in more bad debts and a greatly increased cost' of collection, at the expense of the 'con-! sumer. , . • ' ■ j

The following statement by Mr. Andrews, "Did the consumers know that the board constructed tennis courts on yaluable land for the board's staff, and that the consumers were paying for these luxuries in higher charges for current," was described by the chairman as' "being nothing more or less than a deliberate .misstatement intended to mislead our board's consumers." Actually only one tennis court was put down on land which was not yet required for the board's use, and which was not likely to be required for some time. The staff, after working hours, cleared the section and laid a foundation. The court was constructed by the boarcl on the understanding that should it require the land at any time the employees would give up the tennis court, and that in the meantime a minimum sum of £8 per year should be paid as rent. It must be obvious that the amount paid as rent covered any expense to the board in the laying of this court.

Mr. Andrews next asked: "Did the consumers realise that ,they had been paying 4s per month minimum charge for meter rent and were now going to pay 3s?" The domestic consumers' minimum charge had been 3s for some years past subject to the same discount as applied to the rates. It was not a meter rent but an availability charge. Other supply boards charged meter rents in addition to the1 minimum charges, and their rates outside the four cities were in most cases higher than those of the Hutt Board.

Mr. Andrews made a rather lengthy comparison between the Hutt Valley Electric Power Board and the Wellington City Council Electricity Department. It should be obvious, said the chairman, that it was • impossible to compare the rates for Wellington City with those of the Hutt Valley Electric Power Board. /

in the "Evening Post" of June '27 Mr. Andrews made three further statements evidently in justification of his previous remarks. The first was "that it was only at the time when after all cuts had been restored the general manager provided for an addition of £600 for higher salaried officers." In the estimates for income and expenditure prepared by the general manager dated May 22 he provided the extra sum of £502 under management and general in excess of last year's figures, to provide if necessary for extra staff and increased salaries. Provision must be made for relief staff in case of sickness atid for extra staff being engaged in a growing concern of this nature. The general, manager's allowance over last year's figures, said Mr. Bothamley, he personally considered to' be very modest

In addition^ ibQ general jnanagexl

was, by resolution of the board passed at a meeting held on June C, 1035, j instructed to bring down a classification and grading scheme. This the general manager did with his recommendations for increases for the stall', as is the visual practice when dealing with salaries at the commencement of each financial year. It must be realised that employees who had been kept without increased salaries for a period of years were now entitled to some consideration. Mr. Andrews further said that the general manager recommended a classification which, if adopted, would entail another increase !of £429 in the following year. The recommendations of the general manager were dependent upon the approval of the board. The figure of £429 mentioned by Mr. Andrews was very much in excess of the general manager's recommendations, neither of which had 1 been considered owing to Mr. Andrews's action. MR. HOLLANDS'S POSITION. '. Mr. Andrews's last statement was that after these recommendations the general •' manager applied for six months' leave of absence on salary for himself. This statement was a personal attack on the general manager of the board, and one which if left uncontradicted would do him a great injury. This statement by Mr. Andrews was a breach of privilege in that he was referring to matters which were taken in committee, and which the speaker viewed very seriously. The fact was well known to the members of the board that some time ago the general. manager applied for leave of absence, but did not ask for six months' leave on full pay. He specially mentioned that he wanted leave of absence mainly for health reasons, and placed the matter in the hands of the board for its decision. The board, under circumstances well known to Mr. Andrews, advised the general manager that the time was inopportune for him to proceed on leave, and that the board would deal with his application for leave at a later date. Mr. Andrews was, he believed, also informed that the general manager had not had any vacation for t .o years, and that his annual holidays were overdue. • "I have pointed out that Mr. Andrews's statements are to a great extent incorrect, and his arguments based upon facts ■ the accuracy of which he has evidently not troubled to check. Mr. Andrews's misstatements can only be put down to ignorance or to deliberation; in either case I feel that some reason other than the good of the board and its consumers has actuated Mr. Andrews in making these statements," concluded the chairman. "BOARD ROOM LOCKED." Mr. Andrews said briefly that he had carefully checked the minutes of the board, and found only one occasion when it went into committee. He had asked if he could get the papers from his drawer to check up his own figures but was told that the board room was locked and he could not get in. That was one of the difficulties he had had to contend with. : "I beg your pardon, I was never asked. I deny that definitely," said the engineer and general manager (Mr. E. F. Hollands). . "I have to congratulate you," said Mr. A. W. Press, addressing the chairman, "on the able manner in which you have dealt with what may be termed Mr. Andrews's fanciful charges. Personally, as I listened to his outburst at our last meeting, I was disgusted that a man of his standing - should have had the effrontery to consider,'after sitting at the board's table for two meetings,. that he was capable : of castigating and condemning in'such a wholesale manner as he.endeavoured to do; but I am convinced from what you have said that not, only Mr. Andrews'but the^ .general' public will recognise that it was a..case.of speaking : first and :thinkihg afterwards, and after he has digested all you have said he .will be an enlightened man."

Mr. Press said that the board was one of the most prudent and econo-mically-managed' Concerns of its magnitude in the Dominion. With the .exception of the water heating, not one single rate had been.. increased since 1930. Oh the contrary, many have been reduced. Discounts were now 17§ per cent.- off basic- rates. The board was really selling water heating lower than cost. Probably one of Mr. Andrews's most glaring inaccuracies was that the board was building up an army of salaried officers at from £6 to £20 per week and increasing their holidays. Out of 68 employees, only 9 received upwards of £6 per week, and 6 of them received less than £7. As to the increase in holidays, the relief given in this direction was solely to outside men on hourly wages, not, as implied, to the high-salaried staff. This relief was long overdue, and the board had given justice to the men by granting the extra days.

"I do feel that it -was expected of Mr.: Andrews, holding the responsible position he does as Mayor of Lower Hutt, that he would have permitted himself time to become familiar with the whole of the board's ramifications and so be a useful member of it by using whatever ability he has in a constructive manner," concluded Mr. Press. ■ • '■...■■.

Mr. L. Stewart stated that Mr. Andrews was not there in the interests of the board or the consumers, but only for' publicity' purposes.

"It is in the standing orders that no member shall make disparaging remarks about, any other," said Mr. Andrews.

Continuing, Mr. Stewart said that Mr. Andrews.imagined himself to be a Mussolini or Hitler. His tactics would not be tolerated. Since the first meeting Mr. Andrews had been antagonistic. He had shown his antagonism when the question of the chairman's honorarium came up. Mr. Andrews had been on the board one hour, not knowing anything about the duties of chairman, and then thought they were worth £150. It was infra dig. for. a newcomer to do that.

With reference to what Mr. Andrews said about the carpenter, Mr. Stewart said that Mr. Andrews forgot that he was on duty twenty-four hours in the day, and on a recent Sunday put in three and a half hours' overtime withr out extra pay. This board was not so generous to its employees as some other boards in New Zealand. The board did not bluff the people. The Gas Board gave a discount of 25 per cent., and this was greater than the, power board's discount of 17.& per cent.'' Mr. Andrews could not bring figures to prove that the Hutt Board's charges were greater than those of any other board of its size in New Zealand.

'•This is the fifth-largest board, ,and the charges of the four largest ones are lower, so the statement is correct," commented Mr. Andrews.

"You . must not interrupt," warned the chairman.

Mr. Stewart said that the Wellington and Auckland concerns had some charges in excess of the corresponding ones of the Hutt Board. With reference to meter rents, the Auckland Power Board had been in business for a long time, its consumers were spread over a comparatively small area, and it received something for its standby plant. Mr. Hollands:did not apply for leave on pay at all. The matter was taken in Committee, and it was a breach of privilege to mention it at all. During the time Mr. Walker was chairman, Mr. Hollands, when in his company, injured his log when, stepping out of a car. During Mr. Anderson's chairmanship he underwent treatment at Rotorua, and during the speaker's chairmanship he was in a private hospital for a week, but was no better. He was run down as a result o£ overwork ami Bain,, ancT, ag-

plied for leave to go to England for treatment and come back a fit man. "It appears* that Mr. Andrews is endeavouring to wreck the very foundations of the board," concluded Mr. Stewart. "KNEW NOTHING." Mr. A. Walker slated that there was the greatest necessity to put the matter before the public. When Mr. Andrews made his speech, he said, the board was so flabbergasted that he was the only member to stand up and contradict some of his statements. The board's policy had not been one of bluff but of straight-out business. The board was doing Its very best for the consumers. It was the efficiency of the staff that had been able to put the board on the map. It was astonishing that a man of Mr. Andrews's talent and ability should make a criticism of the board of which he knew nothing about.

Mr. H. W. Lawrence said that when Mr. Andrews made his remarks he thought it astonishing that a public man should make statements that were such rubbish. He took exception to the remarks about Mr. Hollands, who was one of the finest servants the board could have and had brought the board along to a. state that was almost perfection.

Mr. J. J. Maher said that Mr. Andrews was quite justified in objecting to the increase in wages, and personally, he still held the same opinion today. When the 10 per cent, cut was restored he did not think the wages were too high, but taking all things into consideration, he thought they should be left as they were. He came on the board four years ago, and since then the charges had come decidedly down. Power for milking machines had been reduced from £5 to 30s. When the undertaking was hew big mistakes were made, but it was to the credit of the older members of the board that they had got a man like Mr. Hollands on to the staff. Right throughout his district he had heard nothing but praise of Mr. Hollands.

"OTHERS SEEKING PUBLICITY."

Mr. G. London stated that he had attended a preliminary investigation, and came to the conclusion that Mr. Andrews lacked some inner knowledge of the board's working. He had made himself unpopular in some directions, said Mr. London, by his support of Mr. Andrews's motion, but he did riot take *ny notice of that. As regards Mr. Andrews being accused of seeking publicity, some members of the board could be accused of the same thing. When Mr. Blackley rose to correct some of Mr. Andrews's statements at the last meeting Mr. Dowse pulled him up on a point of order, but since then Messrs. Dowse and Stewart had made statements to the Press. Mr. S. Blackley said vhe was sorry that members, particularly older ones, had brought the matter up that day. Mr. Andrews, as a new member, had a right to ask questions. A committee was set up, and it had met once and was now collecting information to put before a meeting of the board. The chairman had, of course, the right to make a statement, but members were out of order in writing to the Press and discussing the matter now.

Mr. Stewart made the explanation that he put his letter in the Press in his 'capacity as past chairman.

Mr. A. J. McCurdy said the board had been handicapped since its inception. Pie was not aware of any mistakes, with the exception of the appointment of the then engineer and secretary. Until the time when it was found necessary to ask the then engineer and secretary to retire the board had done" everything possible. When Mr. Hollands came on things were straightened- up. Referring to wages, Mr.: McCurdy said he did .not .believe in union wages, because they were a minimum, and men should be paid a' wage that encouraged them. He saluted the outside staff, that were at call day and night, the carpenter and the blacksmith, but he had,no time for the man with the.muckrake.

Mr. P.:-Dowse complained' that the whole business was a.'sorry one. The acting chairman should have allowed Mr. Andrews's statement to, be dealt with only by a notice: of motion, and then they all could have spoken on it at the same time. As he had come from the same district as Mr. Andrews and felt that he personally had been responsible for the whole matter coming up when he had introduced the subject of leave, he had made his statement to the Press. The whole emphasis of Mr. Andrews's statement was on the outside and lower-paid staff. The basis of. the board's income was compared with that of the relief

worker. ■.'.'., "No fear." interjected Mr. Andrews. Mr Dowse said the carpenter had been interrogated in the Street He had been dragged in the mud. If a trading concern indulged in talk of this kind it would not'popularise the use of .electricity. He hoped the committee would go on with its work.

MB. ANDREWS EEPLIES

Mr. Andrews said he would not attempt to reply straight away to a prepared statement. Mr. Stewart bad taken him to task about taking advantage of his position as a new member and trying to reduce the chairman's honorarium. He obtained details from Mr. Stewart as to what the chairman's duties were, and was perfectly sincere about it. The resolution was to increase the honorarium of the chairman from £180 t0.£200, and there was another motion to reduce it from £180 to £100. He suggested a compromise of £150, and had the most decent intentions over it. Although he had been on the board for only a few months he had given as much attention to its affairs and hydroelectric matters generally as any other member. He had been some hundreds of miles away, and studied the question there. On page 51 of the P.W.D. extract it was stated that out of 46 boards operating in New Zealand only four were worse off in relation to total working expenses as to revenue than the Hutt Board. The four were Banks Peninsula, with a ratio of 4.92 consumers per route mile; Malvern, 3.59; Waimea, 19.70; Wairoa, 4.07. The Hutt Board's number of consumers per route mile was 38.80. If he had had to speak hard it was to bring members to their senses. He had made no attack on past members, or said that present salaries should be reduced, but that in some cases' they should not be increased.. It was against all principles granting men on hourly rates ot pay daily leave on pay. As regards Mr. Hollands, he had as much respect for him now as when he had come on the board or at any other time, and had no intention of injuring him. As to the charge of seeking publicity, "political propaganda" had been mentioned, but although he had been asked to stand for Parliament, he had refused, and had no intention of standing:. ~ The following motion, moved by Mr. Andrews, was defeated:-"That the scope of the inquiry by the committee set up at the last meeting of the board be extended to include all matters in connection with the board's operations, and the order of reference shall provide a recommendation regarding gross and net charges."