OTAGO POWER BOARD

Evening Star, Issue 20193, 5 June 1929, Page 8

OTAGO POWER BOARD

SPECIAL RATE SUGGESTED A special meeting of the Otago Electric Power Board was held this morning to discuss tho question of striking n rate. There were present .Messrs D. Boyd (chairman), J. K. Simpson, W. Taine, H. M. Driver, F. Carson, W. B. Galloway, and A. E. llussell. EN GIN EER-M AN AG ER’S REPORT. Tho Engineer-manager (Mr J. C. Colliiis) road the following report:— “ Since tho necessity iof- collecting a rat© has arisen it would be, as stated in my annual report, an unwise procedure for tho board to collect this year only such an amount as would carry us through. My reason forHhis is that we arc bound to have losses for some years in succession, and this position must be considered so that our different rates will not he on an increasing scale, but rather, if possible, on a decreasing scale. In other words, if wc are content to collect only' those minimum amounts required each year, we would probably find ourselves in the ■position of having to strike a bigger rate next year than this, and a still greater 'one in the year following. To adopt the better, plan and have the largest rate this year will have a twofold advantage. Firstly, it will save us an appreciable amount in overdraft interest, and! secondly, the consumer will realise that since the rate is gradually decreasing it must soon reach a vanishing point, whereas if our. rates showed an increase as years went on every ratepayer would bo asking what the ultimate outcome was going_ to be. In trying to arrive at the position it must be realised that it is a very hard matter to estimate our revenues and expenditures for the years 1930-31, 1931-32, 1932-33 at the present time, and in doing so I must necessarily adopt u conservative attitude. ‘"Another point to be considered is our depreciation reserve fund. This fund we will have to account for as from our seventh year of operation. By that time wo will have accumulated a debt under this heading of approximately £21,000, and in the years following wo must not only pay tho amount of our depreciation reserve, but also one-fourteenth per year of the above £21,000. 1 have considered that tho board will be able to meet this expenditure without making allowances until after the seventh year, but in order to do so it will he necessary for our finance to.be in every other respect in a very sound position.” Note.—ln submitting the following figures I am assuming that the board will at any rate, adopt part of ray suggestions, and will therefore reduce our overdraft so considerably that we will not this year, nor in the years to conn-, approach the limit allowed by law, and consequently I. have omitted an otherwise important factor—namely, that amount of money which wo would require in order to “ cany on,” approximately £I,GUO. ‘'Our estimated loss for this coming year is £B,OOO. Wc shall certainly have a loss in tho year 1030-31, ami to be on the safe side we may take the loss at £4,000. Now, our position at March, 1031, will bo this: Our accumulated loss to date, £22,000; plus this year’s estimated loss, £8,000; plus the following year’s estimated loss, £4,000; total accumulated losses to March 31, 1931, £34.000.

“Of lliis amount approximately £1.3,000 is our depreciation reserve fund, which amount wo need not account for until after March 31. 1931, so that the accumulated loss which wo will have to account for at March 3.1, 1931. will be £22,000. Now, after March 31, 1930, wc must steadily' reduce our overdraft at the hank. In the first place we are compelled to reduce this ovcrdralt a certain percentage each year, and in the second place wc must make every endeavour to wipe out this overdraft before we have to face the annual payment of depreciation reserve. Therefore since the conservative attitude is the only one to adopt, wc had better face the position of having to wipe off a deficit of £22,001) by way of rating in the next three or lour years. In arranging that each district should as nearly as possible boar the burden of its own tosses, the question arises as to whether the southern area should be split into two portions. I think the board will agree that this course would not ho fair to the ratepayers of the Bruce County. It is obvious that the cost of power for this district must he eery high, when compared with that portion further south. As a matter of lact, were wo to attempt to split this district 57 per cent, of the Joss incurred in the whole of the southern area would be born by the middle district, and 13 per cent, by the southern portion. On the assumption that we will only sp)it the whole ol our present district into the following areas;—North part. No. 1 area; south part, No. 1 area; Lawrence, No. 2 area; Owaka, No. 3 area. After a general rate has been struck, and basing the proportions of the losses that have actually occurred this year, the only proportion wc could reasonably lake within the northern area is to bear 35 per cent., the southern area 51 per cent., and the Lawrence area If per cent, of the losses. Should we strike a general rate cadi year for four years of ]-20th of a. Id in the £, rebating 51) per cent, of uiircticnlaled ratepayers. this general rate will bring in approximately £2,100 net in the four years.

Since we arc to make provision at tliis date to collect £22.000 of our present deficiency by way of rating, them will be a balance of £19,600 to bo raised by way of special rates. On the above percentages, then, we should raise in the northern area £6,Sot); southern area, £10,1)00; Lawrence area, £2,760. Increasing these amounts by 10 per cent to cover expense of collecting and contingencies we will need to collect:— I'Toni the northern area. £7,336: from the southern area, £11,000; from the Lawrence area, £.'1,026.

‘ The report went, on to show that on top of tho general rate of l-20th of Id in tho £ the special rate in the northern area in the first year would be 3d in the £. falling to Id in the fourth year; in the southern area it would be. 6d in tho first, year, falling to Id; and in the Lawrence district it would bo 8d in the first year, falling to 2d. The capita! values of the northern area was taken at £1.116.000: southern area, £1.719.000; and Lawrence area, ,£352.000. The northern area would pay n, total gross revenue by way of special rating of £7.670, as against the £7,536 required; the southern urea would pay £11,410, as against £II,OOO required; and the Lawrence area would pay £3,178, as against £3,025 required. The net revenue received would be £8,316 in the first year, £6,837 in the second year. £5,396 in the third year, and £2,117 in the fourth voar, a gross total of £22.686.

Mr Collins staled further:—“ I have stated repeatedly throughout this report that a conservative attitude has been adopted. Someone will note that 1 have referred to the losses that wiM occur this' coming year .and the following year, but have omitted to mention what T expect to happen in the following years. Yet again, sonic may expect that our accumulated losses

would lesson somewhat in the courseof I'our years—and, candidly, I think I they wiil, but after all, these conditions will only make, our position the more lavourablc, and since the rating question will have to be revised each year, this will only mean that a, further reduction in the above table- for later years. Personally, since we have to rato I Aujuid like to take more than the net £'S,-31G by way of rating this year, and show a corresponding reduction in following years, but .1 realise that the burden "the ratepayer has to cany will be very heavy indeed, hi conclusion, 1 would once again out that the .sinest way the ratepayer has of reducing the rate is to make a more generous use of the power." .After a general round-table, discussion the report was adopted. NOTICE 01'' MOTION. The following notice of motion was given :—" That on June 25 the board strike and collect the following rates: (a) A general rate of .05d in the £ on capital values on the whole area, rebating 50 per cent, to unreticulated ratepayers. (b) A special catc of 0.5 d in the .£ on the capital values of the northern area, comprising parts of'Waihemo and Waikouaiti Counties, and Palmerstoii and Waikouaiti Boroughs. (c),A special rate of .Gel in the £ on capital values of the southern area, comprising parts of Bruce and Clutlia Counties and Balolutha and Kaitangata, Boroughs, (d) A special rate of 8d in the £ on the capital values of the Lawrence area, comprising parts of Bruce and Tuapeka Counties and the Lawrence Borough; and that the rate bo for the period from April 1, 1929, to March 31, IiKO." VALUATION OF PROPERTIES. Following a discussion regarding tho collection of the rate, it was decided that the matter of the collection be left to the local authorities, and it was resolved—" That local authorities bo informed that tho board will meet them in a reasonable manner in connection with the valuation of split properties." LOAN PROPOSAL. It was decided that it be moved at next mectig that the board apply to the Loans Board to borrow £15,000 for reconstruction, extensions/ and other works. SERVICES APPRECIATED. Members generally expressed great appreciation of the services of the engineer-manager and the secretary, and it was felt that when ratepayers became fully acquainted with the position they would submit to it, and would realise that the rate was a diminishing one, and would, it was hoped, disappear altogether in a few years.