GREY POWER BOARD

Greymouth Evening Star, 29 March 1930, Page 12

GREY POWER BOARD

‘ FINANCES INVESTIGATED. Owing to rumours relative to the finances of the Grey Power Board, the Greymouth Chamber of Commerce appointed Messrs J. M. Bunt and F. A. Kitchingham a committee to investigate the position, present and future. Yesterday they reported to the meeting of the Chamber that they had discussed the Board’s finances with the Chairman, Mr J. W. Greenslade, anil the secretary, Mr A. J. McDowall, and after perusal of the Board’s balancesheet for 1928-9 and of the relevant acts, the committee found as follows: 1. That on March 31, 1929, the Board’s bank overdraft was £6OOl 10s Id, which is over £2OOO below the legal limit fixed by the Electric Power Boards’ Act, 1925 (viz, £8050). Owing to the pending transition from steam to hydro generation the Local Bodies Loans Board has insisted on larger annual reductions as at March 31,1930, and thereafter than are required by the Act —this is so that the overdraft will be extinguished about the time that the hydro plant starts in operation.

2. The Government Audit Department fixes the rate at which depreciation shall be allowed. On the generating plant and boilers the Government requirement is 2 per cent, but the Board has allowed depreciation at 5 per cent. On March 31, 1929, the depreciation reserve stood at £ll7O 14s 9d. This amount was not invested in outside funds or securities, but, as allowed by law, had been used in connection with the Board’s undertaking. Section 22 subsection 1 of the Electric Power Boards’ Amendment Act, 1927, provides that the Board may postpone the funding of its allowance on account of depreciation for seven complete financial years from the commencement of the supply, of electricity. This period of seven years will expire in 1933 from which date the Board will each year have to find in cash; (a) Depreciation for the year; (b) l-14th of the seven years

accumulated depreciation reserve. The Board’s officials estimate (a) that by 1933 the Depreciation Reserve will stand at approximately £5000; unless the Board makes provision in the meantime for setting aside cash on account of part of the Depreciation Reserve, for the Board would have to find under para, (b) each year l-14th of £5OO0 — £357; (b) that as from the closing down of the steam plant depreciation on the whole of the Board’s undertaking will be about £7OO a year, the balance • of depreciation at the Audit Office rate being met by the sinking fund reductions. During the financial year 1928-9, depreciation at the Audit Office rate was not provided for, as an amount in excess of the requirements for the year 1927-8 had been set aside in that year and the net position is as stated in the early part of this paragraph.

o. inc jjodi(i iicib ousei veu <lll ito obligations as regards sinking fund, and on March 31, 1929, there was a sum of £9012 13s 6d accumulated on this account —this amount of course includes certain amounts legally paid out of the loans themselves. Shortly., the position is that with regard to sinking fund, overdraft and depreciation, the Board has complied fully with the requirements of the law, the Audit Department, and the Local Bodies' Loans Board, and in one re, spect (viz., with regard to depreciation as mentioned above) has set aside more than it was legally, bound to do. Mr Greenslade suggested that it would be well to add that there had been no substance in the rumours circulated.

Mr Coates -said that, as he had set the ball rolling and after hearing the report read, he was prepared to do so. Mr Greenslade proceeded, and said, that he spoke in committee, but Mr Kitchingham objected and pointed out it. had been agreed previously that discussion of the report was to be in open meeting. Mr Coates moved that the discussion bo open to the Press. This was- seconded by Mr Kitchingham, but like most other motions at the meeting it was not put to the meeting, yet was acted upon. Mr Greenslade then referred to depreciation. The Power Board, he said, had a plant which should bring about £12,000, and he intended to suggest that interest on that amount, about £7OO, should be applied to the depreciation fund. However, he was pleased to be able to say that by March 31, the Board would not be overdrawn whereas last year, the debit balance had been about £6OOO. Mr Kitchingham agreed the rumours which had been current that there would be a deficiency of £12,000, had been found to be trash, t The substratum of these rumours was, however, that in 1933 the Board’s position would alter to a certain extent. Tliis year a certain amount had been put on depreciation, but in 1933 the Board would have to put it in in cash, which would put the Board on a new footing. The rumours which had arisen were untrue, but he would not say that there was nothing in them. He wanted to make it quite clear that the Board’s position would alter as from 1933.

In view of the report, Mr Coater considered that the Chairman of the Power Board should be pleased that the matter had been brought up. When such rumours were going the rounds it was better to bring them up, rather than discuss them at street corners. Mr Greenslade said that if notice were taken of all the rumours going round the Board would have something to hang its hats on, but most of those cases had not been investigated. However, he was glad that this investigation and report had.been made. The motion to accept the report, was carried.