POWER RETICULATION

Hawera Star, Volume LI, 21 May 1932, Page 6

POWER RETICULATION

SOUTH TARANAKI BOARD YEAR’S PROGRESS REVIEWED 1 REPORTS TO' ANNUAL MEETING. Reviewing tho operations of the South Taranaki Power Board during tlio past l ycai* tlie dbiairniciii (Mr. J. 13. Murdoch stated at the annual meeting fast evening that, although the board had been faced with times of severe financial depression the result of its activities had indeed been very satisfactory. “There have been suggestions that, in view of the financial results for the year just closed, the board might further assist its consumers by another reduction, in charges,” said Mr. Murdoch. “In regal'd to this I would point out that the reduced charges had been in operation for a period of five months only when the financial year closed and their effect over the full year cannot yet be accurately gauged. No one. at the present time can accurately foretell the duration and future effects of the present depression and I consider it is the duty of the board, as the trustees of the ratepayers, to make no move that might jeopardise the future of their business. Ido not advocate that the board should make large profits at the expense of the consumers, but I consider that# the financial stability of our business is our first concern. I do not think it is wise to make any further general reductions until we are able to judge the effect of the depression on our business, and until we are quite satisfied that it is safe to further reduce our charges. It seems to me that the main policy of the board should be to strengthen our finances by building up our reserves to reasonable limits and to see that the only extensions which are made to our business are those which will show a jirofitable return.

“The reductions in charges made in November last, immediately Government power was available, were a welcome assistance to all consumers. The reduced charges mean a reduction in revenue to the board of several thousaends of pounds per annum, and I think the hoard lias reduced its charges as far as it can safely do so at the present time.” RECONSTRUCTION WORK. The period under review had seen the completion of the reconstruction work on the old reticulation taken over by the board and the change-over of the supply from 5,500 volts to 11,000 volts. This change-over would give the board increased capacity in its lines and greater efficiency in operation. Additional transformers had been erected in different localities and consumers would receive an improved service. The engineer and iiis staff were to he congratulated oil the small amount of interruption occasioned during this reconstruction and change-over work. GOVERNMENT BULK SUPPLY. In November last the board had received a hulk supply of electricity from the Public Works Department to supplement that generated at its own station. This supply had removed all fears of a power shortage in the district, and the hoard in its contracts with the Public Works Department! had made adequate provision for future! requirements. Supply was being re-J ceived by means of temporary equip-5 ment at tlie sub-station site, Tawliiti' Road, as the permanent building and equipment had not yet been erected. The erection of the sub-station building had been considerably delayed owing to the current financial depression, but there was every reason to believe that the Public- Works Department would arrange for its contractor to commence on the building within a few weeks. The hoard would, of course, continue to operate its own generating station at certain periods every day. in conjunction with the Government supply. Considerable advantage would accrue to the board in doing so, as the station was a very valuable asset for peak reduction and power factor correction. Run for this purpose it would more than return interest on its capital cost, after paying operating expenses, as it would enable the beard to obtain greater efficiency from the power purchased from the Government and would enable the maximum demand to be maintained evenly over the full 24 hours. The maintenance of the station in operation and the retention of the Diesel standby plant also ensured that a supply of electricity would be available to the board’s consumers should any serious interruption occur in the Government supply. SUPPLY TO PATEA BOROUGH. During the year Patea Borough Council had approached the board with a view to obtaining a bulk supply of electricity to relieve their plant and to meet the increasing demands on it. After amicable negotiations a contract for a period of five years had been signed by both parties, securing for the hoard a minimum of £IOOO per annum. The board had constructed a line to Kakaramea to give supply to the borough, and this line would become the main feeder when the reticulation of the Patea area was undertaken. The council was given a temporary supply in March and the supply under the terms of the contract had commenced on April I. LOAN POLL FOR PATEA AREA. Immediately upon tlio election of re- ; presentatives of the Patea area in July last the board had taken active steps to approve of and place before the ratepayers of the area a scheme ■of reticulation for the district with a view of giving a supply of electricity , to all who wanted it. hi December j a poll of ratepayers was taken. In - spite of vigorous opposition to the . scheme by settlers in certain portions i of the area, the board’s loan proposal ( of ,£40,000 was approved by the rate- 1 payers hv 174 votes to 92. I After tli<! completion of the legal for- I nudities in connection with the poll the i hoard in March last had endeavoured i to arrange for a portion of the loan i to be raised by instalments spread over £ a period of 12 months, but lending in-i t stitufions were not advancing money at s that time, owing to income tax pay- 1 ments becoming due and it being the I end of their financial year. The board’s f representatives were informed that the i application would be dealt with in 1 May, and were given to understand f that there would be no difficulty iu,t obtaining the advance then. 1 In view of this position the hoard 1 had not actively canvassed the area i to ascertain to what extent a supply v of electricity was required. Owing to t the financial conditions at present ex- <■ isting in the country the board did not < anticipate that all settlers in the area* t would take a supply of electricity, but K a canvass of the area would shortly It

he made and those desirous of having electricity on their farms and in tlieii homes would be reticulated, providing the revenue offering showed a payable return to the board.

A number of settlers in the Alokoia district had already signified their desire for a supply and arrangements had just been finalised to enable this reticulation to proceed. “I should like to make it plain that the board will not depart from the statements made during the course of its loan poll campaign that no olio will he forced to tako electricity if they do not want it and that no reticulation will he undertaken unless it shows a payable return on the capital cost,’ J added Mr. Murdoch. FINANCIAL POSITION. The accounts and balance sheet for the year disclosed a very sound and satisfactory financial position and further demonstrated that the possibility j of a rate being collected was indeed j remote. Tlie difficult times liad undoubtedly affected tlie hoard’s operations through consumers being forced ( to economies which in good times the\ would not practice, but in spite of this the board’s connected load had ;m----creased and the profit made for tliej vear, under adverse conditions, was very satisfactory. , Tlie . net profit, after making full provision_for interest and depreciation, was £9703 10s 9d, of which an amount of £3-519 10s 9d had been set aside as sinking fund for redemption of the loan. The net revenue account showed an amount of £8332 17s 7d available for appropriation, and tins had been transferred as follows: bad debts leserve, £250; stock depreciation reserve £300; depreciation reserve (.additional provision), £623 Is lOcl; general reserve. £1500; capital account (being capital written down), £2o00: carried forward, £3159 15s Od; total, £8332 The sound financial position of the business at tlie present time was due to the prudent and eonversative policy of the board which was laid down at its inception, when it was decided that onlv payable reticulation would be undertaken and that adequate reserves would he established. The reserves nowtotalled £27,396 3s 4d and were as follow ; Sinking fund reserve. £Bll3 18s lid: loan repayments reserve, £462 8s ; depreciation reserve £3000: geneiahieserve, £5686 8s 3d; capital written down, £6423 12s sd; stock depreciation reserve, £300; bad debts reserve, £250; balance at credit of net revenue account, £3109 los 9d; total £27,396 3s 4d. The first four reserves mentioned above were represented by cash investments outside of busines sand these investments earned interest. ,lho remaining reserves were invested in the business. Whilst these reserves were substantial, yet in the chairman s opinion, they should be still further built up so" as to ensure that the hoard’s financial position would remain stable even, under conditions more adverse than were at present being experienced. LOAN MONEY. The board had made arrangements at the end of the year to raise a further £5200 of its authorised loan of £187,500 to pay for capital works carried out during the year, This amount was raised at 5i per cent., which was a very satisfactory rate at tlie present time. The total amount of the loan actually raised after a period of two and a-half years was £l<o,oUo so there was still available an amount j of £12,500 of the original authority) for further development of the bust-' ness in the future. In regard to the Patea area tlie hoard would raise only such sums as were required to proceed with the reticulation of those portions of .the district where a supply was required. These amounts would not lie raised in one sum, but would he raised by instalments spread over a period oi about twelve months.

GENERAL BALANCE-SHEET

RETICULATION EXPENDITU RE

Commenting on the general balancesheet (further details of which were previously published) the secretary (Mr R. P. Baigent) stated that the gross expenditure in connection with works and reticulation for the year was. £14,552 Us 3d, practically the whole of this amount being spent on reticulation. Goodwill was written down by an amount of £2500. The total amount now written off goodwill and preliminary expenses Was £6423 12s sd. The stocks on hand at the end of the last three financial years were as follow: Reticulation stacks: 1932, £3466 7s 6d- 1931, £4807 19s 3d; 1930, £2667 19s Id.

Power houise stocks : 1932, £129 10s 9d; 193 d, £lB6 0s 8d; 1930, £203 13s sd.

Trading stocks : 1932, £2079 Is lid ; 1931, £2412 8s 9d; 1930, £2668 9s 2d. Totals: 1932, £5675 0s 2d; 1931. £7406 8s 8d; 1930, £5540 Is Bd. It would bo noted that power house and trading stocks had been steadily reduced and that a considerable reduction had been made in reticulation stocks during the year. The hoard liad considerably less idle capital tied up in its stocks than most other boards, a circumstance which, of course, was to its advantage. Stocks had been taken into account at cost price. Tho reserve account previously set up for depreciation of stock was used to write down the reticulation and trading stocks, the amount written off reticulation stocks being £259 9s 'lod and off trading stocks £2lO 10s 2d. SUNDRY DEBTORS. * Tiie following statement showed the position of the sundry debtors for the past three years:— Trading and installation: 1932, £440 13s; 1931, £729 Is; 1930, £B2O 6s 3d. Financial assistance : 1932, £619 18-s 3d; 1931, £1098; 1930, £B2 19s od. Sales of current: 1932, £1133 9s 3d; 1931, £998 7s Sd; 1930. £9lB 9s 3d. Totals: 1932, £2194 0s 6d; 1931, £2825 8s 8d; 1930, £lß2l 14s lid.

i Considerable reductions had been effected in the amounts for trading and ' installation and for financial assistance whilst the amount for sales of current ! showed an increase. At first sight it would appear that the present times of depression were mainly responsible for the increase, but the secretary did not think this was the ease. Since 1930 the board lpul connected up over 300 new consumers and these meters were not read until nearly the end of the month. Consequently the last discount days fell in the next month and it was these accounts which showed the outstandings at the end of the month to have increased. This was borne out by the fact that outstanding accounts for Ha.wcra. and its immediate surroundings at March 31, 1932, totalled £467 Is Od, whilst the figure for 1931 was £512 IBs. Furthermore, the first quarter’s reading for the bulk supply to the Patea Borough Council, totalling £6l 18s lOd, was included in the outstandings at March 31, 1932. These accounts were carol'nilly watched and lie did not think the hoard need feel any concern, over the amount shown as owing by, debtors. Bad debts incurred and writ- j i ten off since the commencement of 1 operations two and a-half years ago] I totalled £236 18s Id, of which amount.

£166 os 6d was due to bankruptcies. Tho total charges for the same period were £79,576 Is sd, the amount collected being 99.71 per cent. Reserves for discounts, £250, and for bad debts, £250, had been established for the current year and, in his opinion, these were ample.

RESERVES AND LIABILITIES Loans actually raised at March 31 totalled £173,300, the amount raised during the year- being £3500. Loans to the extent of £263 17s 6d were repaid in tlie year and the total repayments at March 31 were £450 18s Id. Sundry creditors were £S4I 4s 2d in excess of tlioso for tho previous year, tlie increase being due to the amount for power purchases from the Public Works Department being brought into account at March 31. Reserves increased by £7976 5s during the year, the increase being due to transfers from the income and expenditure account and. appropriations from tlie net revenue account.

AVERAGES PER, UNIT SOLD. Average revenue and costs per unit sold, with figures for 1931 shown in parentheses, were: Cost of power, ,316 d (,330d) • maintenance of high tension lines, .Olod (.021d); maintenance of low tension lines, meters, and cost of meter reading, .112 d (,134d); ■ maintenance public lighting, ,005 d (.003d); other maintenance, .019 d (.024d) ; management and general, ,305 d (.352dj ; canvassing, ,ol4d (.026d) ; testing and inspection, .0.23 d (.OJSd); discounts allowed, .228 d (.225dJ ; interest on Joans .872 cl (.959d); depreciation, .075 d (.054d); unauthorised expenditure, .000 (.01Sd) ; sinking fund, ,337 d (.415d) ; other expenditure. .042 d ( —); total working costs, 2.363 d (2.609 d). Tile decrease ill revenue per unit sold ! was due to reductions in charges and to increases in l-oacl charged for at fiat rates. The deorease in working costs was also due to this latter cause. ! The total unit cost of the board i might appear high, but this was due to a small unit production, explained the secretary. The hoard’s heating load had not yet been developed and, as this class of load accounted for the heaviest unit consumption, exclusive of bulk supply, the costs would remain high until the number of ranges and water heaters connected to the system approached the average figures for other hoards. It had to he remembered that the hoard could deal with another 500 ranges and water heaters on its system without noticeably increasing costs, except for power consumed, and their unit consumption would very greatly reduce the total "working costs. RANGE AND HEATER LOADS. A comparison of the figures of other boards relating to the number of ranges and water heaters connected to their systems was tabled, representing the average figures for eighteen boards whose revenues ranged between £15,000 and £50,000. These figures also were for the year ended March 31, 1931, reference to other boards being given in parentheses: Average years in operation, 24 (6); average revenue per consumer, £lO Ss (£ls 7s lOd); average number of consumers, 2750 (2275) ; average number of electric ranges, 71 (315) ; average percentage to consumers, 2.6 (13.8) ; average number of water heaters, 170 (473) ; average percentage to consumers, 6.2 (20.8); average number of milking motors, 269 (302). “These figures indicate tlio great scope for load development which awaits the board,” added the secretary.

•‘Our revenue per consumer is only two-thirds that of the average figure. Tariffs no doubt account for some part of the difference, but the main reason is undoubtedly that our load lias not been developed to such an extent as that of other boards, and tlie figures for ranges and water heaters clearly indicate this. It is true that we have not been operating. as long as other hoards and that we have not had power available to meet this load in the past; hut now that Government power is here there can be no reason why this load should not be sought. Times are certainly against a quick development of the range and water heater load, but it must not be forgotten that we have certain minimum commitments to meet under our power contract. These minimum payments increase at the rate of £BOO per annum if this amount of power is to be absorbed and tho maximum advantage gained from our sta■i as well, then our range and water heater load must ho greatly increased as soon as possible. Also, it is apparent that it is. from this direction that our future profits must come and, therefore, its early development is essential if further reductions in the future.

The matter is of great importance to the board, as our future prosperity rests on it to a large extent and it would seem advisable, even in the present adverse conditions, that some action should be taken with a view to increasing our connected load for ranges and water heaters.”

POWER GENERATION

INCREASES IN LOAD

Reporting on power generation durum the year the engineer (Mr. 1’ R. Overton) stated that additional load had again beet* a very satisfactory feature °f the past year’s world im the board’s power station was heavily loaded up till about the end of November and on many occasions a very narrow margin was experienced. The dry spells this year were equally as serious as last year, the river "flow reaching quite as low levels as hitherto, but the period was not so drawn out. The Diesel engines were called on very frequently to take the station load and the large one was in daily service until the end of November, running a total of 1027 hours, lhe maximum station load of 972 k w occurred on August 31, 1931, at 5 p.m., an increase of 54 k.w. over that of the previous year. Units generated for vear ending March 31. 1932, were 2*,419,290 and units purchased 483,465, making a total of 2,902,755. The units generated for the year ending March 31, 193] were 2,527,410, the increase being 375,245 units or 14 per cent. BULK PURCHASE OF POWER. Power was first switched on from the Public Works Department lines on November 22, 1931, just about the commencement 'of the djy season, and had it not been for the relief given in this direction it is very doubtful if the board’s station could have held on, an it was certain that additional load could not have been taken. During the first few months of supply arrangements were made to purchase on a basis of one halfpenny per unit. Since March 19, 1932, the hoard had been charged in accordance with its contract. on the maximum basis. The fact that the sub-station was not conTplete made this a very difficult charge for the hoard as it had no instruments on the different criouit-s to indicate what was going on. The Public Works Department had assisted very considerably in placing at the board’s disposal an indicating k.v.a. meter. Attendants had been placed at the tem-

porarv sub-station, whose duty it was to continually watch tho meter and report to the power house when load increases occurred. This system had since been improved and the hoard ; was now able to read the demand taken from the Government within reasonable accuracy ifpon a meter at the power house and tlie attendants at Tawliiti Road were no longer required. „ . _ DEVELOPMENT OF LOAD. Fifty new consumers were connected to the system during the year and about ten disconnected and a i a |p° number of extensions to old installations had taken place The l atea borough was connected on March o, 193‘> and was taking between 80 and 90 k’.v.a. It had 350 consumers and a connected load of 425 k.w., hut vas listed as one consumer only. Since ample power had been available a noticeable increase bail taken place in electric ranges and water heaters. This might be attributed in some way t-o the lidding of electi ic cooking demonstrations which had always been enthusiastically supported by‘the Women’s Division of the Farmer’s Union.

CONSTRUCTION AND ALTERATION

Work during tlie latter part of the year was confined maiiny to the ciiange-over trom 0,5U0 to ix,UUO volts. Route miles or imes completed under the above heading were as toliow: — New constructed ±i,UUO volt lines, 22 miles 27 chains; 5,500 volt lines reconstructed to 11,001) volt lines, 2o miles 19 chains); low tension lines, converted to li,Uoi> volt lines. 3 miles ol chains; new tow tension lines, 0 miles 65 chains; old low tension lines restrained and rebound, 2 nines o 2 chains; 11,000 volt lines restrained, 5 miles; total, 90 miles 6 chains.

The whole area was '.supplied at 11,000 volts at the end of march, and an improvement m voltage oi supply on consumers’ premises was noticed immediately. Ine street lighting systems in rtawera, Manaia and Norniauby had been maintained in a satLsractory day during tlio year and no alterations or additions had been made. Last May the Government inspectors liad made an inspection oi all lines and constructional work in tlie board’s district and all was passed satislactorily. With regard to the wiring in consumers’ premises a few dangerous installations had been rewired and as opportunity offered the work throughout was being gradually brought up to a good standard. During the year 611 installations and extensions had been made, 730 permits for new work,- extensions and alterations issued, 600 meters installed and 300 tested and adjusted. The electrical contractors operating in the board’s district had co-operated with the board’is staff in making the wiring work creditable to all concerned, it was also" found that licensed wiremen and contractors had always been ready and willing to assist in special lighting displays. INSTALLATIONS AND TRADING.

During the last three months of the year a noticeable drop liad taken place in comparison with previous quarters, but despite this a very satisfactory profit (considering tlie times) was shown for the whole period. In round figures the turnover at £2,232 was lower by £1,696 than the previous year. Wiring and appliance trading returned about £1716, which was satisfactory m view of the fact that the largest extension was in Waimate \V est at Upper Auroa. and Glenn Roads. Wiring prices this year had made an appreciable drop—-range installations were on tlie overage 10s lower, lighting and heating points 4s per point lower, milking motors with cutouts and change-over switches about los down. Electric appliances themselves, however, were not showing signs of startling reductions, particularly in regard to ranges, a line which would be very materially affected by the recent Canadian tariff. English and New Zealand range manufacturers could turn out quite a good article, but the increased duty on ranges almost eliminated from the New Zealand market some oi the world’s keenest competitors. During tlie year tho board had decided to give a 10 per cent, discount on appliances and service lines where prompt payment was made. This had unquestionably affected working results and increases in turnover to offset reductions had not been realised. Howwere, in these times it was not always advisable to look for installation profits but more to stabilise increased sales of electricity for different puiposes over a Jong period. FUTURE DEVELOPMENT.

It was hoped that the sub-station building at Tawliiti Road would be commenced at an early date. The work was 'long overdue and the way the board was working at present is not all all satisfactory. 'lhe switchgear and instruments, with the exception of the metering equipment, had arrived and was in store at tlie West Coast Refrigerating Company’s stores. The underground cable and terminal boxes were also here and immediately the building was completed the board eoulff proceed in the erection of tlie electrical equipment. The switchboard at the power house had not yet been altered to fit in with the new working conditions as it was necessary to depend upon the old switchgear with temporary additions to carry on until the sub-station was complete. With these improvements completed the board would have an up-to-date system and one capable of carrying a great deal more loading. At present the board was receiving a number of enquiries for power and lighting both in the old area and in the new southern area. Without being optimistic tlie engineer thought that a fair amount of expansion would be the result of the present year’s working. The board’s charges for electricity could quite favourably be compared with other boards working under similar conditions, but in this district there was yet a large milking and cooking loading awaiting development. When this load was absorbed the board would again be in a good position to make reductions in charges. DEMAND DURING THE MONTH.

Reporting on the operations for the the past month the engineer stated that units generated at the power house totalled 34,860, with a maximum demand of 594 k.w. Units purchased from the Public Works Department totalled 232,060, with a maximum demand of 408 k.w. Ninety-two permits were issued—l 7 for new installatioius, '57 additions and alterations, four rewiring of old jobs and 14 for temporary work. Seventy-three inspections were made mainly lor extensions. GENERAL. The engineer and tlie secretary thanked their respective staffs for loyal co-operation during the year. ‘‘l think the results achieved are remarkable, particularly in view of the fact that the hoard has been in operation only two and a-half years,” said Mr. L. A. Bone. “The reports are extremely comprehensive and the more they are studied the more the hoard’s solid position becomes apparent.” Similar views were expressed by other members, appreciation being ex-

pressed of the complete nature of the reports. Mr. J. B. Murdoch was elected unopposed as chairman for the ensuing year, his honorarium being fixed on the same basis as last year. Messrs. Murdoch, Bone, E. Long and E. A. Pacey were re-appointed as a finance committee.

Some discussion ensued on members’ allowances and travelling expenses, which were fixed at los per meeting and 8d per mile each way of travelling. It was proposed that the allowances for meeting should be reduced to 12s 6d, while one member considered that, for this year, the members should forego their allowances. The majority of opinion was that the allowance of 15s was lower than granted to most boards, and that 8d per mile for travelling was not excessive. “I hope we will do more business in open meeting during the year,” said Mr. D. J. Hughes. “There have been complaints that two much of our work is done in committee and the public haying a right to know all that is being done.”