at Critical Stage

Manawatu Times, Volume 60, Issue 151, 29 June 1935, Page 6

at Critical Stage

The Mayor: All right. Go on. Mr. Kissel: You get power cheaper than anyone else. Closing of Plant.

"The next question," said Mr. Kissel, "is your disagreement on the question of closing down your plant. Wo have let you run your plant for quite a number of years, but it has become evident that wo have done so at tho expense of our business and at a cost that wo can not continue to carry. It docs not matter such a terrible lot as regards Palmerston North, but Palmerston North will be used for the purpose of other people of considerably greater magnitude. The Mayor: Is it fair to state that! You had tho opportunity of terminating somebody elsc's agreement long ago.

Mr. Kissel: Well, wo will leave that out, but what wo give away in Palmerston North wo will be requested to give away to other people. 'Jlio cost of power delivered to the consumer in Palmerston North during tho year previous to tho start of Mangahao was 5d per unit, but the cost* last year was well under ono penny. That reduction to consumers in Palmerston North had been mado possible by the Government scheme and not by the Palmerston North plant. Mr. Kissel admitted that the cost of 5d was due to a considerable extent to the fact that tho city built its reticulation for a much bigger load than was available at tho time and so the cost per unit would bo higher, but tho load had grown to its present proportions because power had been made cheap by the establishment of hydro-electric schemes. The city was thus getting from its plant a value which it did not possess of itself and a value mado at the expense of tho department. It was costing the department possibly £SOOO when used to cut the peaks whereas the city only saved a possible £SOO a year. The city would say they saved nearer £2OOO, but his own opinion was that it was nowhere near that figure. However, it was recognised public money had been spent on the plant in goed faith, but it was dono with the knowledge that Mangahao was coming. Tho department had offered to recognise that expenditure and had offered £SOO a year as a reasonable amount for tho closing of the station altogether, while £SOO was offered if the plant was retained under certain other conditions, but without any peak load cutting. Tho council could not expect to obtain full compensation for tho plant. "Fools No Longer."

Mr. Kissel next replied to questions, tho Mayor opening. Ho asked Mr. Kissel if it was recognised when the city was first granted its license that they would be cutting the peak. Mr. Kissel replied that the city had its license before the hydro schemes wero operating.

The Mayor: It was not the policy of the department then to stop peak-cut-ting? Mr. Kissel agreed. Tho Mayor: Then tho department has altered its policy? —Yes. Mr. Mansford: Why? Was it purely because wo wero skimming tho cream? Mr. Ivisscl: It is economically unsound.

Mr. Mansford: You, with your knowledge and diplomas, must have known that Palmerston North was going to cut the peak. Mr. Kissel: AVo probably knew. We were fools if you like, but wo are fools no longer.

The Alayor: I don’t know. Air. Kissel: Well, in that Tcspect anyway . „ , Tho Mayor: Is not the idea of asxing us not to cut the peak more with the idea of doing something illegally which, you can not do legally and so drive us into one big camp? Air. Ivisscl: It is purely an economic matter. The Alayor: You remember that Air. Ransom, when Alinister of Public Works, said the big stick was not to bo used. Air. Kissel: He does not agree with that now.

Tho Alayor: When did you discuss it with him?—A few days ago.

The Alayor: I saw him yesterday and he is still of the same opinion. Tbe Crux of the Position.

Air. Alansford: Since 1929 interest and other charges havo como down, but tho “reasonable" price wo are asked to pay to-day is £2750, whereas in 1920 it was £BOO. I think you said, however, a mistake was made. Air. Kissel: Alay have been made.

Tho Mayor: You said was made and tho figures wero checked by members of tho department. It is the overhead charge that has come into the matter since. When taken in was it on the basis of one consumer or 50 pbr cent, of the load?

Air. Kissel: That is the crux of the position. The ways ono can take out the proportion of overhead are legion. I have had them worked out and you can get figures from £SOO to £13,000 a year. That is what we want arbitration about.

Tho Alayor: Did you uso the same method as in 1929? Was tho overhead cost taken out on a basis of one consumer then and to-day on a basis of 50 per cent.? Air. Kissel: I havo had it taken out in several ways and as a general average £2OOO to £3OOO is quite reasonable. Hamilton Again.

The Alayor next asked questions about Hamilton. lie pointed out that their contract with the department terminated in 1925. Air. Kissel: No. The Mayor: Well, you did not terminate it then?—No.

The Mayor: You did not terminate it between 1925 and 1930 because oi trouble at Arapuni. Is that it? Mr. Kissel thought the Mayor’s questions quito unimportant side issues. It seemed somebody, ho said, had divulged information about Hamilton without authority. If the contract expired in 1925 it was allowed to run on because it was anticipated when Arapuni went into operation the department would be able to reduco all contracts to something like tho same rate. Hamilton was a perfectly good customer.-

The Mayor: And so aro we.

Mr. Kissel: Hamilton pays more per unit than tho Manawatu-Oroua Power Board and this contract is a perfectly bad one.

Tho Mayor: You talk of information being divulged. Perhaps it is just as well that somebody else outside tho department can get information. Crucial Question.

The Mayor: Has the department power to withhold supply if a contract is terminated? Mr. Kissel: I can’t answer that. Missing Overtures.

The Mayor: You said that tho City Council was to blame in not making overtures to the Power Board. Mr. Ivisscl: I suggested that you mado less to them than they did to you. The Mayor: Do you know wc made an offer to cut the peak?—Yes. The Mayor: And they said it was not worth considering?—Ye?. You know that they came along on another occasion and after some haggling drew two offers out of theii pockets and told us they wero bedrock? You know we suggested a counter offer and they would not consider it?

Mr. Kissel: It is surely only a method of bargaining isn’t it? • Tho Mayor: Is that the usual way to settle an electrical dispute! l r ou said we wore not making £2OOO out of our plant. Would you say a firm of auditors did not know what they were talking about if they came here and said we were?

Mr. Kissel: I can’t answer that as 1 don’t know tho auditors.

Tho Mayor: You said a little while back that what was done in Palmerston North would be done with other authorities.

Mr Kissel: Probably will bo done. The Mayor: Wasn’t it possible to do it with those other authorities before? Mr Kissel: Somo of them have been done. The Mayor: Wasn’t it possible to do with them what you aro now doing with Palmerston North? Mr Ivisscl said all contracts that had run out iu the last year or two had had similar conditions imposed.

The Mayor: Tlaces situated similar to us, have they had power refused unless with the written consent of the Minister? Has that been put up to any other supply authority? Mr Kissel instanced the Hawke’s Bay Power Board, though tho text of the agreement was not exactly the same, while the Wanganui-Rangitikei agreement was almost exactly worded. "That does not say you are refused," added Mr Kissel. "That condition is in the contract the Power Board has made with us and if you want to run your plant, the Power Board will have to make some other contract with

us.” The Mayor: Has that clause been inserted in any other agreement? Mr Kissel: The equivalent has been put in most of tho others and they have agreed to take all their supply. The Mayor: With that up against them they probably have and did not know they had any other recourse. Cr. Hodgens asked why Palmerston North was picked out for the imposition of the special clause and Hamilton was unaffected? Why was Palmerston North’s contract terminated and tho city mado to pay £2OOO more than under the old contract? Mr Kissel: Palmerston North has treated us differently. Justification. Cr. Hodgens: Wo feel wo have a grievance. Mr Kissel: The point is you use your plant deliberately to reduce the amount of revenue we receive from our system. There is justification for the different treatment.

Air Hodgens: You can’t make more out of standard rates less 5 per cent, as in Hamilton, than out of standard rates plus £SOO. Air Kissel: Tho electric supply business is not wholly dependent on figures. Crs. (in unison): Evidently. Air Kissel: I am just trying to explain why a variation from policy is reasonable.

Cr. Hodgens: Now we are being askcd to pay standard rates plus £2,750.

Mr Kissel: The obvious answer is that we let you off too lightly in the past. Cr. Hodgens: If wc close down our plant wo expect to get power at standard rates loss something and not plus something. Air Ivisscl: You want to come under the same conditions as Hamilton. Why not under the same conditions as Nap-

Cr Hodgens pointed out that the Napier agreement had been made when that town was in tho hands of a commissioner following the earthquake The speaker then went ou to show that the difference between the Power Board and City Council was not £I7OO as Alt Kissel had put it. The council would also lose the right it had to generate its own power under license. Mr Kissel said the department would not supply tho Power Board unless it entered into a contract with the city that the city plant be closed down. Cr. Hodgens: But you must recognise we havo certain rights under our license —Yes.

Cr. Hodgens: And ivc are to bo penalised because we want to retain those rights? Mr Kissel: You are at perfect liberty to use your plant, but you are not entitled to get pow-er from us at the same price as the people who take then whole supply. Cr. Hodgens: I quite appreciate that. Mr Kissel: Then you appreciate the whole thing. The Mayor: We have not had that opportunity. Mr Kissel: Nobody is stopping you Cr. Hodgens: Have I to remind Ml Kissel oft he reason why wo are n the Power Board area—that it was because we would be able to get current at standard rates? He said the council had been most unreasonable. Mr Kissel: I said that probably the Power Board had made moro offers than you. Cr. Hodgens: Yes. they made two offers at the same time. t Mr Kissel: They gave you an alternative

Cr W. B. Cameron: One being at the penal rate. "Method of Individuals." Cr. Hodgens: You know there should be givo and take. Mr Ivisscl: It is usual. Cr Hodgens: What attitude would you take if someone came along and said take it or lcavo it? Mr Kissel: Who uro you referring to? Cr. Hodgens: Tho Power Board. They told us they would not consider a counter offer; only the ono they presented. Mr Kissel: That might be the method of individuals. If it is true you should get over that and try and get together. Cr. Hodgens: AVhat can you do with a person who says: "My word is the last word",? That Big Stick Cr Tremaine recalled Mr Ivisscl saying tho department was not using the "big stick,” but it would ‘ givo the city electricity at a reasonable rate if it manufactured part of its supply. The Power Board had stated on several occasions that it did not want tho city’s load unless tho council agreed to the Power Board terms. When the Power Board delegation came to tho council it came with instructions whereas tho city council delegates had an open mind. The council was told the Power Board did not want tho city supply at less than the rates they demanded of the city. No Direct Supply. Cr. Tremaine asked if the department would supply tho city direct. Mr Kissel said thfi department would not do that. It would mean a definite scrapping of a policy. Cr. Tcnnent: Hamilton is being supplied direct. What others? Mr Kissel instanced Hamilton. Christchurch, Wellington, New Plymouth, Lyttelton and Riecarton. Cr. Tennant: It seems tho Public Works Department has two policies. The Hamilton agreement can be terminated with six months’ notice on cither side, so why has tho Public Works Department not done that if the department only had the policy of supplying through Power Boards? Cr. Tcnnent also asked if Mr. Ivisscl conside'red the £2750 that Palmerston North was being asked to pay was economic?

Mr. Ivisscl said they had to treat good consumers reasonably. Hamilton would not co-operato with the outside bodies and the Government had not forced them to do so.

Air. Tcnnent thought the Government’s argument an unfair one. Why should Palmerston North be penalised for coming into tho national scheme?

Air. Ivisscl said Pair erston North could not blame tho Department because it had come into tho Power Board area. Hall thero been the proper co-operation, however, between the two bodies, there would bo perfect harmony. The Mayor; Wo only agreed to come in under certain conditions and those conditions have not been kept. Cr. Tcnnent asked why Masterton paid only £5.9 and Palmerston North was being asked to pay £8.5? Air. Kissel explained that there was a water-power plant in tho Wairarapa and an arrangement had been entered into whereby it was run under the P.W.D. direction only. For that privilege a rebate had been granted. Without the rebate Wairarapa would bo paying £7 19/2. Cr. Tcnnent expressed the opinion that in a national concern tho Department had no right to make different charges. Air. Ivisscl: But conditions vary. ■ To Be Cut Off Or Not? Cr. Hodgens asked why the ultimatum was delivered to Palmerston North that unless the city agreed, to certain things there would he no supply? The Mayor: But Mr. Kissel has already said no. Mr. Kissel: There will he no supply in the terms of that contract. That doesn’t say there will he no supply. You can’t take one clause out of the contract and apply it separately. Cr. Hodgens: As a member of the Power Board I know that the hoard dare not supply, because the Department has said the hoard will bo cut off. Mr. Kissel: Where did you get that from? Cr. Hodgens quoted from a letter to the hoard signed by Mr. Robinson of the Department. Mr. Kissel: If the hoard reads that into the letter they are wrong. The Mayor: The board has written us saying they cannot supply us with power unless the city shuts down the plant. Mr. Kissel: That is wrong. The board has interpreted it wrongly. Cr. Tremaine asked if it was the policy of tho Department to give effect to definite undertakings of previous Ministers? Mr. Kissel: That is a question for the Minister. I cannot recall any caso in which it has not. Cr. Tremaine: X particularly refer to the statement of Air. Ransom that the “big stick” cannot be used to make us close down our plant. Was the additional clause put iu the Power Board agreement in order to make tho city close down its plant? Mr. Ivisscl: We are not compelling you to close down your plant. Cr. Tremaine: But you propose making us pay for the privilege of running it. Is it the jmlicy of the Department to charge such a rate as to make it unbusinesslike to run our plant? Air. Kissel: Yes. Cr. Tremaine: Then liow do you justify the statement that the “big stick” is not being used? ' Cr. Hodgens pointed out that the Power Board installed time clocks, condensers and pilot wires to save costs and no objection was taken to that bj tho Department. Mr. Kissel said boards were quite entitled to make their plants more economical. Cr. Hodgens: I cannot sec the difference. Cr. Tremaine complained that Air. Kissel had not answered his question about the Public Works Department imposing a charge that would make it uneconomical for Palmerston North to uso its plant. The Mayor: Air. Kissel has said yes. Cr. Cameron thought tho P.W.D. had been hiding behind tho Power Board and it should have sent a representative to discuss the situation before a final rate was suggested. How could ihe council come ;to an agreement

with tho Power Board behind which tho P.W.D. seemed to bo hiding. Mr. Kissel said he recognised now that it would have been better to have discussed the matter earlier with tho council. Tho city, however, had three representatives on tho Power Board. Cr. Tremaine: But they arc virtually disfranchised.

Cr. liodgens pointed out that the Power Board's estimates for the current year allowed £1(1,000 for Palmerston North's requirements, which was tho same amount as tho previous year. Tho balanco sheet revealed an estimated surplus of £3154, so that if they got tho extra amount now demanded from the city, what were they going to do with it all? Would they return it to consumers in reduced prices? Mr. Kissel said ho did not know what the board would do. Cr, liodgens: But they want £4500 more from us. The Mayor returned to tho subject of the clause which prevented tho Power Board from supplying tho city if tho plant at Terraco hind was run. Tho Minister had said, ho informed Mr. Kissel, that the line to Bunnythorpc belonged to the board and they might refuse to supply the city. It seemed, therefore, that even tho Minister understood his written consent was necessary. Mr. Kissel: You don’t seom to understand the position even now. The clause was inserted to put you in a position to supply the Power Board in case of a breakdown. The Mayor said ho could not follow the explanation but asked Mr. Kissel why he ha., not informed the Minister of his error? Mr. Kissel: I did not understand the clause myself until I went back and asked a clerk about it.

Cr. Tremaine pointed out to Mr. Kissel that his interpretation must bo wrong and Mr. Kissel agreed. The clause, said Cr. Tremaine, would only allow the city to run its plant in case of emergency. Tho Power Board could not supply the city.

Mr. Kissel: In the terms of that contract.

The Mayor thanked Mr. Kissel fos coming up to Palmerston North at great inconvenience. Matters had been explained but everything had not been explained away.

The council then went into committee but no statement was available to the Press last night.