POWER SUPPLY AGREEMENT.

New Zealand Herald, Volume LXVII, Issue 20740, 6 December 1930, Page 12

POWER SUPPLY AGREEMENT.

After protracted negotiations, agreement has been reached between the Government and the Auckland Power Board regarding the costs of operating and maintaining the King's Wharf steam plant as a stand-by for the Arapuni scheme. Briefly, the Government has undertaken to refund to the board half the extra cost of steam generation until supply from Arapuni is resumed ; subsequently, the steam plant will bo maintained as a reserve against emergencies, the Government paying half the capital charges and presumably having the right to draw upon it, in case of need, for all power available after the requirements of the board's district have been supplied. The arrangement is probably as nearly equitable as possible, though, if the board had been inclined to drive a hard bargain, it could have made a strong case for claiming a refund of the whole extra expense during the present emergency. Moreover, in view of undertakings given to other districts, the board might have invited the Government to bear the whole cost of stand-by provision. By its moderation, tho board has relieved tho State system of both operating and capital charges to a large amount —in addition to which tho cost of tho proposed stand-by plant in the Waikato is avoided—so that once more the urban district has made a substantial contribution toward the cheapening of electricity in rural areas. The official statements do not refer to the technical aspects of maintaining tho steam station when it is again placed in reserve: it would appear reasonable and economical to modify the existing contract so that part of the daily peak load might be taken by the board's plant, thus ensuring the preservation of an adequate skeleton staff and keeping the station in running order, so that it would be immediately available in any emergency. The conclusion of tho agreement permits the board to count its costs definitely, and -to frame a policy without reservation for uncertain factors. Obviously, electric power will cost more than if Arapuni had not been interrupted, but the increased cost will not justify insistence on the present scale of charges in the board's area. Its policy should be to proceed at once to reduce its charges to the lowest possible level, so that whatever handicaps are borne by existing industries and whatever obstacles confront now enterprises cheap power will be assured. Sound financial methods are necessary and commendable, but there is no need and no excuse for making profits in excess of the conservative provisions to which the board is pledged.