POWER RESOURCES

New Zealand Herald, Volume LXXII, Issue 22231, 4 October 1935, Page 13

POWER RESOURCES

ACTIVE DEVELOPMENT DEPARTMENT'S OPERATIONS CAPITAL AND REVENUE EARNINGS FOR THE YEAR [BY TELEGRAPH —SPECIAL REJ'ORTERI WELLINGTON, Thursday Increased activity in tlie development and operation of the Dominion's hydro-electric resources is referred to by the Minister, Hon. J. Bitchener, in the Public Works Statement, which was tabled in the House of Representatives to-day. The outstanding event of the year was the completion of the Waitaki power station, which added a further 30,000 kilowatts of active generating capacity to the South Island system, with provision for the installation of an additional 45,000 kilowatts as demands for power increased. This station was placed in commercial operation as from January 1. The 110 kv. transmisison line from Waitaki to Dunedin was also completed, and Dunedin City Corporation has commenced taking supply under its contract with the department. This contract has already demonstrated its value to Dunfrdin on the occasion of a recent interruption to the major supply from Waipori. The Arapuni Station The main activity in the North Island has centred around the enlarging of the Arapuni power station to its full size to accommodate four additional generators, two of which, each rated at 24,000 kv.a., are now on order. Construction work has been commenced in connection, with the 50 kv. tranmission line from Henderson to give supply to the North Auckland district, and plans are being prepared for the extension of the 110 kv. transmission line from Masterton to Melling, thus providing a ring-main system for the Wellington district. At Waikaremoana investigations have been started to explore the possibilities of the more effective control of the water from the Onepoto outlet, and, if satisfactory, a major work will be commenced in connection with the further development of this scheme. The general position to date, the Minister states, is that the Electric Supply Account has been able to meet all operating; and interest charges, has provided £695,837 toward tbo statutory requirements of £1,282,686 for depreciation, and, in addition, has provided £326,484 to sinking fund and £241,419 to general reserve from profits made from time to time on the Lake Coleridge and Horahora systems. In other words, the system as a whole has paid interest and operating charges and provided £1,263,740 in reserves, of which £303,145 has already been utilised by the Treasury for the paying off of loans which formed part of the original capital. Satisfactory Working The Minister states that both the North Island and the South Island systems have operated satisfactorily during the past year. The results of the year's operations were as follows: — North Island System:—Capital investment at end of year, £8,505,639; revenue, £712,766; operating expenses, £120,927; balance, £591,839. This balance has been used in paying interest charges, £414,042 and £37,687, as the department's share of the capital charges on the King's Wharf generating plant of the Auckland ElectricPower Board, but is £10,428 short of being able to provide the full statutory contribution to depreciation. Accumulated losses to date amount to £586,849, but the reserve accounts established in connection with this system show that £959,086 has-been credited to depreciation and £55,930 to sinking fund, which latter amount has been utilised in the redemption of loans. South Island System.—Capital invested at end of year, £4,397,871; revenue, £228,097; operating expenses, £35,083; balauce, £193,014. The balance has been used in payment of interest, £97,792; £78,552 has been paid to depreciation: and the remaining £16,670 to sinking fund. Percentage Earned On Capital The percentage earned on operating capital on both systems after paying working expenses is shown as follows: — Average operating capital, £10,927,589; gross revenue, £940,863; working expenses, £156,010; net balance, £784,853; percentage of net. balance to operating capital, 7.182. The capital invested in the electric supply systems operating throughout j the Dominion totals £32,823,944, which 1 includes £12,903,410 of Government expenditure. The gross revenue received for the year was £4,577,998. After paying working costs, interest, sinking fund and depreciation charges, the net profit for the year was £449,499, as compared with £460,489 for 1934. The Minister deals with tho question of the Government charges for power supplied in bulk and refers to the re- | port of a committee set up by the • Power Boards and Electric Supply Authorities' Association following its annual conference in 1934. Tho report was considered by a conference of supply authorities recently held in Wellington. "In general," the Minister states, "I think it may well be claimed that tho report is a general endorsement of the policy of the Government in its handling of the electric supply business " Cost of Stand-by Plants Particular reference is made by the Minister to the various suggestions for the rearrangement of the total cost as between tho supply authorities and the Government, but these suggestions, he states, only alter the distribution, but do not really reduce tho cost. "fn fact," the Minister continues, "some of the suggestions in respect of the more extended use of auxiliary generating plants actually increase the total cost. It is indeed questionable if we have not been contributing by way of rebate on ordinary charges too much toward the cost of these stand-by stations. As pointed out previously, it is recognised that the owner of such a plant, even when not operated, has to pay capital charges in respect to its original cost in addition to whatever ho may have to pay to the Government for power purchased in bulk. It will, however, be found in all cases that the amount paid for power purchased is less than would have been the net operating cost, exclusive of capital charges, if the samo amount of power had been generated in the stations replaced by Government supply. "It is recognised that such plants have some value ns an insurance against interruption, but that insurance is of a special value to the owner much in excess of its value to tho system as a whole. In tho North Island system, for example, tho value of allowances made for these plants plus the cost of maintaining the department's own stand-by amounts to about £BO,OOO per annum, a sum which is more than twice the total annual operating cost of the whole of the Government's own main generating plants in the same area,," L