THE HYDRO ELECTRIC SCHEME.

Oamaru Mail, Volume XXXIX, Issue 12221, 24 April 1914, Page 8

THE HYDRO ELECTRIC SCHEME.

To tiie Editor. Sir, —At the ratepayers' meeting on Tuesday evening liis Worship the Mayor described, the Council's electricity scheme in very glowing terms; in fact, his features were illuminated with his theme ; but, when he spoke on the possibility ■of the scheme being turned dawn, and how it would bo a sad day for the. town, and that it would take years for Oamaru to recover if tho scheme was not adopted, Iris visage changed/ and lie appeared to be like Councillor Mitchell's "man, who is without hope, and is already half dead, having lost his vitalising agency" (electricity). 1 hop:: the present scheme will be turned down, and that his 'Worship will adop: his old motto: "If at first you don't succeed, try, try again;" and Sir, I viish to help the Mayor and ratepayers of Oamaru by giving a suggestion or two to solve the knotty question. * In the first place, I suggest discard the idea of using water power for generating electricity, vide Wellington, and use Dcisel oil engines instead; thereby making the electrical scheme n complete scheme in itself. If Oamaru would follow ilie example of Hastings, where they have installed a complete electrical "plant of 300 brake horsepower at a cost of £17,000 (from which they are supplying 0(50 private consumers lor lighting, street lighting, and ;'.!!0 horse-power for motive power, the 'total revenue for the year ending March, 1014, being £4753 17s 8d) there would he some sense in it, in -comparison with the present- ridiculous proposal, costing about £27,000. Jf D-isel oil engines were used for generating current instead of water power (which is quite satisfactory to the present- users) the capital cost of ib" sciicuio would be greatly reduced below the cost at Hastings, and brought within reason, without sacrificing the £1420 per annum from the present- motor supplies, and the surplus water power available —for a myth. I If this suggestion was acted upon there would be. no necessity for the expenditure on the new water race and. intake. or the £SOO for special race repairs, or. for that comparatively bogus expenditure- of £SOOO on the gasworks for the next- 20 years—at Oamaru's rate of progress. ("2) In "November, 1808, Mr Turnbull, electrical engineer, gave a report to the Oamaru Borough Council for an electrical plant of 3000 8-eandle-power lamps on full load (no motive power) at an estimated capital cost of £3425; revenue from which would be over £IOOO per annum if the station prospered ; the estimated running, cost of the plant being £692 'ss per annum; shewing an estimated profit- of over £3OO per annum. In my opinion, a loan of £IO,OOO for a plant using Deisel nil engines for generating the current is quite enough for Oamaru for the nest 10 years; and it could' be added to at any time, -if the demand for current- was there, and to any extent. Some very preposterous statements hnvc bean made in defence of the Council's" scheme, and I wonder if there is n man. in Oamaru who will dare to say that he believes that the Council's scheme at a cost of £27,000 will be either as efficient or economical in its first cost, or in its working afterwards, as the Hastings scheme is, at a capital cost of £17,000. •Fellow ratepayers, turn the proposal down. —I am, etc., S.C.

To the Editor. Sir, —The writer of your leading article on the above subject takes me to task for not. dealing at Tuesday's meeting with certain necessary expenditure on the waterworks and the gasworks. Those who were: present at tho meetinor know quite well that- Councillor Mitchell spoke at such length that it was irrmossible for other speakers to deal with*.all aspects of the question. In my letter of yesterday, however, your readers would notice that 1 anticioatcd the criticism that has been made. Let me-briefly state one or two facts. Making a new intake for the waterrace .is not dependent upon the carrying of the electricity scheme., nor is the improvement- of 'the water supply on the higher levels of the town. Electricity or no electricity, we .require a \il\v gasholder. If for a. small oxpenditure,"as stated by the experts, we could get enough water into the reservoir to ■generate electricity as proposed, then wo should have enough water to supply Messrs Meek direct from the- mains, as I suggested, and so obtain at ica-st a, very substantial increase of revenue. If there would not be sufficient water I to"supply Messrs Meek direct from the | pipes, neither- would there- be enough I for ihe electricity scheme-., and it should be abandoned at once. IVow let me say that these- suggested improvements cc-u'd be carried out together with a coi'S'd rribi2 additional gas reticulation to satisfactorily iight the town without, collecting a single farthing of additional rates. As indicated in my letter cf yesterday, a loan of moderate size wculd: be required, and, while- a ratiug security would, have to be- given, not a sinarh: penny of tliat rate would require to be collected. On the other baud, if the proposed electricity scheme is carried out. it means, as I liavc said, heavy financial loss to tho borough which would have to be made up by additional Let- mo just say in conclusion that all that Councillors Grave, Ongley, and myself are concerned about is that tho ratepayers should know the facts. If. believing, as they do, that the scheme would result in a serious loss; to the borough, they failed to say so. then th-ey would be unworthy of the trust reported in them.- —I am, etc.. , ROBERT MILLIGAN. P.S. —The above statement. answers' the question of your leader writer whv. I "dared from the- public platform to suggest", that additional gas reticulation could be made. T trust I shall always daro to suggest, what, is' so reasonablv practicable. [Councillor M-illigan must be aware that th© Gas Committee, of which lie ■is a member, has been forced to refuse many extensions of the gas reticulation on the score, of expense.

To the Editor. Sir, —The exposition of the electric scheme as set out by Messrs MilHgan, Grave, and Ongley at the meeting on Tuesday night must have come as somewhat of a shock, not only to their confreres on the Council, - but to the public generally. Councillor Milligan liar;, I believe, been opposed to the e-ehemo from thq^firsts and he .was absent from -the Council during its deliberations on the subject extending over the greater part of the last twelve months. The attitude of Councillors Grave and Ongley at the Council table has' never been wholly condemnatory of the ; scheme, the chief obstacles to its complete adoption by them being their doubts as to tho expert's esti-

mats of-the carrying capacity of tho race, and the absence of ,a guarantee from the two mill proprietors that tln'-y would take the power. As alldoubts on the first head wore cleared up by a second inspection of the race and a further report thereon from Mr Beal ; and a 'satisfactory arrangement with tin- special power users was on the point of being concluded, no member of the Council could have been prepared for such a. total abandonment, and such a grossly distorted .survey of the scheme, as was set out by these two councillors. Anyone seeking his primary information on the electric question from, these gentlemen might .have been excused if he had com« to j tlio conclusion that the whole thing j

was, financially, a flimsy affair that -had been effectually rent to tatters at their hands. i maintain, however, that the whole fabric of the scheme is sound and capable of more than withstanding all the twisting and straining which these councillors sought to subject it to. Councillor Grave would never have put before the Council such a financial sur- >."•■■>• of the scheme as-he presented on Tuesday night. The majority of that bWIy have diligently and seriously con.".klrred all the details of the matter, •md have come to quite a'different--con-clusion than the figures of Councillor Oravo would indicate. That this gentleman is "not opposed to the electrical scheme" after setting it forth in '-.uc-h melancholy, hues, is-a surprise. If his forecast is anywhere ;:oar the mark he, tind the ratepayers too, should be very much opposed.-to.' it. It is true, that with prophetic visiea, ho eenfidaatly looks' for profitß

at the end of eight years. How, from a condition involving an annual loss of several thousands, this happy state of affairs is to result lie absolutely gives no indication. Councillor Grave has not taken' himself nor the scheme seriouslv. He sets out bv giving the cost of "the scheme at £30,000. This is the sum proposed to be borrowed by the Council, but not for the electrical scheme alone. The cost of the electrical "and waterworks improvement," as set out by the experts, is £20,790. Of this amount £2245 is for the new intake and improvements to race, and £2OOO for improvements to high-level water supply on the hill. These three items amount to £4245, which has to be expended whether the electric scheme is .sanctioned or not.

It may he t contended that the cost of a reservoir on the hill should be properly charged to the electric scheme, but, as was pointed out by Mr Beak-1 this provides the cheapest solution of the high-level water supply apart altogether from the electric scheme. The estimated cost of reservoir and larger pipes at certain points in the reticulation is £2OOO, against £4OOO for a general enlargement of the pipes. Therelore, the sum of £4245 is the amount to be expended on the improvement of waterworks, and the balance, £16.545, is the experts' estimated cost of the. electric -scheme, instead of £30.000 so amazingly set out by Councillor Grave. Any sum which the Council may borrow beyond the £20,790 of the experts' estimates is to pro- : vide a fund for giving facilities to cus- [ tomers for the installation of electricity, the amounts expended to be repaid in easy instalments; also £3OOO for the extension of the scheme in Ncwborough and the North Road; and for any unforeseen contingencies that may. arise. On the last head, hewcve';. the experts have allowed 15 per cent., or £2712, so that there is every prospect of the scheme being kept well within their estimate. The extension of the scheme on the North Road is not considered in the experts' reports, it being an after-thought of the Council, and consequently no revenue from this source is included in the experts' estimate of general revenue; and yet Councillor Grave has debited the Echemo with tho £3OOO for North Road extension while only crediting it with the revenue derivable with '■ tho borough! Proceeding on premises totally erroneous, and arrived ab in the most casual manner, Councillor Grave saddles the scheme with 6 per C3nt. interest and sinking fund and 3J- per cent, depreciation on £30,000. A's I have shown, the cost is £16.545, and the money can be borrowed at 4J per cent. Conceding the TV per cent, for sinking fund and 3i per cent, depreciation which Councillor Grave insists upon, we will charge the scheme with" a total of 10 per cent, on £17,000. This makes a capital charge of £I7OO, and with £1750 for working charges and maintenance, computed bv Mr Black, makes a total charge of £3450. On the other side, we have the admittedly conservative estimate of revenue of £4062 for the third year, showing a profit of £612. But we are at present deriving £1420 for the sale of water for power--'purposes, so that the net effect of- the operation of the scheme on the borough finances would appear to be a loss of £BOB, and if we looked no further into the position ratepayers might naturally be disposed to forego the many obvious advantages of electric light, etc., rather than pay this price for it. But here various considerations arise. Mr Black, the electric expert, while absolutely qualified to give the most accurate estimate of the cost of initiating an electric scheme, lays no claim, and is in no particular way qualified, to set out the profit likely to result from the scheme. With as much reason I might ask a-

lawyer to show me the profit I would make by investments or speculations or •in any business transaction I might ask him to complete for me. Or if a manufacturer were installing an plant, he would not insist that thosesupplying the machinery should set out the profits to be made by its operation. Mr Black is an electrical expert, and ho refused to assume the roles of a business or financial expert insisted on by Councillor Grave. It was for the Council, as business men, and as'tho representatives of the ratepayers, to decide whether the}' would go in for the scheme, and he would) not spoonfeed them out of their responsibility. Ho had, however, given the Council what he termed a- very conservative estimate of probable revenue based on the population of the borough and on the experience of other towns of about a similar size to Oamaru. Although lie considered local conditions specially favorable for the sale of electric current, lie would ignore them, and frame the estimate strictly on a population basis, so that it might- bo absolutely safe and conservative. In its subsequent consideration of these estimates the Committee felt justified in increasI irig the prospective revenue. Mr Black i had set down the total .revenue from power users at £1709 in the third year, t As -we are at present deriving £1420 from power users, it was obvious that with about £BOO in view from Messrs Meek as a customer the revenue for electric power, even on the same rates as noir charged for water.'could be substantially increased. I am not sure of the. exact amount by which tho power revenue was increased, but if we add £775 to the £1420 now derived from power users it will be near enough. We therefore have £2195 instead of MiBlack's £1709 for power revenue. Tho revenue from private lighting is put down at £1166 by Mr Black, but as this is at the rate- of only 5d- a unit, whereas Hastings and New Plymouth charge 6d (which is cheaper than gas at i Oamaru rates), one-fifth may be added to th(*»£ll66. making tho lighting revenue £I4OO. These increases amount to £i2o. and are- equal to within £9O of wiping out the loss of £BOB I havo previously indicated.' Mow, if the ele<"- I trie scheme is not proceeded'with £SUJy must very soon be spent upon the. gasworks. This sum must carry the 10 per cent: capital charge which I have applied to the electrical. scheme, or£soo a year. This sum will be saved

to general revenue by the electric scheme, so that the net result on the borough's finances would be a saving of nt-least- £4OO a- year. It is very doubtful it a, further large expenditure on the gasworks would show a profit.-'Busi-ness people are insisting on the extra conveniences which electricity provides, and one firm in Oamaru is installing a complete .40 h.p. plant of its own. Others will follow, arid the revenue hitherto collected from them for gas 2inn almost d 'i sa PPear. The saving of A-4UU a year to the borough finances would be the position at the end of the third year, and with a splendid electrical asset only half developed, As the.experts say: "Judging by the' experience of hew Plymouth, Eawera, Hastings, and ether New Zealand towns, the difficulty is not to dispose of current, bub to keep Dace rear after year with . the always-incireasingj demand. If the experience of these places is w e know of no reason why it should not be—the revenue of Oamaru will proba*blv . be -double the present estimate within six or seven | years. -'

Councillor Ongley's contribution to the discussion on Tuesday night was tho statement that Hastings, profiting bv iSew llymouth's experience, had decided to-nss-Diesel oil engines instead of water for generating purposes, and that their cost of the electric unit was 1.40 d whereas m Oamaru, "with tho water thrown in." the cost was lid The position of course, is that Hastings had no water available for their scheme and are consequently obliged to use oil at 2s 8d a gallon for fuel instead ot "water thrown in" as in Oamaru. The cost of the electric unit m Hastings is about 1.40 d. "exclusive of capital charges" (vide Mr Crawshaw's letter); hut the cost in Oamariv "inclusive of all charges," may he soFdown at under M, and less than \d if we could sell the full capacity of the plant. We propose to sell the current at |d to tho mills, or .less than half the generating charge l : in Hastings. The Hd per unit cost referred to by Councillor Ongloy was under the larcc scheme. wliero £15.000 was set down for hydraulic works. A scheme dependent on"oil fuel is a precarious undertaking compared with one where a (rood supply of water is obtainable. The price of oil has bern . steadily advancing for years and . i<i likply to continue. The price of our water is permanently limited to tho i maintenance charges on race and l re- i servoir. _ j —Electricity v. Gas. — j Councillors Milligan and Grave,eon- ' tendea that the profits t>f-tho tl;retfoTl»B '

wbuld be seriously affected by the compeitition of electricity. "Councillor GrSave put the profits from sale of gas at [ £ISOO a year, and stated that it wohld cost £250 a year more to light our\ streets with electricity than with - gas.' The streets never have been properly lighted, and recently the Council gave instructions for more light in Thames street, so that the estimate of £SOO for street lighting under the present system will be increased. It is not known, however, what it costs to give the present feehta illumination. My own opinion is thatwith about £2OO a year paid to a lamplighter, with cost and breakages of burners, mantles, etc., £SOO is far short of the real sum. In a letter from -the electrical engineer in Hastings, from which I quote, streetlighting with electricity, -as compared with their experience of gas, "cost 50 per cent, less for a brighter light," and, as I have shown- before, electric current costs much more in Hastings than it would in Oamaru. I have tried to locate the £ISOO which Councillor Grave says is the annual profit on the Gasworks. I have taken the Council's records for the last ten years, and find that the assumed 'profit for that time is £8231, or an. average of £823 per year. I say "assumed" profit, for it is quite obvious that if a private company had only earned what is put down as profit in the gas accounts, a dividend would never have been paid to tho shareholders. The original gas loan was £IO.OOO at 7 per cent. That was prior to 1880, and since that time another i £IO,OOO, probably very much more, has been spent on the works and mains. Applying to the gas plant the 10 per cent, charge which we have levied' on the electric scheme, and putting the capital at only £20,000, we have a charge of £2OOO a year, so that the assumed profit on gas disappears, for capital and depreciation charges have never- been made against the works. Consumers have also to pay 9d per 100 ft for.-gas for lighting purposes in Oamaru, and a private company in Hastings supply it for Bd. Nevertheless an average,! of 50 new consumers per month in Hastings are taking the electric light at 6d a unit, in preference to gas which is 12£- per cent., cheaper than iu Oamaru. Mr Black's suggested charge for electric lighting in ' Oamaru is od a unit. If electric current at 6d a-unit in Hastings is ousting gas at 8d per 100 ft, Oamaruvians' can see what s rcood thing they have in electricity at sd. It iV not to be expected for a moment that tho large Power-users in Oamaru will reject the Council's offer of power at gd per unit. This price was affixed after the Council had ample evidence that, all things considered, it was much the cheapest power available. Whether the mills' take the power or not, it. would pay the Council handsomely to facilitate the connection,.by easy terms, every house in the borough adjacent to the electric lines. A large number of small customers nt 5d a unit is a better business proposition than a few large ones at one-eighth of that price. In conclusion, I am firmly of opinion that, with ordinary business acumen on the part of the Council in developing the splendid asset which the electrical scheme will give us; and with the people of Oamaru taking full advantage of its facilities, the scheme will soon be placed on a highly profitable basis. The profits .accruing "from its operation should the sooner place us within reach of nn up-tc-date*drninnge scheme which, although most desirable for Oamaru. eould ohfv be obtainable at the present time by the infliction of a heavy rate. — I am,'etc., J. M'DIARMID.

To the Editor. ..Sir, —In considering the advisability of adopting or rejecting this scheme the large majority of-the ratepayers must necessarily be guided by the opinions of-those * who have had, and availed! themselves of, tlic opportunity of investigating and critically scrutinising its details." The details to non-experts, or those who have not the time or ability to analyse them, are simply confusing. The only question—without worrying, about .details —which ratepayers have to answer to themselves before determining which way they will vote is "Will the scheme, if adopted, be beneficial-to the borough?" Now, what are the opinions upon this point that are offered- for the ratepayers' choice? In the first instance, there is the opinion of an overwhelming majority (8 to 4) in the Council in favor of the scheme, a scheme which it has had under consideration for a period of about two years, 1 think certainly long enough to afford it full opportunity of coming to a correct conclusion.' This alone ought to count for much, but when it is hacked up, as it js. by the opinions of two of the best experts in "the Dominion, surely it should bo conclusive. To repeat the advic? Mr Grave, is reported to have given to the meeting on Tuesday hist, "Where an expert is employed to guide us and be is admittedly one of tiro best that can be obtained, it behoves us to accept his opinion, unless -it exhibits manifest error." ■ Now, what is the opinion of the two experts employed by the Council, expressed, in their joint rereport ? . I. quoted it in a former letter, but as it should be in _ every ratepayers' mind, I quote it again here-: "It should be noted that judging by the experience of other towns, such as New Plymouth, Hawera. -Hastings-,. Gisborne, Timaru, and Duncdin, the difficulty is not to dispose of current, but to keep pace year after year with the always-increasing demand. If the experience of these places is repeated—and we know of no reason why it should not be—the revenue in Oamaru will probably be double the present estimate within six or seven years." For my part, this opinion, the favorable view" of 8 but of 12 of the Councillors, coupled with the success which has invariably attended the installation of electricity "elsewhere, form tor'o'JiF.y' quite sufficient reason for the adoption of the scheme, even were there_ nothing further which could be said in its favor. —I am, etc.. HEBER NEWTON.