HYDRO-ELECTRIC POWER

Otago Daily Times, Issue 18465, 28 January 1922, Page 15

HYDRO-ELECTRIC POWER

TTTTC PROGRAMME OF STATE DEVELOPMENT. DEFERRED EXPENDITURE. ELECTRIC POWER BOARDS. The following are extracts from the Public Works Statement, presented to Parliament by tho Hon. I. G. Coates yesterday:— LATTE COLERIDGE SUPPLY. The financial result of the operation of the Lake Coleridge system for tho year ending March 31, 1921, has again been very satisfactory, and, after paying all operating, interest, and depreciation funds, has allowedl the deficit on tho first four years’ operation to be still further reduced. Tho revenue for tho year was £51,373, and the expenses were;—» Working expenses _ _ _ £21,541 Interest ... ... _ 18,639 Depreciation _ £47.926 giving a profit of £3,447, which will he used in the reduction of the accumulated deficit on the first four years’ operation. There are, of course, in addition to tho direct profit shown above, indirect benefits conferred on the district by having this source of power available, which have so increased tire demand for power supply that the plant Las been run overloaded continuously throughout the year, and numbers of prospective consumers have had to be refused connections until extra plant can he installed. During the year the load on the plant reached 7412 kilowatts, although the normal full-load rating of tho machines is only 6000 kilowatts. The fifth unit (4000 horse-power) has been installed during the year, and the pipe lino to supi ply this was expected to bo completed by October of this year. It ia hoped that if this machine gives satisfactory trial runs it will be able to take np a share of tho load before' tho end of the year. A further unit of the same size has also been ordered, and should completed and in service during 1922, Tho level of tile lake had been falling gradually as the load has exceeded 6000 kilowatts, that has always been considered the limit of power available from the lake stream itself, without tho addition of _ water from tho Harper, Acheron, or Wilberforoe Rivers. During the year a channel was excavated from the Harper River, bod into the lake, and a temporary diversion of the river made into this channel This has proved very successful, and tho lake level has risen consistently ever since. It is proposed during the coming summer to complete a permanent diversion of tho river into tins channel, which will enable tho Coleridge station 'to be duplicated and brought np to a capacity of _at least 36,000 horse-power. It is anticipated that this will meet the demands of both North and Sooth Canterbury for some years. A start has been made with the erection of a transmission line to give supply to South Canterbury, and it is anticipated that a limited amount of power can bo supplied over this by the end of 1922, and a complete supply when the duplication of power house, for which plans are now being prepared is completed. HORAHORA POWER STATION. This power station, wirioh was token over from the Waihi Company and operated on behalf of the department for the concluding five months of the preceding year, has been operated by the department for the past year. As in early years of the Coleridge undertaking, tho first year of operation of this plant does not show a profit after allowing for all charges. It is satisfactory, however, that the whole of tho operating expenses have been paid, together with a substantial sum towards interest and depreciation, even at this early stage of operation. The revenue feu tho year ending March 31, 1921, was £14,805, and the expenses were as follow; Operation _ ■_ ...£6,452 Interest „ 10,675 Depreciation 3,960 £21,087 leaving a deficit of £6282 on tho year’s operation. Next year’s revenue should show a very substantial increase, as it was only towards tho end of the financial year just closed that any consumers other than the 'Waihi Gold Mining Company were connected up. The maximum load on -tho station during the year was 3600 kilowatts, but it is anticipated that by tho end of the present year the load will have reached very nearly the limit of the present plant, 6000 kilowatts. Tenders -have been invited for two additional units of 2000 kilowatts, which it is proposed to add to the present station, and preparations will be made for installing this plant as soon aa it can be delivered. Tho work of erecting tho transmission lines necessary to give supply to the different power boards haa been pushed on vigorously during the year, and all the boards are now in a position to take power at one or more points. ELECTRIC POWER BOARDS. A large amount of work in connection with the formation of power boards haa hefin done daring the year, although the total number folly constituted haa only increased by four. Quite a number of other districts have, however, steps to form power boards, and have circulated petit!one, so that this number will be considerably increased during the next 12 months. Nino of the powpr boards at present constituted have already laid out reticulation systems and submitted loan proposals to tiia ratepayersi. , The loan proposals authorised amount to £2,950,000, equivalent to £2L6 per head of population concerned and to 6.7 per cent of the unimproved rateable value of the districts included. It ia becoming' generally recognised throughout tho country that the distribution of power by means of boards specially set up for the purpose will result in. the actual consumer obtaining his power-supply on the boat possible terms. Whilst it ia recognised that the system adopted in Christchurch in connection with the Lake Coleridge scheme, under which supply is given by the department to individual local authorities, has been very highly successful, and was necessary while tho electric supply business was growing and on ite trial, it is now felt that better results can bo obtained by deputing the whole of the business of distribution and supply in a district to one body whoso special business it will bo to see that tho power is made available to all pn tho very best terms possible. With the policy of the department supplying, in bulk to a number of smaller local authorities it has been found that in many cases both the department and tho local authorities have to carry staffs and equipment to deal with this branch of tho business, and that there is apt to bo overlapping and duplication. It has also been felt_ that some of the local distributing authorities are too small, and that in consequence they have been unable to provide the special staff required to efficiently manage their electric supply business, or, alternatively, that the staff and overhead expenses ,bear an excessive relation to power distributed. My natural inclination is to let local authorities manage their own affairs; but after a very careful investigation of tho proposals put forward by ray export officers, which are designed at every point to work in with tho development of tho most economical schemas in the interest of the country as a whole ; ; and pay due regard to community of interest, I am convinced that it is necessary for the Government to insist on tho formation of electric power hoards, in conformity with the scheme prepared by the department, and not those dictated by immediate local interest vitiated to a considerable extent by existing licenses. The x case is definitely one where, for tho eventual ■good of tho whole community, town ami country mnst assist one another to finance the undertaking and to secure what is tho secret of financial success in any electrical undertaking—namely, diversity of load, and distribution over aa wide a load ns possible of tho costs of operating and management. In the reports attached to tho Public Works Statement of _ 1920 tho department laid down os a basis what it was considered should ho tho districts to he administered, in the matter of distribution of electric supply by tho various clectric.-nowor boards constituted or to be constituted. It is essential, for tho final and host success of tho Power Boards scheme, that the primary matter of development of electric power, and tho secondary matter of its distribution, should he considered and dealt with in its initial stages not from the point of view of immediate or local circumstances, but from the point of view of ensuring that final development and organisation will be on the lines to secure to tho dominion aa a whole tho most economical and successful moans of development of power and its distribution. The, great objective is the develonment and distribution oj electric power to the consumers at the cheapest possible rate. The only possible way to achieve that end is to plan from the beginning the. eventual scheme of develonment, and to eliminate fjia ipinor consideration*) and influences nictated by circumstances of temporary expedient and local influence.

Prior to the coming into operation of the Eleotrio-powor Boards Aqt, in the matter of development of electric power and its reticulation and supply to the people (apart, in the matter of development, from the Coleridge scheme, which was largely educational), the organisation of existing local authorities had to bo utilised. An existing local authority, other than an electric-power board, has many interests, only one oi which may bo the distribution of oleotrio power. Because hydro-electric power and light, unless in most exceptional circumstances, are so much cheaper than any. other form of development, the public pays, without cavil, the price demanded by the distributing authority. The perfectly natural tendency . of such a distributing local Authority is to make all the profit it oan out of such a service; and because the charge on the individual consumer is something less than the price at which ho could obtain a similar service from elsewhere, ‘ he pays without demur. Tho result is that the consumer is paying more than ho should, and the profit is being utilised in reduction of the cost to ratepayers of other works and services which Mould bo financed on their own ways and means. This, it must bo understood, is a general statement having particular reference to hydro-eleetrically-developed power distributed by local authorities other than power boards. An electric power board, having only one interest, has no object other than to supply the consumers at tho cheapest possible rate, and is therefore to be infinitely preferred as a distributing medium. It is to be regretted that, some local authorities, particularly certain municipalities who hokl licenses to distribute power developed from existing plants, are showing a tendency to stand out of power board schemes, hoping, no doubt, to carry on with their own power development (meantime making what profit they can out of the sale of power), and later on to take power in bulk from any scheme developed by the Government, or to bargain with a power, board developing its own_ power, and continue, in the event of a satisfactory bargain with cither ’party, making a considerable profit out of the retailing of power and light. This is not in tho interest of tho consumer. OTHER LOCAL ELECTRIC-SUPPLY AUTHORITIES. Several of tho existing local electriosupply authorities are making arrangements to extend their plants and have works under construction, but, following on tho difficulty of obtaining 1 supplies during the war period, they now find the existing financial stringency hindering them considerably in some of tho works contemplated. Seven additional licenses to erect plants have been issued, mainly to isolated districts, which cannot hope to be connected to tho general Government supply for some time, but no new plants have been put into operation during the year. Caro is taken in • all those cases to seo_ that the works and plant are being designed on lines which will allow of these undertakings working in with the Government supply when available. GOVERNMENT HYDRO-ELECTRIC PROPOSALS. The Government has adopted a general scheme of power supply to the North Island os laid down in a_ report (1918) by Mr Parry, previously Chief Electrical Engineer, which provided for three main generating stations, at Mangahao (24,000 h.p.), Ara poini (96,000 h.p., capable of extension to 162,000 h.p.), and Waijfaremoana (40,000 h.p., capable of extension to 136,000 h.p.). This scheme was adopted after consideration of many alternatives of a general supply from a number of smaller stations, or of an initial supply from one large central generating station, as being the one beat suited to fill the conditions which are likely to arise within_ the next few years, without unduly loading tho cost of initial development, or without causing the prospect of having to incur further heavy liabilities at a later date when the supply from smaller sources should become overtaxed. The cost of operation and organisation for delivery of power to power boards are practically tho same for a 50,000 h.p. delivery as they are for a 5000 h.p. delivery; and let it bo borne in mind that in actual working these are the costs that count and for which. the consumer pays. I am aware that an attempt is now being made, by parties not wholly disinterested, to induce the general public to believe that it is better to go ahead with a large number of small schemes than to await tho development of tho main Government schemes. The measure of development of Government schemes must be dictated by the ability of the country to finance them. The Government’s margin of credit and security is immeasurably greater than that of any local effort. If the public is convinced by the agitation to which I have referred, then it must believe that 50 power schemes can be financed, constructed, organised, and run, and supply the same amount of power, as five power schemes developing an equivalent amount of power. Such a conclusion is, to ray mind, unsound, and I feel assured that the public will realise it before thev enter into commitments for which they will pay for all time, or, alternatively, have to scrap thoir plants and cut the loss incurred by impatience. Provision for the raising of the necessary loans to carry out the three main schemes above was made in tho Electric* power Works Loan Act, 1919, v and in the Finance Act of 1920, but owing to the difficulty of obtaining labour or material at a reasonable cost during tho period immediately _ following tho war, and owing to the nigh rates of interest now ruling, it has been decided as inadvisable to proceed with tho active construction of the whole of these works at tho present time. • It may be unfortunate that I have to preach this doctrine at a time when financial stringency compels tho Government, and should, but apparently does not, similarly compel local organisations, to hasten slowly with a view to securing development at lowest possible capital coat. Ilf local organisations would calculate with tho some exactitude that my department has done tho eventual cost to the consumer of the various schemes which they propose to carry out at existing costs as against tho cost of bigger schemes taken in band and pushed through in tho minimum time, once the money required to carry them out is definitely available, they would realise the wisdom of the department’s view. * It must bo remembered that in large electric-power works, of the total cost of power aa delivered to our consumers from 70 to 80 per cent, is duo to capital charges, interest, depreciation, and sinking funds. It is essential, therefore, that tho works/ when undertaken, must be carried out in the most t economical manner that is consistent with good work and proper provision for extensions and for the future, if those capital charges are to bo kept down, and power to be sold at the lowest possible rate. To reduce tho interest charges during construction also it is essential that, once started, _ the works must be carried along on business-like lines, so that they may reach a revenue-producing stage as early as possible. When it is realised that a reduction of 1 per cent, in tho rate of interest payable on the loan-moneys means that tho cost of power supplied can bo reduced at least 11 per cent., apart from any reduction duo to the general reduction in cost of material that would naturally follow a reduction in interest, it is evident that wo should very carefully consider embarking on any undertaking involving largo capital expenditure if there is any early prospect of a drop in tho money market, unless by delay wo are seriously retarding tho industries of the country. Though tho full programme of development which it was hoped to carry out when the scheme outlined above was adopted has not been started, yot the department’s activities in hydro-electric development have been greater than in any other year in the history of the dominion. Tho expenditure on extensions to existing schemes and in tho development of now ones amounted to £325,234. To carry on the schemes to which the department is already committed and on which work has commenced moans tho expenditure of (ho •following sums during the next few years: 23 4 «S m |5 a a o / . |S3 |S |S j i‘o sis S'"3 6 "3 § q a 3 as a^ ' Si* Sonthlual ... 200,000 50,000 Lake Ckileri'lge— Headworks 608,000 50.500 150,000 200.000 Transmission 60,000 60,000 60,000 Honihora — Tfo<vlworks Transmission 150,000 150,000 ilnngnhmj—■ Hood works 143,000 275,000 300,000 200.000 Transmission 75,000 100,000 125,000 Waikurcmoana 3,000 CO ,000 50,000 Otiioo— HoadwOTfcs 50,000 150,000 100,000 Transmission 30.000 120,000 100,000 —which sums total over three millions and a-quarter commitments for developments to end of 1923-24, or total to 1929 of £4,715,500. Were the whole scheme gone on with these expenditures would considerably, and the country would bo faced with the following expenditure to complete these

in the time that is desirable if the work is to be done in tho most economical manner:—Amount expended to March 31, 1921, £1,035,000. Estimated expenditure—--1922, £825,000; . 1923. £1,166,000; 1924, £1,637,000; 1925, £2,023,000; 1926, £1,966,000; 1927, £1,112,000; 1928, £884,000; 1929. £842,000; later expenditure, £1,414,000. Total amount, £12,902,000. With, these figures in mind, and considering tho arguments above in regard to costs in relation to interest rates, it is evident that tho best results to the country will be obtained by holding back as much of this expenditure as is possible at tho present time; and then, when conditions are more favourable, embarking upon a concentrated and vigorous scheme of construction, on carefully considered plans, that will give tho country a supply of electricity that will not, bo loaded for years to come with high charges consequent on the abnormal costs of construction at the present time. This is applicable not only in tho case of large generating stations proposed by tho Government, but also to various alternative local schemes proposed, at various times,which in thp aggregate would amount to an even larger expenditure than is involved in the Government proposals, and which if rushed into now would only load the country with unduly expensive power for years to come. Construction work at the Mangahao scheme, which is to supply power to tho Wellington district, has been actively pushed on during the year. The necessary roadworks have been completed, and considerable lengths of each of the two tunnels excavated. It is hoped during the coming summer to start active construction work on the two dams. Some difficulties were experienced in connection with tho foundations of these, but new designs have been prepared which will overcome these and give absolutely satisfactory structures, though at increased cost. Tenders were received for the main pipe-lines, but owing to the very high prices ruling at tho time it was decided to invito fresh offers, which arc closing in November, and we will undoubtedly save several thousand pounds on this item alone, consequent on tho fall in prices that has occurred. Tenders for tho main generating plant have been invited, and will be opened and considered shortly. At Arapuni, tho proposed main supply for the Auckland province,. a vast amount of information has been collected during the year, and the results of this were submitted to a commission of engineers who visited and inspected tho site of tho proposed dam. These gentlemen decided that to make tho dam doubly safe it would be advisable to amend the design somewhat, with a resulting increase in cost. The question of alternative sources was again very carefully gone into by my expert advisers in the light of revised costs, but the conclusions reached were that with any type of • dam Arapuni was undoubtedly tho most suitable source of power to develop for the Auckland district. At ;Waikarernoana contracts have been lot for tho supply of a plant of 1000 horsepower capacity, and delivery of most of this plant is expected by tho end of this year, and it is hoped to have it in operation before the end of 1922. This plant is part of the main generating plant, and will be used in part for the construction of I the main scheme when started, and part for the supply of the Wairoa Power Board. For the general supply of the whole of the South Island a complete scheme has not yet been laid down. Schemes of supply from new proposed generating stations at Lake Hawea or at the Teviot River have been considered in detail, but it has been decided that for some time to come the supply to Otago, Southland, and Canterbury can best be met by linking up and developing to their economic limit the existing developments at Monowai (Southland Power Board), and Waipori (Dunedin City Corporation), with the Government scheme at Lake Coleridge. Negotiations are now proceeding with tho Dunedin City Council under which, if satisfactorily completed, it will further develop Waipori, and sell power in bulk to tho department for transmission to the various power boards proposed in the Otago district, and to join up with the department’s supply from Lake Coleridge at Timaru. For tho supply to tho northern end of the island, surveys have been made on tho Clarence River, Waihopai River, Rotoroa (Gowan River), and Rotoiti Lakes, and other minor sonroes, and preliminary reports on these schemes prepared. Pending further survey and investigation work to bo done in the Buller and Westland districts, it is impossible to definitely lay down a general scheme, but the indications are that as soon as sufficient load develops a fairly economical scheme for the supply of Nelson and Marlborough can bo developed on the Gowan River, the outlet of Lake Rotoroa. Owing to tho financial conditions prevailing and the consequent curtailment of some of the activities contemplated in my previous report the appointment of tho special advisory board mentioned therein has been held over pending the more active prosecution of hydro-electric development. Meanwhile tho whole of the work of operation and management of the department’s existing plants, the investigation and design of new works and plant, and tho construction of new works is being on by tho staff of the Public Works Department, to whom I am indebted for thoir loyalty dnd energetic support during the last year.