OTAGO POWER BOARD.

Otago Witness, Issue 3961, 11 February 1930, Page 75

OTAGO POWER BOARD.

CRITICISM OF OPERATIONS. DEPUTATION TO FARMERS’ UNION. Echoes of the criticism that has been levelled at the Otago Power Board during the past few months were heard on Wednesday at the meeting of the Otago Provincial Executive of the New Zealand Farmers’ Union, when Messrs R. S. Thompson (Wetherstones) and D. M'Corkindale (Waitahuna) waited on the executive to place before it the plight of ratepayers and the general position of the board’s affairs, with a view to secur-

ing the support of the union in an adeavour that was being made to secure an independent financial and economic investigation into the operations of the board since its establishment. Mr Thompson stated the case for the deputation at great length, and before he left the meeting he was given a definite undertaking that the Provincial Executive would do all in its power to assist the ratepayers to secure the inquiry they were asking for. The meeting decided to communicate direct with the board in order to ascertain the atitude of that body towards the proposed investigation. Various speakers expressed the opinion that the board’s affairs at the present time warranted some inquiry. MR THOMPSON'S STATEMENT.

Mr Thompson stated that at a meeting of the Lawrence branch of the Farmers’ Union, held on January’ 18, it was decided to" request the union to allow him to place before it certain information relating to Otago Power Board affairs. No official reply had been received from the board as to its decision regai ding the combined demand made by the Lawrence ..rea ratepayers and the Milton branch of the Farmers’ Union:—“ That an economic ami financial investigation should be made into the whole of the board’s affairs with a view’ to the reorganisation and improvement of the conduct of the board’s business and the services adhered thereto. ’ Quoting extracts from a pamphlet issued by the board prior to the £200,000 loan, Air Thompson said: “The early and economic connection of as many settlers as possible with the power lines will be the fixed policy of the board, thereby ensuring a speedier and ever-increasing sale for power and light, and thus reducing to a minimum the necessity of rating Of the £200,000 loan the sum of £25.000 is set aside in inaugurate a system of assistance to consumers, whereby the cost of house and farm installation will be advanced by the board and the repayments with interest spread over a number of years. “ A further £25,000 is set apart for proposed extensions to outlying districts. This proposal will enable the board, after providing for the wants of the inhabitants of the northern and southern areas, to extend the privileges of power and the profits of the sale thereof to districts at present excluded from the area. These installations, whether they take the form of local power plants or direct connections, will all help to build up a payable load over the whole system, as the board will not sanction any such extensions till it is guaranteed to be selfsupporting. Under the provisions of the Local Bodies Loan Act it is essential to strike a rate sufficient to cover the total interest and sinking fund of the proposed loan with a margin of JO per cent, added. The rate advertised, IJd in the £ capital value, has been struck to comply with all the conditions, but it is improbable that such a rate should ever be collected. “ Both Dunedin city and Lake Coleridge schemes reached a paying point from revenue alone after four years, and there is every prospect of a similar victory being written for the Otago Electric Power Board. So far every electrical supply scheme in New Zealand has outgrown the hopes of its promoters in regard to the quantity of energy concerned, and it is not likely that Otago will provide a different example.” According to a financial statement the total revenue for the northern and southern areas was estimated at £27,519, which, it was further estimated, would be obtained from the expenditure of £125,000 on reticulation, equivalent to a return of 22 per cent. “ This shows,” concluded the report, “ that the revenue required by the board must exceed £27,500 per

annum before the scheme will be selfsupporting, and the board is convinced that the engineer's estimates are well within reach at the end of two years.” “ At the end of four years—that is, for the years 1928-29—the board received a revenue of only £26,000 from an expenditure of £223.000 on reticulation. a return of only 11.7 per cent.” stated the speaker. “ The Public Works Department estimated that the total losses would be only £12,300. to be incurred during the first two years of operation. but the actual losses to March 31, 1929. are £36,000. and still continue. Last years deficit (£11.404) was the largest in the history of the board—brought about to a large extent by the incompetent and extravagant manner in which the a airs of the board were conducted during that year.” After quoting extracts from the 1929 Public Works Statement, the speaker added, with reference to the trading department, that last year's losses amounted to £’4oo; the year before the loss was £635. and this year a loss of £9OO was expected. Yet last year the Waitaki and Southland Board's trading departments made profits of £lOO and £855 respectively. The Otago Board asked its ratepayers to believe that its trading department’s losses were a necessary evil. Why? The board provided money free of interest for the purchase of electrical equipment. Last year's turnover for the trading and wiring department amounted to £8724. and of this 96 per cent, of the business was done on the deferred payment system, and gave some idea of the amount of interest the ratepayers had to find in order to enable the board to grant this concession to consumers. The principle was wrong, and eimply indicated the desperate straits the board had placed itself when it was compelled actually to purchase its legitimate business at the ex’ftnse of its ratepayers. On t*e board's accounts a due date for payment was stated, with a provision that a 10 per cent, penalty would be added

should payment not be made on or before the due date. Again “ Rafferty’s rules " were in evidence. Consumers paid when they pleased, and no penalty was extracted from the late payers. The Southland scheme was notorious. It had often been described as a calamity. In similar terms, the Lawrence area scheme could be spoken of as a catastrophe, because the results were even worse than those obtained in Southland. Mr Thompson went on: “The Lawrence area ratepayers have been ask£H to believe that their revenue from the sale of electricity will double itself inside two years—an utter impossibility. It clearly indicates that the board has little or no knowledge of our position. When the board’s proposals were put before the Lawrence area ratepayers some of its members and officials—-accredited agents of the board —visited our district and gave definite promises that the losses (it any) of this area would be pooled with the losses fif any) of the original area, so that in the event of it being necessary to levy a rate it would be so small as to be hardly worth while collecting. “It has been suggested t the board that the Government should be asked to appoint a magistrate to act as a commission to take the evidence of the board and the Lawrence area ratepayers, in order to settle once and for all this vexed question. It is believed that the Lawrence area ratepayers would willingly pay the cost of this commission. It is claimed that the original policy of the board did not allow for differential rating. because when the £206.000 loan proposals were placed before the northern and southern area ratepayers a rate of l]d in the £ capital value was struck over both areas to cover total interest and sinking fund. No attempt was made to differentiate between these two areas. The present system of rating is evidently some new idea recently acquired by the board at the expense of the Lawrence and southern area ratepayers. “Again, the board’s letter of December 17, 1926, to the Lawrence Borough Council stated, inter alia : ‘ Respectfully point out to you that, if your borough and surrounding districts decided to amalgamate with our present districts, the whole of the privileges afforded to our own consumers would be afforded to you, but the district embraced would be liable to rating in the event of any deficiency resulting from the board’s operations in the whole of those districts.’

“This surely indicates that, by deciding to become part of the board’s inner area, the Lawrence area ratepayers would be liable to be rated for losses (if any) incurred in the northern and southern areas. This could only be accomplished by pooling the inner area losses and levying a flat rate over the whole of this area. “ This year the board proposes to recover by rate the sum of £8316, and the following rates have been levied:—Northern area: General rate l-20d, special rate 0.5 d. Southern area: General rate l-20d, special rate 0.6 d. Lawrence area: General rate l-20d, special rate o.Bd. “The same amount (£8316) could have been recovered by a general rate of 1.20 d and a special rate of 0.55 d levied over

the whole of the inner area. “It is considered that a considerable saving could be effected by a reorganisation of the board’s staff and the removal of the offices to Milton. Only 20 per cent, of the power purchased by the board is consumed in the northern area. It is, therefore, apparent that better and cheaper results would be obtained by placing the board’s offices in the area from which the bulk of its revenue is obtained.” Having dwelt on the question of water transport and alleged wasteful expenditure. the speaker referred to conduct of the board's business, and stated that the members of the board appeared to have peculiar notions as to the manner in which the business of their ratepayers should be conducted. Practically all the business was done in committee, and little or no information was given to the ratepayers It was suggested that ratepayers would appreciate the board’s publishing each month the financial report drawn up by its secretary on the lines adopted by the Southland Board. As a matter of fact, they were entitled to this information. In the best interests of the community,

probably the best solution of the problem would be to abolish the board and arrange for the Dunedin City Council to undertake the conduct of the board’s business. By this means a very large saving would

be effected with regards to overhead expenses. Moreover, the business would be conducted in an efficient and competent manner. Under the Dunedin City Corporation’s competent management ratepayers would speedily be freed from all liability for rates, and consumers could probably look forward to decreased charges for power. It was believed that legislation could be promoted to bring about this desirable change—a change that would benefit both Dunedin city and the country districts Mr D. M'Corkindale (Waitahuna) spoke in support of Mr Thompson. CONFERENCE SUGGESTED. Mr D. Grant (Milton) said the matter had been discussed by the Milton branch of the Farmers’ Union, and they were supporting the demand of the Lawrence ratepayers for an investigation of the board's affairs. He considered that at a later date the executive should call a conference of delegates from the branches of the union in all those districts affected by the board's operations. AN INVESTIGATION WARRANTED The chairman said that it must be clear that the position called for some action. The question was what course the execu tive should adopt It had been iggested that a conference of branches should be held, and an alternative was the calling of a general meeting of ratepayers.

Mr A. C. Leary suggested that Mr Thompson should make some proposal n the matter. Mr Thompson said that ir possible they should interest the various branches in Lawrence and Milton. and also secure . he services of a competent man to investigate the operations of the board He did not desire that the past blunders of the board should be exposed, but that a system of organisation be evolved whereby any recurrence of the previous mistakes might be avoided. Mr D. M. Reid moved ;hat the executive affirm its interest in the situation and its determination to act in behalf of its members among the ratepayers in the various districts, and that it support t’e Laurence remit, which asked for an eco-

nomic and financial investigation into tin whole of the board’s affairs. Mr A. C. Leary seconded the motion and added that lie endorsed everything Mr Thompson had said. If the board had the interests of the consumers and ratepayers at heart, it would consent to such an investigation.

Mr J. Christie supported the motion, stating that it would do a lot of good to draw public attention to the existing state of affairs. The motion was carried. EXECUTIVE TO ACT.

It was decided to communicate direct with tl>p board, placing the whole matter before it, and stating that it was desired that a full investigation of the board’s affairs should be made by an outside accountant and an engineer. The president and secretary were empowered to consider any reply that might be received from the board, and. if necessary, to call a special meeting of the executive to deal with it if the reply is nsatisfactory Mr Christie: What will you do if the members of the board resign in a body? Voices: That is just what is wanted. A new board would welcome an investigation for its own protection. A hearty vote of thanks to Mr Thon ison, for the trouble he had gone to in the matter was carried with acclamation AMENDMENT OF ACT. The foilowing remit from the Middlemarch branch was referred to the Provincial Conference:—“ That the Power Boards’ Act be amended to provide that the franchise for the requisition of loans for reticulation purposes and election of power board members to be carried out in a similar manner to the voting system adopted by county councils —thus, for the voter to have votes in accordance -th the rateable value of his property, g.nd not as at present: one vote per voter.”