POWER TO DAIRY COMPANIES.

Putaruru Press, Volume VI, Issue 231, 5 April 1928, Page 1

POWER TO DAIRY COMPANIES.

AGREEMENT TERMINATED Department's Action Criticised. Loss of Revenue to Board. “ Time the Farmers Woke Up.”

“ I consider the Public Works Department has not gone out of its way to meet the requirements of the dairy companies ana that they and the board are being penalised,” was a statement made oy Mr. R. Sprague, manager of the Thames Valley Power Board, in reporting to the Board on Monday with reference to an important conference at Hamilton, when the question of the supply of power to dairy factories with three-party agreements was being considered. The conference, which was attended by representatives of the New Zealand Co-operative Dairy Co., the Public Works Department (Mr. Kissel, chief electrical engineer) and the board (Mr. Sprague and Mr. N. G. McLeod, engineer), was held on Thursday evening. “ The matter of supply was fully discussed and the Department was very definite in their statement as regards the quantity of power being available,” said Mr. Sprague. “ It was finally decided that the Dairy Company’s factories be given supply at the board’s standard rates. The three-party agreements are now terminated. Upon the Department notifying the factories that Horahora cannot supply due to overloading, the factories are to take their own load meantime.

“ The Dairy Company's representatives were prepared to consider this proposition, which will make them direct consumers of the board. The board and the Dairy Company have now been advised that the Department will not allow them to use power other than for motors not connected to their stand-by plants, which r. eans that instructions have now leen issued to the effect that dairy factories previously operating on the three-party agreement cannot be supplied with power where their motors are connected to their own generating plant. Board’s Revenue Affected.

“ The beard’s revenue for the ensuing year will be very much affected owing to the considerable expense made for plant to give this supply, and from which no return in revenue will be made. I consider the Department have hot gone out of their w T ay to meet the position, and the Dairy Company and the board are being penalised.” The board’s view of the matter was that while power was available it should not be necessary for the dairy companies to run their plants. The Government has agreements with the Auckland Power Board and the Tauranga Borough Council, that ‘when these authorities had power to spare they should supply back to the Department, if the Department required the power. “ According- to the Department, the difficulty at the present time is that owing to shortage of water Tauranga can supply only about 900 k.w., and owing to the necessary cables not being connected between King’s Wharf and Penrose, the amount of power which can be made available to the Horahora system by Auckland is very limited,” said Mr. Sprague. “ The position should be relieved by June in any case, when the new Diesel engine plant at Penrose is expected to be in operation. But at that time of the year our demand is lowest because the milking load and the dairy factory 1 loads will have gone off. Auckland city and other towns would receive the advantage of power so made available by the country power boards. “ If the proposal submitted to the dairy companies is accepted by them it seems that the Department will be able to call on any factory to ran its own plant when required, the Department to pay the company for the running of that plant. Until the dairy companies accept this proposal, or some other proposal, the Depart-

ment insists that the factories under three-party agreements must take their own loads.” Notice to Te Aroha Company.

A letter from the District Electrical Engineer was before the board, in reply to an enquiry put through reg: rding the Te Aroha West factory, which explained the Department’s attitude, but did not fcy any means make clear the position. The letter was as follows:—“ Notice was given some time ago to the New Zealand Co-op. Dairy Go. and the Thames Valley Power Board that the Public Works Department would not have power available to continue to supply dairy companies under three-party agreements These agreements provided that the factories could be cut off and required to generate power from their own plants in the event of the Department not having sufficient 1 ower available to supply all the demands made upon it. In case you have not already received notice from the board, can you arrange to carry your load on your own plant after March 31 and until further notice? The present indications are that we will not be able to carry your load again until the Arapuni plant is in operation.”

“We have not been notified that supply is to be restricted or that we cannot take on any new consumers,” said Mr. Sprague. “We understand that the three-party agreements can be looked upon as terminated, yet we cannot take these factories on as the board’s consumers. The fear was expressed by the department that if we did this we would make such arrangements with the factories that we would receive a considerable revenue from the factories and the department would get comparatively little, that the department would have to buy extra power from Auckland or Tauranga or supply it from the Grand Junction plant in order to benefit the boards. “It is a fact that we would endeavour to give supply to the factories on terms most suitable to the board—we are not the only authorities that try to do this. At the same time we must give supply on terms acceptable to the factories. In any case the board must suffer no loss if it is possible to avoid it. Terms Only Tentative.

“We offered certain terms to the New Zealand Dairy Company if it should come on as a board consumer. The Dairy Company told the department these terms were too high for it. The department told us that it had the right to take any consumer with 50 k.w. load or more if the consumer could not obtain satisfactory terms from the board. The terms offered to the Dairy Company were only tentative, and we were prepared to consider any other method of charge provided we were at no loss. The terms submitted would have allowed the Dairy Company to get power at about the same or at little greater cost than it was paying under the three-party agreement, for the larger factories in any case, if it could take advantage of the plant it has installed.

“ If the department can take these factories over it either has sufficient power available or considered that it could make suitable arrangements with the dairy factories regarding the use of their plants. The board could also make arrangements with the factories regarding their plants, but the department does not want the board to do this for the reason previously stated. “ The department is the generating authority—for practical purposes it has or is arranging to have thfi monopoly of generation. In such case it should make the necessary provision for growth of load while such provision is possible. The offer at present before the Dairy Company would allow it to do it, the department stating which plants, if any, are to be operated, and when. “ The plants of the factories under the three-party agreements are not suitable for continuous operation in that they have no stand-by. They could in any case receive a night supply from the mains, which might help the industry and save their plants for the times when they must be run on account of overload on the system.

“The points to be noted are : (1) The three-party agreements are terminted ; (2) there has been no notification of restriction of supply to other consumers ; (3) the board is

debarred from taking the dairy factories as its own consumers at present; (4) a new arrangement has been offered to the factories affected, and if this arrangement is accepted the department will p.esumably work the plants to best advantage, at the same time guaranteeing the factories’ supi-iy iiom the department’s system w.uie any is available; (5) at present the factories get no outside supply except in emergency ; (b) the plant the board has installed for supplying these factories is practically idle.” “ Dog-in-the-*ranger " Business. Mr. J. B. Thomas : There is a dog-in-the-manger business about it. The chairman said that some of the dairy companies had stand-by plants sufficient to provide a limited amount of power. If they had to go in for the supply of power for themselves the cost would be very large, and it would be unlikely that they would revert to taking supplies from the Government or tlje board. There would therefore be a national loss of revenue. Mr. G. Howie : How much have we lost ?

The Manager : The loss is £2OOO in the last three months. Mr. Flatt : It was the hope of the board to reduce the cost of power to its suppliers, but if this new idea is carried out that will be knocked on the head. Instead of the price going down there will be a possibility of it going up. The chairman said the finance committee had passed a resolution that the board pledge itself to support the New Zealand Dairy Company in its representations. He understood that the Dairy Company intended to make representations to the Minister. Mr. Arthur said the matter was a very serious one. The board should be the one to approach the department, not the farmers. Easter was coming on and there should be no delay. He moved that the chairman, manager and engineer go to Wellington on Tuesday and interview Mr. Kissel with the object of securing a more satisfactory arrangement. The power was given to Auckland and other centres now, and the dairy factories were being denied. The result would be that plants would be installed, and when Arapuni came into operation the dairy companies would say they did not want the power. Mr. J. B. Thomas strongly supported Mr. Arthur. Serious Position Will Arise. In seconding the motion Mr. Flatt said that the board should receive more consideration. If the matter was allowed to go on a serious position would arise. The board was now losing money and the functions of the board would be seriously handicapped if the position was allowed to continue.

Mr„. J. Price thought the move should come from the Dairy Company. The company would probably communicate with the board before waiting on the department, which would give the board an opportunity to make representations. The board should work with the companies to the best -advantage. Mr. Flatt : The resolution permits of that. Mr. Price : Not at all. The Dairy Company should go first to Mr. Kissel and open up the way. The chairman agreed that, while the matter was urgent, the company should be communicated with first. However, there must be as little delay as possible. He suggested that the resolution should be amended and that the chairman, engineer and manager should be instructed to confer with the New Zealand Cooperative Dairy Company and then to go to the Minister. Mr. Price : Decide on a course of action in conjunction with the company and then take the representations to Wellington. The Chairman : We do not know what the company intends doing. 1 was informed that it proposed to see the Minister. Mr. Flatt : I think we should lead the way. Action Too Drastic. The Engineer : There is not enough co-operation between the department and the board. The department runs power at times when it is unnecessary and it could be used by the board. The action taken was, in my opinion, too drastic.

Mr. Corbett advocated that finality, should be reached by going to Wellington, and the sooner the better. Mr. Price moved an amendment that the Dairy Company be communicated with and that later a joint deputation wait on the Minister. it was thought by Mr. Sprague that the Government was averse to the board making any money out of the dairy companies.

At this stage an urgent telephone call was put through to the New Zealand Dairy Company at Hamilton with the object of deciding upon a course of joint action, but the officers in charge of the matter were not available. Mr. Arthur then withdrew his motion and the amendment was carried unanimously. The chairman said the dairy companies were the backbone of the country and should receive the first consideration. Because they had subsidiary plants the board was prohibited from supplying them continuously with power. Undoubtedly an anomaly existed. Again, the loss of revenue to the board was a serious factor to be considered, especially as such loss would fall back on the farmers.

Mr. Price said that in addition to losing revenue the board also lost its diversity factor, and that loss went back again to the farmers through their own dairy companies. In his opinion it was high time the fanners woke up.