MONOWAI SCHEME

Southland Times, Issue 19250, 14 June 1921, Page 5

MONOWAI SCHEME

POWER BOARD’S DECISIONS MODIFIED PLANS ADOPTED SOME PLAIN SPEAKING. At a meeting of the Electric Power Board yesterday a number ol very important matters affecting the prosecution or otherwise of the scheme was considered. The following were present:—Messrs W. Hinchey (chairman), R. A. Rodger, F. Young, T. Fraser, T. A. Buckingham, H. Fowler, L. Cody, E. A. Bowmar and Hon. A. F. Hawke. Messrs R. A. Anderson and W. Norman were granted leave of absence. In tendering an apology for absence Mr R. A. Anderson wrote that he was strongly in favour of proceeding with the No. 3 scheme. Mr W. Norman also apologised for absence. THE GOVERNMENTS ATTITUDE. Reporting on the visit of the deputation to Wellington, the chairman stated:— Following upon the resolution passed at the last meeting of the Board, a telegram was sent to the Minister of Public Works advising him that the Board had received the report of its engineers on the proposed first section of the scheme and wished the Minister to receive a deputation of members of the Board, i e., Messrs E. Bowmar, R. A. Rodger and myself, to discuss the Board’s proposals and to obtain his permission enabling the officers of his department to examine the report and advise the Board of their opinion on the proposals outlined therein. Mr Coates replied agreeing to receive the deputation on Saturday morning, but pointed out that up to the time of his so telegraphing,' the officers of the Department had not received the Board’s proposals and that it would be necessary for these officers to have a reasonable time to study the report before they could give any considered opinion regarding the same. Upon receipt of the Minister’s message I immediately instructed Messrs Hay and Vickerman to hand over to the Public Works Department the full report and accompanying plans as submitted to the Board at its last meeting, and also the report on the question of rates when it was prepared. The first report was handed over on Thursday morning, 2nd instant, and the other a few days later. On Saturday morning the Board’s deputation duly waited upon the Minister, there being present the Hon. J. G. Coates, Messrs Furkert (Under-Secretary and Engineer-in-Chief), L. Birks (Chief Electrical Engineer), and Kissel (Assistant Engineer), as well as Mr R. A. Rodger and myself, Mr Bowmar unfortunately being unable to be present. We indicated to the Minister that the Board was not prepared to go on with the first section of the scheme unless thoroughly satisfied that the scheme was going to be on a business basis and self-support-ing, and that the Board wished the Public Works Department to review the report of Messrs Hay and Vickerman for the purpose |of supporting the figures. The Minister agreed to allow the engineers to go into the matter and prepare a report for the Board. I Finance.—The deputation then introduced the matter of finance and expressed the feeling of the Board regarding the failure of the Government to carry out the undertaking which it made to provide the finance until March 31, 1922. We expressed the feeling that, as the Board was prepared to modify its scheme in order to meet the financial stringency, thus relieving the Government of at least 50 per cent, of the amount promised, the Government should endeavour to arrange to carry on until March 31 next. It was agreed that the engineers be asked to prepare a revised schedule of the sums required monthly to carry on the reduced scheme and the Minister arranged for the deputation to meet Sir Francis Bell as soon as that revised schedule was ready. On Monday we received the schedule from Messrs Hay and Vickerman which showed that the requirements of the Board for the next ten months under the proposed reduced scheme would be £25,000 per month The deputation then waited upon Sir Francis Bell; the Hon. Mr Coates and Colonel Campbell, Secretary to the Treasury, also being present. The deputation covered the same ground with regard to the Board’s opinions and position as when discussing finance with the Minister of Public Works. Sir Francis Bell said that he fully appreciated the difficult position the Board was in and that he could not hold out much hope of the Government continuing to finance the Board. He would, however, put the whole situation before Cabinet before the end of the week and do the best that he possibly could to at least give the Board temporary assistance. The Board has since been advised by Sir Francis Bell as follows, under date June 10, 1921: “Cabinet has approved a grant of £25,000 for the present month and a similar sum for each of the two following months, but your Board must understand that no fur-. ther moneys can be found beyond August and should therefore press on the negotiations for the completion of its loan.”

View of Hon. Mr Coates:—With reference to the altered policy of the Board the Minister of Public Works expressed his entire approval of the Board’s carrying out of the first section of the scheme and making it, if possible, self-supporting. He also said that he thought it would be a mistake for the Board to stop the work as, after having spent so much, it was desirable that it should be gone on with and brought to a revenue-producing point. Other Opinions.—ln discussing the Board’s proposals generally with several engineers who are acquainted with the details of the scheme, opinions were expressed that the reduced development as suggested by the Board would compare favourably in regard to retail prices with the majority of the Power Board schemes contemplated in New Zealand.

Amendment to the Act.—ln discussing with the Minister the position of ratepayers who are not going to be served with current under the proposed reduced scheme, the Hon. Mr Coates said that he would be prepared to introduce legislation enabling the Board to remit rates on properties situated beyond a defined distance from the supply lines. This is a very important matter and I would strongly recommend the Board to approach the Minister to have this done at the next session of Parliament in order to put the Board right with the ratepayers it is unable to reach under the present proposal. ' SELLING RATES. The construction engineers (Messrs Hay and Vickerman) reported:—ln compliance with the request of the Board as indicated by yours of June 1, we have investigated the questions of selling rates and methods of charging which will be most suitable to Southland, having regard to the facts that the revenue received must be sufficient to pay expenses, that the consumer must get fair treatment and satisfactory service, that load growth must be encouraged and that the method of charging must be simple and easily understood. As a result of our investigations, we have no hesitation in recommending the Board to adopt the two-charge method of rate making for all load to be supplied. The system charges first ? certain amount per K.W. or per K.V.A. of maximum demand, and second a unit rate on the energy consumed. It has the advantages of tending to keep down the peak'load, and of charging the consumer for what he actually uses. As one of the inherent characteristics of hydro electric supply systems is that for the same generating capacity the cost of service falls nearly proportional to increase of sales, it points to the equity of basing rates on a sliding scale decreasing with increased consumption; the expediency of this as a means of stimulating load growth is very apparent. The charges we propose are based on this principle and are as follows; INDUSTRIAL LOAD—O.SOO K.W. Yearly price per K.V.A. of Maximum Demand £io Price per unit £d For loads greater than 500 K.W. and for special industries or those taking loads at off-peak hours, special rates should be made. The estimated re ,r iue from industrial load—£l6,ooo.

BOROUGH LOAD. Where the Board supplies in bulk to a local body which does its own reticulation : Selling Rates: Approx. Yearly price Price Av’g. selling Maximum per K.V.A. per price to Bor.

The revenue expected from this price b £20,000. COUNTRY DOMESTIC LOAD. (Retail Consumers.) Maximum demand rate 8s per month per K.V.A.; minimum charge Bs. Unit rate on sliding scale as follows: MONTHLY CONSUMPTION. 0— 50 units 4d for first fifty units 51—100 units 3d for second fifty units 101 150 units 2d for third fifty units 151 200 units Id for fourth fifty units 201 300 units 4d for third hundred units 300 units and onwards, id, for all over three hundred units. The above charges automatically give consumers the benefit of lower rates with increased consumption. In the case of the consumer who puts in only light and a general utility point for radiator, hot plates, ironing etc., the total charges would be approximately 6d per unit. A figure comparable with costs elsewhere in New Zealand and the addition of more radiators, motor, oven, water heater, etc., is by falling rates, made an attractive proposition. As examples of the application of the method, we show two typical cases of country consumers building up load, the costs being at the above rates based on average consumption. Initial stage: Lights and one general utility point—Units per month, 50; total units, 50; maximum demand charge, 8s; unit charge, 16s 8d; total charge per month, £1 4s 8d; total charge per annum £l4 16s. Second stage: 1 K.W. radiator added— Units per month, 60; total units, 110; maximum demand charge, 10s; unit charge, £1 10s lOd; total charge per month, £2 0s lOd; total charge per annum, £24 10s. Third stage: 2 K.W. oven—Units per month, 120; total units, 230; maximum demand charge, 16s; unit charge, £2 3s; total charge per month, £2 19s; total charge per annum, £35 Bs. Fourth stage: Hot water heater—Units per month, 300; total units, 530; maximum demand charge, £1; unit charge, £2 10s 8d; total charge per month, £3 10s 8d; total charge per annum, £42 Bs. Iron, radiator, hot plates etc., may be connected from this point. Actual price per unit: First stage, 6d; second, 4jd; third, 3Jd; fourth 2d. The yearly cost of radiator in this case, £9 14s; 2 K.W. oven, £lO 18s; 2 K.W. oven and 1 water heater, £l7 18e. ’ COST OF INSTALLATION. Stage 1: Wiring complete, switch board and meters, 8 bulbs, £24 10s to £32 10s; 1 radiator, 1 iron, hot plate, £8; 1 radiator, £4; 2 K.W. oven and hot water heater, including tank, £29; total cost, £65 10s to £73 10s. First stage: Lights and general utility point for iron, hot plates, etc. —Units per month, 50; total units, 50; maximum demand charge, 8s; unit charge, 16s 8d; total per month, £1 4s 8d; total charge per annum, £l4 16s. Second stage: 2 K.W. motor added— Units per month, 100; total units, 150; maximum demand charge, 16s; unit charge, £1 7s 6d; total per month, *£2 13s 6d; total charge per annum, £32 2s. Third stage: 1 K.W. radiator—Units per month, 60; total units, 210; maximum demand charge, £1; unit charge, £2 2s Id; total per month, £3 2e Id; total charge per annum, £37 ss. Fourth stage: 2 K.W. oven—Unite per month, 120; total units, 330; maximum demand charge, £1 10s; unit charge, £2 6s 6d; total per month, £3 16s 6d; total charge per annum, £45 18s. Fifth stage: Water heater—Unite per month, 300; total units, 630; maximum demand charge, £1 15s; unit charge, £2 12s 8d; total per month, £4 7s 8d; total charge per annum, £52 12s. Actual price per unit: First stage, 6d; second, 4|d; third, 3Jdr; fourth, 21d; fifth, W. The yearly cost of 2 K.W. motor in this case, £l7 6s; radiator, £5 3s; 2 K.W. oven, £8 13s; 2 K.W. oven and water heater, £l5 7s. Cost of installation: £ll5 10s to £123 10s. The estimated revenue from the country load is £48,000, giving with the borough and industrial loads a total of £84,000. Loads are as estimated in our report of May 19, 1921, for No. 3 scheme when developed to the £700,000 stage. The yearly expenditure at 12 per cent, (including sinking fund and depreciation), is £84,000; and at 10 per cent, is £70,000. There is thus a margin of £14,000 between the estimated revenue and the amount required to pay interest and working expenses only. It should be noted that apart from the advantages quoted above for the two-charge system of rating, it not only prevents anomalies which occur where the charge is based on a flat rate over the connected load, but it induces the consumer to strive for efficiency in his appliances and methods of working. Installing a motpr of too large a capacity for the work it is called upon to do, driving inefficient plant, buying ovens which waste energy, and careless working generally are factors which the consumer should be guarded against in his own interests and in the interests of the Board. DEPARTMENT APPROVES. Just before the members began to discuss the reports, a telegram was received from the Hon. J. G. Coates, Minister of Public W T orks, as follows:—Report on first phase of the Monowai development by Messrs Hay and Vickerman recommending alternative three, has been examined and concurred in by my department. It is also considered that the scheme of charges is on proper lines and should bring in sufficient revenue to render the scheme self-support-ing. MEMBERS’ MINDS. A SPIRITED DISCUSSION. When the foregoing reports came up for the consideration of the Board, the chairman said that the Board could not go back now; it had spent too much money. It was the Board’s duty to go forward and bring the scheme to a paying point. The ratepayers were looking towards the Board for guidance. Mr Hinchey also referred to the proposed amendment to the Act, emphasising that it gave the Board power to refuse to rate those properties situate outside the radius of the transmission lines. Mr F. Young was informed that the Board was not limited as to its rating. Then, he said, the danger under the proposed amendment would be that the rating might be too high on the area affected. The Hon. A. F. Hawke mentioned that the proposal did not debar the Board from rating—it only left the way open not to rate on those areas not receiving any benefit. Mr H. Fowler stated that, on the £700,000 expenditure proposed under No. 3 scheme, the engineers estimated an expenditure of 12 per cent, on costs and expenses per annum. This meant that £84,000 would have to be found every year. The engineers estimated on consumption of 5700 kilowatts, but it had to beremembered that, unless the Board could supply the boroughs that had electricity already, at a cheaper rate than that their ratepayers were now being charged, the Board’s electricity would not be taken. But this 5700 kilowatts was about what Mr Birks had estimated would be the consumption after five years under the whole scheme. They now proposed to cover one-third of Southland—--350 miles reticulation —instead of the 2050

miles originally intended and yet, it was considered, they were going to get more than half of the originally estimated revenue. This was in spite of the engineers’ own finding that the further the area was reticulated the greater was the load taken, end, therefore, there was no loss in extending into the “hungry” areas. The chairman: You must remember that there are 17,000 people in Invercargill, 1600 in Bluff and those in Winton who are already supplied with electricity. Mr Fowler went c-n to say that he thought it would be advisable to consider going to the Town Council and offering to instal extra plant in the Invercargill powerhouse to carry out scheme 1. Invercargill was already supplied, and, to get the ratepayers to take the Board’s power under the other schemes, something pretty tempting would have to be offered. If the powerhouse was extended, and allowing for reticulation, the work could be apparently carried out for about £250,000. The present power-house had a capacity of 1500 kilowatts and a similar capacity could be added, giving sufficient power to reticulate 300 miles.

The chairman: The aim is to be able to sell cheaper than Invercargill is at present. Mr Fowler: That means that you are making the man in the backblocks pay for

The chairman said that he did not see any use in going into calculations as Mr Fowler was inclined to do. That was done uy the engineers and they could be made 'rom all parts of the compass. If the calculations were wrong they were not the Board’s responsibility—they were the responsibility of the experts.

/ Mr Fowler: Their responsibilities are nil. Southland looks to the Board to take the responsibility. From the experts we had an estimate of something under £1,200,000 'or a scheme that has been aagin estimated to cost over £2,000,000. Mr Fowler went an to say that the canvassers for the Electrification Committee had covered 2040 niles and had secured only £47,000 per annum in promises under the old rates. They certainly could not get that to-day. The ost of installation was too heavy. The chairman: It will be at least two

.ears before we would be able to supply he current and by that time there is going co be a considerable reduction in prices of material.

Mr Fowler said that if the Board could ;et out the load without spending as much is £460,000 in a generator and transmission, out by the installation of a 1500 kilowatt generator at the Invercargill power-house, t should do so. The position should be investigated, and, if the Board could attain his object for the expenditure of something like £50,000 on a generator, the matter should be considered.

The chairman: You are putting your opinion against that of the engineers. Mr Fowler: I am quite aware that the engineers want the job. The chairman: The Department engineers as well as our own support the proposal. It was remarked by Mr R. A. Rodger bhat the engineers were assuming that the cotal output was going to be utilised right way, but that would not be the case for ome years.

bkT Fowler suggested that the Board hould get “round the table” with the Bor>ugh Council—they should have done it 18 months ago—and find out the position. The difference between £50,000 and £400,000 at 12 per cent, was sufficient to pay for the generator in two years. They could then, .f they liked, give it away or scrap it. Of ourse, the Council might cot agree to the proposal, but it would do do harm to ipproach it. - Mr Rodger said that he had gone into he engineers’ scheme only so far as it affecec the Tapanui area. It was evident that be Borough of Tapanui had been included l. ihe figures in order to get the required number of prospective consumers. How many more boroughs had the engineers injluded in order to get the 2400 houses in the area?

They were distinctly told that Boroughs were not to be included except where instructed.

Mr E. Bowmar commented that it was ‘absolutely ridiculous’’ to suppose that they would get £24 per year from borough consumers.

Mr Fowler said that if they could not come to an agreement with the Town Council they could go on with the scheme. They should have gene into these matters a year and a half ago. The chairman: That’s just the point. But now we have to see what can be done to bring things back to a better level. Southland must advance and we must assist it lorward. If Mr Fowler’s proposal is adopted we shall have to undo a good deal of work. Personally, he would have nothing to do with a steam plant.

The Hon. A. F. Hawke stated it as his opinion that there would be no difficulty in getting consumers from the farming community if the average cost to each man was not going to be more than £2O . If it was £24 it would be near enough the mark to be sure that the rate would not be very heavy.

Mr L. Cody said that the cost, of installation was ; the important point to the farmer.

Mr Bowmar: I understand that the Electrification Committee was informed by Mr L. Birks that the scheme could not be undertaken except at a considerable loss. Perhaps Mr Campbell could enlighten us? Mr Campbell (the secretary) did not reply.

The chairman: I knew when I came on the Board that, as a business proposition, the scheme was absolutely hopeless. But we are now trying to get into the position where it will pay its way assisted by a small rate. We have spent nearly £200,000 in the work, and it is our duty to pull it out. The only thing he could see clear was that the scheme must be carried on. (Hear, hear.) He did not think they would get the revenue the engineers estimated, but they would go very near it. If, at the cost of a small loss, they were to help to send Southland along, they were entitled to do so. They could not pass that day without coming to a definite decision; the ratepayers were waiting for them to move.

Mr Fowler explained that he was quite prepared to carry on the main scheme at once if they found it impossible to supply the load immediately required for £50,000 or even £lOO,OOO instead of £400,000. Suppos ing, he suggested, they offered to put in extra plant in the Invercargill station and offered to pay the Council £lO per kilowatt for a term of years. The chairman: The 1500 kilos would not meet the extra supply for long. Mr Fowler: Once we see that the load is going to be absorbed we could go on with the main scheme.

The chairman: Why not go on with it? Mr Fowler: It is going to be too big a loss. Nothing that he could see had changed since Mr Birks had advised them to work out from Invercargill and thus set up the organisation preparatory to going on with the big scheme.

Mr Hinchey said that to do anything worth while the Board would have to double the capacity of the Invercargill power house and that would cost them half as much as to complete the other scheme. Then, they had to remember, the coal question which had brought the hydro scheme about. He had been through the Wellington steam station and did not want to have to do anything with a steam station after what he had seen. He believed in the scheme, said Mr Hawke, and he thought and hoped it would be carried through. But he would say, “scrap the whole thing if it was going to cost die ratepayers £50,000 or £60,000 in interest.” He suggested that Messrs Hinchey and Fowler should be deputed to look into the latter’s suggestion along with the engineers. There was not much that they could do in a fortnight, anyway. The trouble was that most of the members did not have the technical knowledge requisite to deal with the position unassisted. The Board should be unanimous in whatever was done, and he thought that Mr Fowler’s proposal was worth while going into. Mr Rodger drew attention to the fact that the £lOO.OOO expended at Monowai would have to be taken into account in Mr Fowler’s interest estimates. The money would Lav- to remain idle, This was the question;

Was the Board going to stand anything from £25,000 upwards of a loss for a year or two or was it going to scrap the whole thing and meet a loss of £100,000? Before considering anything else they should decide what they were going to do with the major scheme. Messrs J. Fraser and Bowmar stated that they were inclined to agree with Mr Rodger. Mr Bowmareaid that he was favourable to facing the loss and scrapping the scheme. He thought the possibilities of loss were greater in going on than in a rate on what had been spent. He was not afraid of the farmers not taking the power, but he was afraid of the other consumers. It was remarked by the chairman that, before money could be expended in the direction advocated by Mr Fowler, another poll would be necessary. NO. 3 SCHEME APPROVED. MR BOWMAR DISSENTS. “You have scrapped the contract prices, the consumptive charges and the interest rates; now you are going on a lone hand. lam not prepared to do that.” Mr Bowmar spoke thus when, after a draft motion had been submitted by the chairman,, it was put* to the meeting in the following form, moved by Mr Fraser and seconded by Mr Buckingham : That the Board, having carefully considered its present position arising out of the prevailing economic conditions and high, rates of interest, resolves, in the meantime, to carry ' out a section of., the scheme costing, with other requirements, approximately £700,000, to be approved by the Public Works Department, provided that the loan can be raised in London, all work to be suspended until the money is secured, and provided that the Minister undertakes to have the Act amended enabling the Board to remit the rate on pro perty outside the area reticulated. Mr Bowmar went on to say that, he would prefer to see a rate struck and the Board wait for a more opportune time before proceeding with the scheme. The chairman: The public would not al-, low it. Mr Bowmar: It would be for them to say, we have no authority to go on. Other members declared that the Board had authority. Mr Bowmar said that there would be a loss of between £30,000 and £40,000. Petrol was getting cheaper and there would not be the same demand for power. Farmers would curse them “up hill and down dale” if they landed them in a scheme that was ®oing to prove a curse instead of a blessing. Be advised them to wait until things were batter. In the past he had agreed to the chairman’s requests to let his objections be clothed in the press and the minutes, but he would not do so this time. He could not see daylight and he was* not prepared to be an acquiescent party in going on with the scheme. Mr Hinchey pointed out that there would be no need to strike a rate, if they were short, on depreciation. They could overdraft it as had been done at Coleridge, until they could pay it off. Mr Hinchey appealed to Mr Bowmar to be “a sport” and let the passing of the clause be unanimous. Mr T. A. Buckingham spoke optimistically of the scheme eventually being a paying proposition and Mr Young said that it would be deplorable if they let northern provinces get ahead of them in this important direction. Mr Rodger stated that, if the motion was passed, each member would be able to get the opinion of the ratepayers on the subject Mr Fowler said that the motion suited him The piotion was then put and carried, M. Bowmar being the only dissentient. QUESTIONS OF DETAIL. In connection with finance it was decided unanimously on the motion of Messrs Bowmar and Young, to ask Sir Joseph Ward to negotiate for a loan riot exceeding £BOO,OOO, being part of the loan of £1,800,000, the final loan negotiations to be subject to cable confirmation by the Board. Details were left in the hands of the Finance Comm.ttee. It was further decided to ask the Min ister of Public Works to introduce an amendment to the Power Boards Act next session enabling the Board to remit rates on properties not receiving electric current and situated a distance to be defined from the Board’s electric lines. The minister is to be asked for an indication as to whether he will support the request. GENERAL. A number of letters were “received” and others held over sine die. The Finance Committee will consider questions affecting the prosecution of the works or otherwise pending the raising of the proposed loan. A letter from the Auditor-General objected to th© payment of £627 19s Id “excess honorarium” and £2l for attending meetings to the chairman (Mr A. W. Rodger) during the year. The writer also referred to the exceeding of loan moneys on one expenditure, and stated, “I give you friendly warning , that such action in the future will be followed by corresponding action on my part.” In connection with the payments to Mr Rodger it was stated that, unless a refund was marie, the members would be called on to provide the amount. In regard to these matters the secretary re B ad a statement showing that the payments to the chairman had been authorised by .the Minister in so far as the honorarium was concerned. Further, the Board’s solicitors had held that Mr Rodger was entitled to the payment for attending meetings made to other members. So far as the excessive expenditure was concerned, it was intended to have legislation introduced legalising this.—lt was decided to reply to the Auditor-General in these terms.

The report of the engineers dealing with the progress of works was “received.”

Dem. K.V.A. Max. Dem. unit. consumers. 0 . 25 £20 0 id 6.0 26 . 50 18 0 id 6.0 51 . 100 16 0 id 5.0 101 . 200 13 10 id 4.0 201 . 300 10 10 id 3.2 301 . 400 8 0 id 2.8 401 . 500 6 0 id 2.4 501 . 600 4 10 id 2.1 601 . 700 3 0 id 1.9 701 . 800 2 0 id 1.8 801 . 900 2 0 id 1.7 901 . 1000 2 0 id 1.7