THE ELECTRICAL POSITION.

Taranaki Daily News, 22 July 1929, Page 8

THE ELECTRICAL POSITION.

(To the Editor), Sir, —The electric company has worked up a solid business which has paid the shareholders handsomely. It has ■been characterised as a gold mine. Mr. Dixon, who has attended sliareholders’ meetings, wishes he had 1000 shares. What matters to us is that the business is well established and that consumers are using current in large and increasing quantities. The business that has paid the shareholders well wiL pay the ratepayers well at the price fixed, and it should be remembered that the power board’s income or revenue starts the day

the board takes ovei- the business. There is no period of waiting for revenue to come in.

From a business man’s point of view, it is a sound gnwing business, as witness the increase of revenue from power and light alone from £’9,702 in 1925 to £25,610 in 1929, according to the company’s own baiance-sheets, with a corresponding increase in profits from £6,460 in 1925 to £11,371 in 1929. And this extra profit has been earned with little increase in the working expenses —

£10,364 was the figure for working expenses in 1925 as against £11,883 in 1929.

The mention of profits brings me to another point. It has been suggested that the board should license the company to carry on for another five or ten years, and the amazing statement has been made that the board could make a better bargain then. Let us examine this statement. The company’s profits are increasing every year materially, because of increased consumption of current, and because the business is an exl- - or growing one. The goodwill to be paid for any concern depends on its profits, and is calculated on the basis of the profits. Why, sir, the company’s goodwill would increase by leaps and bounds each ytar as its profits increase. There is certainly a substantial sum in the award for goodwill. But in five years it would be very much greater, and in ten years it would be much greater still. In buying out the company the ratepayers will receive not only a sound business, but also all the advantages the future holds in the way of increased business. But now is the time to buy out the company, and not in five or ten years’ time. South Taranaki cannot afford to delay making the purchase. At the price fixed in the award, the business will pay without the possibility of any rate ever being collected. Mr. Lamb agrees it will pay well at the price fixed, and don’t forget that in August last year Mr. Dixon said, “I contend that at £140,000 it is a good proposition.”

The power board will not be content with buying out the company’s business. Service and progress demand more than that. The board will extend the business wherever extensions will pay, but first of all the board will assure itself that each such extension will be a payable proposition. No loan moneys, no capital, will be expended on any extension which would show a loss. Accordingly as the purchase of the company’s business will pay without any possibility of a rate being collected, and as no extensions will be made unless they are payable, it is char that the board’s whole progressive programme will be profitable and that no rate will ever be collected.

The company has catered .mainly for lighting, and quite right too, from its point of view, as the company had to pay dividends to shareholders. The board hopes to give more service to South Taranaki than that by catering for heating on payable business lines as well as lighting. The board is confident that in ranges, household appliances and in water heating there is a considerable field for development, and has been so advised. It has not suited the company to develop on these lines, but the board is out to serve the community. There has been an outcry about our suggestion to develop water heating, and it is admittedly a difficult subject. The point is that water heaters just pay their way without giving any profit or only a small profit. On the other hand, efficient electric water heating would be a great boon in oilT cowsheds and dairy factories. I believe a really good supply of boiling water could be given, and that it would be a huge advantage to the dairy industry. If this can be done without loss, then I would say it was the duty of the board to give this important public service.

Until the ratepayers buy out the electric company, we are in the position of a tenant paying a high rent without any prospect of an interest in the property or of owning it. Once the purchase is completed, the ratepayers will own the business, and it will be developed on lines of sendee to the community, who at tire end of the term fixed for the loan will hold the whole undertaking free of debt. We are working not only for the present, but also for the future in the matter of an important public utility. I am, etc., J. B. MURDOCH. Hawera, July 19. '