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----......-. SAYINGS OF THE…




---GolwynBayGas & Electric…


GolwynBayGas & Electric Light Undertakings. (BY AN EXPERT.) Since the, publication of the financial results of the gas and electricity department far the year ended 31st March last, many statements have been made, and, in many cases it would appear they have been made without a full .Y knowledge of all the facts relating thereto. The ,general drift has been to prove, or rather attempt to prove, that these two trading concerns are hopelessly insolvent, and, in the absence of any authoritative contradictioin., such has come to be regarded as an undeniable fact. Whether the statements are true or not, the effect is most damaging to the welfare of Colwyn Bay; but if not true, then I think the time has come when the true facts should be presented in such a manner as may, easily be understood. I wish to say, first of all, that these statements are groundless in fact, and instead of being hopelessly insolvent, these concerns constitute the most valuable assets of the Council, as I hope to. shew from the following statement, and the remarks thereon — Gas. Electric. i. Income 14,660 4,320 2. Expenditure (excluding Principal and Interest 10.757 •• 2'§t'' 3. Trade Protit •• 3'9°3 •• I> 4. Capital Outlay 93,819 32.S&0 5. Rate of protit per cent. on the Capital Outlay 4'16.. 5'53 6. Profits capitalised on a 3 per cent. iOij-joSo • 48,080 7. Mortgage Debt 86,7 3 -9,436 8. Surplus. Capitalised profits in excess of Mortgage Debt 17,367 18,644 It will be seen from the above figures that the profits of these trading concerns, if capitalised at 3 per cent., are sufficient to pay off, not only the whole of the loan debt, but also to create the substantial surpluses shewn against item No.. 8, amounting to ^36,011. I do not suggest that these capitallsed, profits are intended to represent, the true sale value of the undertakings (though even that is a debat- able point), but rather to indicate the extent to which the Council has been justified, from a fin- ancial standpoint, in carrying on the works. Much has been said, from time to time against the growing debt of Municipalities as a result of Municipal trading, and this statement is de- signed to slhew on, the one hand what the debt on the Colwyn Bay undertakings is, and on the other hand the working value to Oolwyn Bay or the works and properties represented by the out- law. To my mind, the most logical method of arriv- ing at this value is suggested by the fact-that upon the capital monies which the Council have had to borrow to inaugurate, or acquire, and de- velope these undertakings, an average rate of interest of 34 per cent. is being paid. It is clear, therefore, that any capital investment which (after making proper provision for depre- ciation) has yielded a profit of 3% per cent., has enabled the concern to pay its way. If, how- ever, greater profits than 3 per cent. are made, a greater amount of capital must necessarily be taken in order to bring the percentage of profit to the 3 per cent. level, and the amounts shewn as capitalised trade profits are the amounts which, if sunk, would produce profits of exactly 3 per cent. For instance, the electric undertaking, with a capital outlay of ^'32,56^, yielded a trade profit of £ 1,803, or 5.53 per cent., whereas a profit of 3^ per cent. on this capital would amount to only £ 1,2.21, and consequently the amount of capital of which: £ 1,803 would represent 3M per ceinit. is. £ 48,080. The sale value of Municipal undertakings can- not, of course, be guaged by the profits actually made. Councils do not exist for the purpose of making profits out of their undertakings, but rather to use those undertakings to the general advantage of the ratepayers. Charges for pro- ducts or cornimiodities are. often cut down as low as the cost of production will allow, and the profits are necessarily much smaller than would be made by a company working solely for the benefit of shareholders. Supposing, for a moment, that these concerns were in the hands of private companies. The Council would, of course, be compelled to con- tract with them for the public lighting of the streets and promenades. The public lighting and maintenance charges for the past year amount to £ I,549 (gas, ^878; electric, £671); but these are based on the ridiculously low figures of 2S. per 1,000 cubic feet for gas, and 2d. per unit for electricity, whereas ordinary consumers are charged 3s. 4d. and 5d. respec- tively. Of course the first-mentioned rates are much below the actual cost price, and it is certain) that a company would increase these charges very materially and I suggest that, under such cir- cumstances, public lighting charges, would easily reach the sum of ZiSoo, the equivalent of a 6d. rate; and moreover, the ratepayers would then be compelled to pay this amount by means of the District Rate. This is a point I wish to make very clear, as I am afraid it is not generally understood. For the past four years the rate- payers have not been called upon to contribute a single penny towards the cost of Lighting the town. The gas and electric concerns have borne all these charges out of their profits, profits which could, and might have been well utilised in de- veloping the concern, instead of raising new loans (with the resultant loan repayments) for that purpose, and during the four years referred to, the amount thus- borne by the concerns is no less a sum than £4,767 (gas, £ 2,929; electric, -f 1,838) In addition to this, a sum of £ 2,100 (gas, 6850 electric, £ 1,2.50) has been trans- ferred from the funds of the concerns to the general district fundi, making a grand total of £ 6,867 in direct relief of rates, which represents, on ,the present assessable value of the town, a rate of I s. nd. in the Z. Surely, in view of these facts, it must' be ad- mitted, even by the most critical, that the con- cerns have behaved towards the ratepayers in a magnanimous manner, and I am confident it oniliy noeds thajt these: facts be made fully known in order that they _may be fully appreciated. During the past few years uolwyn, Bay has ,passed through probably the most critical period of its existence,, and it has only been by the 'valuable aid which these concerns have been able to afford, thait the rates have been kept fairly normal, as a result of which, we as a town are enjoying a measure of prosperity, which otherwise would not have been ours.

North Wales Electricity¡ Concerns.I

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