When speaking on this debate on the last occasion, I mentioned that the E.S.B. were obliged to provide supply to every rural householder, where the capital cost did not exceed 16 times the revenue derived from the annual fixed charge. In 1951, that ratio was extended to 20 to 1 and in September, 1952, the ratio was again extended to 24 to 1. The present position is that the board will provide supply to any householder, where the capital cost does not exceed 24 times the revenue derivable from the annual fixed charge, and in any case where it does not exceed 24 times the revenue, the supply is put in without any extra special charge.
I think this was a great concession. It eased the charges on a very large number of rural consumers. Had the board insisted, as they might have done, on retaining a 16 to 1 ratio, it would have meant that a very large number of consumers would have been put into the category of those who would have to pay the special fixed charges.
As it is 24 to 1, revenue works out at 4.2 per cent. The board expect a return from the rural householder of only 4.2 per cent. They may get a lesser return in some cases, but they are prepared to go to the extreme limit of supplying any rural householder with electric light and power, where they will get a return of only 4.2 per cent. Sinking fund and interest charges alone amount to 5.5 per cent. and where the board put on this extra special fixed charge, they calculate the amount which the householder has to pay on the basis of only 4.2 per cent.
Deputy McQuillan, when moving the motion, mentioned that, after a certain number of years, these householders who were obliged to pay the special fixed charge had paid for the wiring and that they were still obliged to pay for many years—for ever, you might say—although in a certain number of years they would pay for the complete cost of wiring and bringing the poles to their houses. As I have stated, the basis on which that charge is computed is still only 4.2 per cent. so that the charge does not meet even the sinking fund charge, depreciation and redemption of capital. There is no allowance made in the extra special charge for either depreciation or redemption of capital. Therefore, there is no question of the person having ever paid for that extra amount. The charge is just put on to meet the ordinary charges and in fact it does not meet the charges.
If allowance were made for the special fixed charge to take in capital costs, such as depreciation, apart from sinking fund charges and redemption of capital, the charge which the board would be obliged to put on would be so heavy that any householder who would not be entitled to get supply at the normal fixed charge would not take the current. He could not afford to take it, because, instead of paying 4.2 per cent., which would mean possibly, in some cases, 10/- per two-monthly period and in other cases, £1 per two-monthly period, the householder would be compelled to pay possibly 30/- or £3 per two-monthly period, which would put the cost outside his capacity altogether. By giving supply at the lower rate of 4.2 per cent., which is based on the normal fixed charge ratio of 24 to 1, supply is brought within the reach of most people, no matter how isolated they may be.
A suggestion was thrown out towards the close of the debate on the last occasion that had the Government not withdrawn the £250,000 subsidy which they had been giving to the board, the board would now be in a position to abolish all these fixed charges. The Deputy who made that suggestion had been in charge of my Department for many years and, as far as I know, had never made any suggestion to the board that they should abolish these fixed charges. He was the person who instructed the board originally about the fixed charges and, again, I admit, he was the person who extended the ratio to 20 to 1 and to 24 to 1. But the Deputy at that time did not make any suggestion to the board that they should abolish these charges and he took it that it was only just and fair that that extra special charge should be made in certain cases to make the rural electrification scheme reasonably economic. Without that, it could not have been faced at all.
Another point is that, if these extra special charges were removed, the only people who would have to pay the piper would be the rural consumers already connected or those who will be connected in future and I understand— and I have been supplied with data— that that would amount to anything up to 10 per cent. on the general body of rural consumers.
