The purpose of the Bill is to authorise the increase to £50 million of the existing statutory limit of £42 million on the expenditure which the Electricity Supply Board may incur on the electrification of rural areas.
Expenditure on the rural electrification scheme at 31st March, 1968 was nearly £41½ million and the Board will soon reach the existing statutory limit of £42 million. The Board is at present doing a systematic post-development scheme in the course of which all unconnected householders will have a further opportunity of taking supply. The increase of the limit to £50 million should enable the Board to complete the scheme. This will take another five years as the Board will have to go back over the areas already covered by the post-development scheme so that all householders will have an opportunity of taking supply at the improved terms recently announced. I shall refer to these improved terms later.
The number of rural houses connected at 31st March, 1968 was 334,000, which is about 87 per cent of the estimated total of 384,000. By the time the scheme is completed, electricity at a reasonable cost will be available to 97½ per cent of rural homes and, on the ESB estimates, approximately 92 per cent of the existing total of rural houses will have accepted the terms offered. I may mention that, of the number not expected to take supply, nearly half could have it at the normal standard charges, that is to say, without any special service charges, and a great many others at very little more than the standard charges.
The Government have been concerned to arrange that, within practical limits, electricity is available to the maximum number at reasonable charges. The ESB system of charges consists of a fixed charge, to meet the costs which arise from connecting the consumer to the supply, and a unit charge, which is the charge for the actual current used. The charge per unit is the same for all rural consumers. In some cases, because of the high cost of connection, the normal fixed charge, related to the size of the premises, is not sufficient to meet the annual fixed costs to the ESB and the ESB find it necessary to impose special service charges. The Government considered the question of these charges.
It has been argued that special service charges should be abolished and that everyone in the country should be entitled to electricity at the same cost —on the analogy that letters are delivered at a flat rate to all rural as well as urban areas. However, this is not a valid comparison. The delivery of letters to isolated areas does not involve heavy capital outlay and substantial annual maintenance costs, irrespective of the use made of the service. A flat rate is therefore possible. In the case of the telephone service, however, which is comparable to electricity, in that it involves heavy capital costs, the customer in an isolated position has to pay an additional charge because of the extra costs involved in providing the service and then pays the standard rental and rate for calls made.
Similarly an electricity consumer in an isolated position, who receives current at the standard rate, must expect to contribute to the extra high cost of connecting him to the electricity distribution system.
If there were no special service charges the ESB would have to incur heavy capital expenditure in bringing supply to very isolated houses—in some cases the capital cost could be £1,000—and then receive an utterly inadequate revenue from the connection. In these areas the very substantial subsidy from taxpayers and consumers which would be incurred would be out of all proportion to the benefits received. Indeed the ESB have found that many of the isolated houses seem likely to be abandoned when the present occupancy ceases. The heavy capital expenditure involved in providing supply would in such cases be wasted. I may say that in one form or another special service charges are to be found in electricity tariffs the world over.
Nevertheless, the Government are very conscious of the fact that the special service charges payable by some rural consumers were very high. It was estimated that at 31st March, 1967 there were about 22,500 unconnected houses the special service charges for which would add 50 per cent or more to their two-monthly fixed charges. I do not know what the upper limit might be, but over the 22,500 houses the average two-monthly fixed charge would amount to about five times the normal charge based on the size of the premises. The Government, therefore, have decided to reduce the level of special service charges. Where special service charges, as previously calculated, are over half the normal charges, reductions are being granted. The consumers who will gain most benefit are those who would have to pay the highest special service charges; in many cases these charges will be reduced by a half to two-thirds and even more in some cases. Those whose charges, as previously calculated, were only slightly over half the normal charges will gain small reductions; special service charges which are half or less of the normal fixed charges remain unchanged.
To show clearly how much rural consumers are going to benefit, I think I should give the House some typical examples of the reductions which will result. The occupant of a county council cottage paying, two-monthly, 14/-fixed charge and £1 15s 6d special service charge will have his special service charge reduced to 11/5d. A consumer, similarly housed, but who because of higher connection costs, was previously liable for a special service charge of £2 12s will have it reduced to 16/-. A consumer with a medium-sized farm paying, two-monthly, £1 5s fixed charge and £2 14s special service charge will now pay a reduced special service charge of £1. A large farmer, with a fixed charge of £2 5s and a special service charge of £2 18s 4d will now pay a special service charge of £1 9s 11d. The House will see, therefore, that the reductions are quite substantial.
These reductions are being introduced by agreement with the ESB and do not require amending legislation. It was therefore decided to introduce the revised terms immediately—as from 1st June, 1968, for new customers. Existing consumers will benefit from and including their accounts for the September/October and October/November billing periods. These are the earliest dates from which it is practical for the ESB to introduce the modified charges. By the end of the post-de velopment scheme, the reductions will add about £300,000 to the Board's annual loss on rural electrification. This will have to be borne by the Board's consumers generally and no increase in the statutory State subsidy payable to the ESB is contemplated.
The ESB, while they are forbidden by law to make profits, are, also by law, required to avoid losses and the additional loss expected on the extension of rural electrification will require to be met by surplus revenue from existing consumers.
Any householders who did not accept supply because of the high special service charges when the ESB were recanvassing their areas and who now wish to obtain connection, may get in touch with their local ESB offices. I think I should stress, however, that while some householders may be able to get supply at the revised terms without delay, people in general will find that they will have to wait until the ESB come to do their areas. In carrying out the post-development scheme, the ESB are recanvassing the country in a planned sequence of areas so as to ensure orderly development and to keep costs to a minimum. Any departure from the planned arrangements upsets the Board's programme and increases the costs involved. Preference for any area can be arranged only by delaying supply to other areas. It is clearly impossible for the ESB to connect immediately all who will now seek supply. The Board expect that it will take them nearly five years to give all unconnected householders in the country an opportunity to take supply at the revised terms.
As I have explained, the new arrangements for rural electrification are going to mean substantial reductions for those who would have to pay high special service charges. There may be some householders, however, in areas isolated from the Board's network, who will consider even the reduced charges still too high. For these people we are increasing the subsidy for the installation of bottled gas to £35. The former subsidy of £10 was intended to provide only a basic installation. In this way it was the equivalent of the rural electrification subsidy which provides only for the connection of a premises as far as the meter, leaving wiring and fittings on the consumer's side of the meter to be provided by the consumer himself. The higher subsidy of £35 will pay for a more complete bottled gas installation. It should cover the basic equipment and three, or perhaps more, consumption points, depending on the circumstances, which may be used for lighting, heating, cooking or other appliances. This grant will be available to all rural householders whose special service charges for electricity, under the revised terms, would still be more than 100 per cent of the normal charges. Enquiries about the increased grant, which does not require amending legislation, should be addressed to my Department.
While the cost of rural electrification is high, the benefits to the rural population are considerable. It has spread the amenities of modern living all over the country. This is clearly illustrated by the fact that there are now 140,000 television sets, 240,000 electric irons, 160,000 electric kettles as well as many thousand washing machines, electric cookers, refrigerators and storage heaters in rural homes. On the other hand, electricity has provided the rural population with greater opportunities for relaxation to enjoy these benefits, with the aids which it has made available for easier farming and simultaneous increased farm productivity. In milking, for instance, the use of electrical milking machines has increased from about 18,000 in 1963-64 to nearly 30,000 at present. There has also been an increase in the use of electric milk coolers. Piped water is, of course, essential for efficient farming operations and this is easily provided by electricity; about 60,000 electric water pumps have now been installed.
I think I need say no more about the benefits of rural electrification. As I have said, the purpose of the Bill is to authorise the ESB to incur the capital expenditure necessary to complete the current post-development scheme. The present proportion of rural households connected, 87 per cent, must be considered very good when one has regard to the fact that our farmhouses tend to be isolated and not sited in groups as in some countries. Over the next five years we expect to raise the proportion to about 92 per cent, with connection available to many other houses which could bring the total even closer to 100 per cent. At that stage we should be among the most advanced countries in the matter of rural electrification. In fact with the revised charges and the continuation of the subsidy, the Government is seeing to it that practically every unconnected householder in the country will now be able to enjoy the benefits of electricity on reasonable terms.
I commend the Bill to the House.
