The report of the Special Electricity Committee, appointed pursuant to @ resolution amended and passed at the Ratepayers' meeting on March 98, 1915, is published to-day and provides most interesting reading.
A short resume of the circumstances leading up to the appointment of the Committee will not be out of place as affording a means of fully comprehending—_the magnitude of the task undertaken. In 1913 considerable perturbation was felt at the continued necessity for borrowing, which was entailed by the ever-increasing demands on the department and the need for extra plant. Fears were entertained that this repeated borrowing by the department might prejudice loans which the Municipal Council might desire to raise for general purposes.
s an additional reason for considering the position anew, it was urged that the department had outgrown the management designed for it, and it was alleged that there was not that unity between the Council and the department which was required to facilitate the working of a progressive concern.
The scheme introduced by a spe mittee appointed in 1913 w 2 British company be formed to take over the undertaking, the Council holding not less than half the total number of shares—a scheme of partnership between the Council and public in_ which the Council would bring Tls. 3,000,000, the value of the assets of the concern, and the public would subscribe 'Tls. 3,000,000 of working capital, thereby providing enough capital for some time to come. This scheme was rejected. 7 The Council, in accordance with the ratepayers' instructions to prepare a second scheme, asked the Electricity Committee to prepare another. They did so, basing it on the home practice of giving the Committee, which managed the undertaking, as free a hand as pos-jo only matters involving heavy expenditure or the like being necessarily referred to the Council or the Ratepayers for their sanction.
It was felt by the Electricity Committee that the relief afforded by the proposed scheme would be small if they could only advise and not direct, and their scheme was also} framed, accordingly. to give the Committee certain executive powers 80 a8 to enable them to act in the ordinary routine of management. This scheme was referred to the Council's legal advisers and they advised that the Council could not confer executive powers on any Committee, which was not exclusive-, which would have to be issued ly composed of members of the! to take priority over the Council's Council.
Company scheme of 1915 was formulated.
The principles which guided the Council in framing this scheme were follows:—
1.—The undertaking must remain 2.—The electricity borrowings must be distinct from general borrowings, and the electricity undertaking must be primarily responsible for such borrowings.
%—The Council must continue to ex-excise the same control in matters of borrowing and of major importance as under the electricity committee's scheme.
4.—The committes of management must have power legally to relieve the Council of ite Labour in conducting the ordinary management of the concern.
The Council's Solution.
The Council came to the conclusion that, to achieve these objects, the incorporation of the Department as a separate legal entity was necessary. In no other way could the Committee of Management be vested with the necessary power to manage the undertaking; for, as long as it remained simply a' Department of the Council, the Committee must, under the Land Regulations, be advisory and not ¢xecutive. Under this scheme the Council was to hold all the shares and the undertaking was to remain the sole property of the Council.
Objections to s Company.
In the report published to-day the Sub-Committee of the Special Electricity Committee on the Company schemes state that the objections to the third scheme are serious. The corporation to be formed would be British, subject to English law and English' tribunals, instead of to the Court of Consuls, and an important branch of the Municipality would be withdrawn from the jurisdiction established by the Land Regulations.
Further, it would not effectively relieve the Council of the responment of the electricity undertaking. Similar objections would apply to any company scheme. Whatever form the company scheme took, the Council could not expect to retain control unless it owned at least one half of the capital, and if the expansion, which is expected, were to take place, the Council would have to provide its share of the future capital requited. If capital mere to be raised by borrowing debentures, shares, and if special rights were To overcome this difficulty the conferred upon the Council's share holding, such rights would be objectionable to the holders of ordinary shares.
The only scheme which would entirely free the Council of ite response, would be the sale out-of the concern, a proposal which would not be acceptable to the ratepayer: The capital invested in electricity by the municipality is now so large that the Council cannot safely entrust the entire management of the concern to an outside body such as a board of directors, In conclusion the report states Apart from the legal difficulties involved, this Sub-Committee is of opinion, after carefully considering the various alleged benefits to be derived from de-ion of control, earmarking of loans for electricity larger returns to the ratepayers, and expansion of the electricity business and the other advantages, which were claimed, that none of the different schemes put forward for the i of the Department will effectively relieve it from the disadvantages from which it is now suffering, and that until the Land Regulations are altered, the present system of management by an Advisory Committee under the control of the Council must continue, The Special Electricity Committee in their somewhat lengthy report point out that the difficulties, which nin connexion with the al ownership and management of the electricity undertaking, are due to its immense and rapid expansion. The first difficulty was the burdening of the munity with the repayment of the vast sums required for the business; and the second was its outgrowing the form of management originally designed. Prior to 1907 the department was managed by the Council. In that year an advisory committee of three persons was appointed to assist the Council and in 1914 the number was increased to five and a member of the Council itself included upon it. The chief object of having an advisory committee was to relieve the Council as far as possible of the burden of managing the department, but the whole responsibility ultimately reated with the Council under the res-friction on delegation of power imposed by the Land Regulations.
Discussing alternative forms of management, the Committee state
Text read from the printed page and cleaned; old type leaves the occasional error.