:
C.S. 166
:
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(i) the consolidation of profits of the companies
involved for calculating the permitted return; (ii) appropriate procedures for all inter-company
transactions, for example :
(a) sales of electricity;
(b) transfers to the Development Fund;
(c) re-investment of depreciation;
(d) allocation of profits;
(e) distribution of profits;
(f) tax implications;
(b) Permitted Return (paragraphs 17(b) and 20 to 26)
The proposed increase in the level of the permitted return to an average of 15% of average net fixed assets should be resisted. The permitted return should remain at 13% of average net fixed assets but should be kept under review.
(c) Flexible Return (paragraphs 17(c) and 27)
The proposal should not be accepted unless solutions can be found to the problems of unduly heavy reliance on accurate budgetting and of determining genuine cost savings.
(d) Development Fund and Balancing Fund
(paragraphs 17(d), 28 and 29)
The proposed quantification of appropriations to the Development Fund based on mutually agreed 5 10 year financial forecasts should be accepted. However, the proposal to set up a Balancing Fund should be resisted. Instead, profits in excess of the permitted level of return should be credited to the Development Fund, as under the existing Scheme of Control.
(e) Tariff adjustments (paragraphs 17(e), and 30 to 34)
The proposal that there should be an annual meeting between Government and CLP to determine necessary tariff adjustments should be agreed but the proposal to make further quarterly adjust- ments should be rejected.
(f) Interest rate on the Development Fund
(paragraphs 17(f) and 35 to 40)
The proposal to raise the interest rate on the Development Fund from 8% simply to 9% should be resisted. Instead, the possibility of a variable interest rate related either to the return to share- holders or to market lending rates should be consi- dered with CLP. The accrued interest on the
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