WEDNESDAY, NOVEMBER 24, 1982
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ON ARRANGEMENTS FOR ANNUAL REVIEW OF THE FINANCING PLANS, MR JACOBS SAID THE SCHEMES OF CONTROL PROVIDED THAT BEFORE THE COMPANIES COULD INTRODUCE CHANGES OF TARIFF IN ACCORDANCE WITH THE FINANCING PLANS APPROVED BY THE EXECUTIVE COUNCIL, THEY MUST REVIEW WITH THE GOVERNMENT THE COMPANY'S ACTUAL PERFORMANCE AGAINST THE CONTENTS OF THE PLANS.
HE SAID PROVIDED THAT ANY PROPOSED CHANGES WERE WITHIN CERTAIN STATED LIMITS, THE CHANGES COULD BE MADE WITHOUT REFERENCE BACK TO THE EXECUTIVE COUNCIL. BUT, IF THE PROPOSED CHANGES EXCEEDED THOSE LIMITS, THEN THEY MUST BE REFERRED BACK TO THE EXECUTIVE COUNCIL.
+SO FAR THIS HAD NOT HAPPENED IN RELATION TO THE POWER COMPANIES. BUT IF IT DID, WE WOULD REQUIRE A COMPLETELY REVISED FINANCING PLAN, WHICH WOULD HAVE TO BE CONSIDERED IN VERY GREAT DETAIL BY THE FINANCIAL MONITORING UNIT OF THE ECONOMIC SERVICE BRANCH AND MYSELF, HE SAID.
ON COMMENTS THAT THE SCHEMES OF CONTROL DID NOT PROVIDE ADEQUATE SAFEGUARDS FOR CONSUMERS IN THAT THERE WAS NO PROVISION FOR ANY CEILING TO THE INCREASES FOR WHICH THE COMPANIES MIGHT APPLY, MR JACOBS SAID THE CEILING WAS ALREADY THERE BY VIRTUE OF THE FACT THAT DEPARTURE FROM THE APPROVED FINANCING PLANS DICTATED A NEW PLAN SUBJECT TO THE APPROVAL OF THE EXECUTIVE COUNCIL.
ON REMARKS MADE BY MR LEE THAT THE DEVELOPMENT FUNDS HAD BEEN USED AS PROF IT EQUALISATION FUNDS AND THUS GUARANTEED PROFIT, HE SAID THE FUNDS DID NOT FORM PART OF THE SHAREHOLDERS FUNDS AND IT BELONGED TO CONSUMERS AND THE INTEREST EARNED ON THE FUND WAS DEDUCTED FROM THE PERMITTED RETURN AND REBATED TO CONSUMERS.
MR JACOBS SAID THE FUND COULD EVEN OUT THE RETURN BETWEEN ONE YEAR AND ANOTHER BUT IN NO WAY CONSTITUTED A GUARANTEE OF RETURN TO SHAREHOLDERS. THE LOSS WHICH THE COMPANY SUFFERED IN A PARTICULARLY BAD YEAR WOULD BE REFLECTED IN A REDUCED DIVIDEND TO THE SHAREHOLDERS.
+AS FAR AS THE POWER COMPANIES ARE CONCERNED,+ HE SAID, THE SMALL BALANCE AT THE END OF THIS YEAR WILL BE INSUFFICIENT EITHER TO DEFER OR TO REDUCE THE APPROVED INCREASES IN TARIFFS TO ANY APPRECIABLE EXTENT IF CASH FLOW PROBLEMS ARE TO BE AVOIDED.+
MR JACOBS ALSO SPOKE ON THE INTERCONNECTION ARRANGEMENT WHICH COULD MAKE MORE SUFFICIENT USE OF EXISTING GENERATING PLANT AND RESULT IN CONSIDERABLE SAVINGS FOR CONSUMERS, AND THE REVIEW THAT COULD TAKE PLACE NEXT YEAR.
HE SAID MR LEE'S REMINDER OF THE BENEFITS THAT COULD FLOW FROM INTERCONNECTION WOULD BE REPORTED AT THE NEXT MEETING OF THE STEERING COMMITTEE.
ON THE REVIEW, HE SAID GIVEN THAT THE CURRENT INVESTMENT AND DEVELOPMENT PROGRAMME HAD BEEN DESIGNED UPON THE BASIS OF THE EXISTING SCHEMES, IT WAS DIFFICULT TO ENVISAGE ANY BASIC AMENDMENTS TO THESE SCHEMES TAKING PLACE BEFORE THE DATE OF THEIR EXPIRY.
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