XN000022-1982-11-10 — Page 7

1

WEDNESDAY, NOVEMBER 10, 1982

EFFORT TO REMOVE AIR OF MYSTERY' OVER UTILITIES

*****

THE HOPE THAT THE PUBLICATION OF THE SCHEMES OF CONTROL FOR PUBLIC UTILITIES WILL HAVE GONE SOME WAY TOWARDS REMOVING THE AIR OF MYSTERY PREVIOUSLY SURROUNDING THEM, WAS EXPRESSED TODAY BY THE SECRETARY FOR ECONOMIC SERVICES, THE HON PIERS JACOBS.

THE GOVERNMENT'S ROLE IN RELATION TO THE PUBLIC UTILITIES WAS ESSENTIALLY TO PROVIDE A MONITORING SERVICE, NOT SUPERVISION, HE TOLD THE LEGISLATIVE COUNCIL.

MR JACOBS SAID THE SCHEMES OF CONTROL CONSTITUTED BINDING CONTRACTS BETWEEN THE GOVERNMENT AND THE COMPANIES WHICH COULD NOT BE ALTERED UNILATERALLY, AND IT WAS ON THE BASIS OF THE SCHEMES OF CONTROL THAT THE COMPANIES FINANCED THEIR OPERATIONS.

+THE SCHEMES PROVIDE FOR A REASONABLE RETURN FOR INVESTORS, AND DETAIL THE MANNER IN WHICH THE COMPANIES' FINANCIAL AFFAIRS SHOULD BE ACCOUNTED FOR, HE SAID.

+ IT IS ON THESE BASES, THE RETURN TO INVESTORS ON THE ONE HAND AND THE CONSISTENT APPROACH TO VARIOUS MATTERS PROVIDED BY THE SCHEMES ON THE OTHER, THAT THE COMPANIES ARE ABLE TO APPROACH THE FINANCIAL MARKETS IN ORDER TO ARRANGE THE FINANCING OF THEIR OPERATIONS.

+MOST OF THE UTILITIES ARE CAPITAL INTENSIVE AND HAVE TO MEET A GROWING DEMAND FOR THEIR SERVICES. IN THESE CIRCUMSTANCES, FINANCING PLANS HAVE TO BE PROJECTED INTO THE FUTURE.+

MR JACOBS SAID WE WERE ALREADY BEGINNING TO ENJOY THE BENEFITS OF THE POWER COMPANIES' EXPANSION INTO COAL FUEL GENERATION.

+ IF THE STABILITY PROVIDED BY THE SCHEMES OF CONTROL WERE REMOVED, THE COMPANIES' ABILITY TO OBTAIN THE FINANCE FOR THEIR FUTURE OPERATIONS OF THIS KIND WOULD BE SEVERELY IMPAIRED TO THE DETRIMENT OF THE CONSUMER, HE ADDED,

MR JACOBS SAID THAT WHEN THE COMPANIES' FINANCING PLANS WERE PRESENTED FOR APPROVAL, THEY WERE SUBJECTED TO VIGOROUS PROFESSIONAL EXAMINATION BY THE FINANCIAL MONITORING UNIT OF THE ECONOMIC SERVICES BRANCH AND OTHER BRANCHES AND DEPARTMENTS OF THE GOVERNMENT.

WHERE NECESSARY, HE SAID, OUTSIDE CONSULTANTS WERE ALSO ENGAGED ON THE TECHNICAL ASPECTS.

+AND LASTLY, THE FINANCING PLANS, INCLUDING THE PROJECTED REVISIONS TO TARIFFS ARE SUBMITTED FOR THE APPROVAL OF THE EXECUTIVE COUNCIL, HE SAID.

AS FAR AS THE TARIFFS WERE CONCERNED, MR JACOBS SAID, THE COMPANIES THEMSELVES WOULD EXPLAIN THESE TO THE PUBLIC. +THE RESPONSIBILITY FOR PROVIDING A RELIABLE SERVICE AT A REASONABLE PRICE RESTS PRIMARILY WITH THE COMPANIES CONCERNED, HE SAID.

'ON CONSUMER