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From the Rolls-Royce experimental archive: a quarter of a million communications from Rolls-Royce, 1906 to 1960's. Documents from the Sir Henry Royce Memorial Foundation (SHRMF).
Address to the Western Centre regarding the structure and financing of electricity supply authorities.

Identifier  ExFiles\Box 24\2\  Scan218
Date  21th February 1922 guessed
  
HIGHFIELD: ADDRESS TO THE WESTERN CENTRE.
793
In other words, they were to do the work all over again, and this fact became so clear in the discussions on the Bill that the part of the Bill proposing to set up District Boards was eliminated and there were left in place of the District Boards bodies to be known as Joint Electricity Authorities. I cannot see that these bodies can be of any service unless they are able to raise money, and if, by some subsequent legislation, they are given power to raise money they become merely District Electricity Boards shorn of some compulsory powers. I am conservative in these matters. I like to see steady evolution. I am no believer in the scheme of setting up a vast new authority where adequate authorities already exist. I have seen many instances where the transfer of great undertakings to new authorities has resulted in loss to all parties concerned and has usually resulted in higher prices to the consumer. I have in mind the transfer of the Marylebone undertaking of the Metropolitan Electric Supply Company to the Corporation, and of the telephones to the State, and I think that in the business of electricity supply in any area where there already exists a power company it ought to be possible for those now conducting the business to effect their own arrangements for joint working and a better use of existing assets without the ponderous machinery of Joint Electricity Authorities. In this connection, the scheme proposed by the companies and municipalities in South Lancashire will be watched with much interest. This scheme and the Birmingham scheme, where the Power Company and the Birmingham Corporation propose to work together, seem to me to promise great results. All that is wanted is sweet reasonableness on the part of those conducting the business.
In the Power Company’s areas I can see no object whatever in setting up any Joint Authority. If it cannot raise money it can effect nothing; if it be given power to raise money and to erect works it will simply duplicate to some extent the work of the Company, with resulting waste of capital and higher cost.
In areas where there is no power company an operating Joint Authority might be useful, but widely distributed electrical supply is in my view far more likely to succeed if managed by a compact Board working on proper commercial lines rather than by a large mixed public body whose members are directly responsible neither to ratepayers nor to shareholders.
I do not at all believe in the principle of compulsion on the part of the Electricity Commissioners or any other outside authority. Let us take an example :— Assume that in an Electricity District the engineers of two authorities advise their Boards or Councils that the cost of linking up their systems would give inadequate commercial results, although from a technical point of view the scheme might be advisable, and that, consequently, the authorities decide that they will not find the money for the scheme. How, in these circumstances, can an outside authority insist on the linking up being made unless it is prepared to bear the responsibility of the further finance of the undertakings? This kind of consideration is always arising in electricity supply. It may be perfectly right to call in arbitrators to determine points of difference in estimates, but it cannot be right, once the estimates are accepted as sound, that an outside body should have the power to insist on the money being spent unless that body is prepared to find not only the money for the immediate scheme but also the further sums required for the finance of the undertaking. It must, in fact, take over financial liability.
I have spent the past two days with the Chairman of this Centre and Mr. Chamen and I have seen a good deal of the district, and it appears that the problem here is a big one in that the generation of electricity by private plants is on a much larger scale than that by public authorities. The power company in the district has had an unfortunate history, but there is no doubt that recently it has steadily improved its position, and I should think that those who have had the enterprise to support it have fairly earned the respect due to their efforts to save the property and so to help the community.
The power company have formulated a scheme for helping to supply the future demands of the district on a co-operative basis. The proposal, as I understand it, is an extension of the well-tried principle on which it has worked in past years, namely, that those who require electricity should when possible become shareholders in the power company, and they now suggest that municipalities requiring a supply in bulk should contribute to the capital cost of providing the supply by lending money to the company or by acquiring shares. I see no reason at all why the corporations should not acquire debentures, provided they are well secured. The money to be raised will probably be less in amount than they will raise for their own plant, and the security should be greater as the debentures are protected by the share capital. I am not so sure about investing in ordinary shares. It is true, of course, that the risk is no greater than the similar investment in their own undertaking, except so far as supplying power in a scattered district must always be more risky than supplying power in an urban area with a large lighting revenue. Light is a commodity which all must use, and the use of which is not so much affected by trade conditions as the supply of power. In fact, the supply of power in a wide area involves some of the risks run by the ordinary manufacturer and trader. I like the company’s scheme and hope it will meet with success, as the great thing is to get to work and carry out any good scheme. We shall all be dead before a perfect scheme is evolved.
It is not my intention to suggest that municipal electricity undertakings should confine their activities to lighting, but that they should supply all the power they possibly can within their areas. I feel that a municipality is not so well equipped for providing power supplies over wide areas, although in many instances the power company might well buy electricity from the municipality.
I read with great interest Mr. Chamen’s recent address on financial matters; at the end he drew a pretty picture of what might be if human nature were different from what in fact it is. It was a dainty illustration and not without a solid element of truth. There is no doubt that the real foundation on which improvement in trade, our
  
  


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