D.—l

Percentage earned on Operating-capital after paying Net Operating-expenses.

In the North island the Depreciation Reserve required by the State Supply of Electrical Energy Act —viz., 12| per cent, of the capital invested—-has already been reached, and an amount sufficient only to maintain this per cent, is therefore chargeable to depreciation, with a consequential credit balance of £530,170 on the year's operations. This balance has been used to reduce arrears of statutory sinking-fund provision which have been accumulated in earlier years. In the South Island the Depreciation Reserve has not yet reached the 12|-per-cent. limit mentioned above, and consequently the sum of £82,617 has this year been charged to Depreciation Reserve. After charging this amount the year's operations show a profit of £58,535. The general position to date is that the Electric Supply Account has been able to meet all operating and interest charges, has provided the statutory requirement of £1,680,732 for depreciation, and, in addition, has provided £1,091,878 towards sinking-fund requirement of £1,649,954. Also, £87,199 has been paid to General Reserve from profits made from time to time on Lake Coleridge system. In other words, the electric-supply system as a whole has paid interest and operating charges and provided £2,859,809 in reserves, of which £496,364 has already been utilized by Treasury for the paying-off of loans which formed part of the original capital. There are, however, still arrears of sinking fund, amounting to £558,076, to be met. Electric-supply Operating Accounts. (a) North Island Electric-power Supply. The Arapuni-Mangahao-Waikaremoana plants have operated satisfactorily throughout the past year, and the revenue shows an increase of £148,640 over that of the previous year. The result of the year's operations was as follows : — £ £ Capital investment at end of year . . 9,710,555 Revenue .. .. .. 1,127,132 Operating-expenses . . 200,438 Balance .. .. £926,694 The balance has been used in paying interest charges (£353,676) and £33,547 as the Department's share of the capital charges on the King's Wharf generatingplant of the Auckland Electric-power Board, also £7,228 to provide the full statutory contribution to depreciation, and £2,073 has been charged against cost of raising loans. The reserve accounts established in connection with this system show that £1,042,933 has been credited to depreciation and £741,038 to sinking fund.

XIV