DOCUMENT IS THE PROPERTY OP HIS BRITANNIC MAJESTY5S GOVERNMENT.

CABINET. 3 0 2Tj Report of the CoiamSttee appointed to review 264/85. the National ' Problem of the ,Supply of Electrical Energy.

I circulate herewith, for the information of members

of the Cabinet, a copy of the Report of the Committee appointed

to review the National Problem of'tho Supply of Electrical

Energy of whioh Lord Weir of Eastwood was Chairman and the

other members were Lord Porres and Sir Hardman Lever.

I also circulate a covering letter whioh Lord Weir

addressed to me wit h the Report,

(Sgd.) WILFRID ASHLEY,

25th May, 1925. MINISTRY OF TRANSPORT, 6, Whitehall Gardens-, S.W.I.

20th May, 19535.

Sir,

In -transmitting our Report on the subject of electricity, we desire to draw your attention to two points which we consider of importance, but which we think can be better dealt with in a letter than In the body of the Report.

(1) An essential preliminary to the construction of the "gridiron" will be the making of a complete eleotrical survey of the whole area, which we are advised will take some six months, As the "gridiron" organisation cannot be formed prior to legislation, and we understand that the Electricity Commissioners cannot spare the staff to carry out thie important work, it follows that there must be a delay of some months after the necessary legislation has been passed before the constructlon­ al work on the "gridiron" can be commenced.-

We have considered whether it would be possible or expedient to avoid the loss of this time.

Our proposals, if accepted, will give a large amount of employment, and,we are of opinion that it would benefit the national situation if this employment could be made available at the earliest possible moment.

Further we feel bound to point out that, whatever decision the Government may reach on our recommendations as a whole, we believe that any possible remedial scheme for British Electricity must Include the provision of the "gridiron" as a physical entity.

We therefore suggest that, in anticipation of approval and concurrently with the preparation of necessary legislation, the Minister of Transport should be authorised to take the necessary steps to put this survey in hand immediately ao that the Central Electrioity Board may be in a position to commence constructional work directly it is created.

We suggest that the survey should be carried out under the general guidanoe of the Advisory Expert Committee (viz Messrs. C.H. Mera, J,M, Kenedy and S.L. Pearce, with Sir John Snell as Chairman) who should lay down the general lines of the survey in accordance with the Technical Scheme prepared by Sir John Snell. We reoommend that, the staffs of two or three leading firms of consulting eleotrical engineers should be employed and we suggest that the most obvious general policy woulOf be for each firm to be responsible for a defined area.

(2) in our Report we point out that the existence of the "gridiron" will radically alter the position as regards the possibilities of the electrification of railway^, and v/e recommend that steps should be taken to ensure that railway electrification is reviewed and reconsidered.

We have not gone -further than this partly because the matter is strictly outside ouc* fcenroa of reference, and partly because we £eel that any more definite recommendation in a document likely to be published might have the ex"fect of restricting the alternatives open to the Government.

. Col. The Rt. Hon. Wilfrid Aghlay, M, P., Ministry of Transport, VJhit shall, S.W.I. We desire, however, to record our opinion that a Committee should be at once appointed to investigate the whole question of the electrification of railways, including the capital involved and the economies which would result.

I am, Sir, Your obedient Servant,

(Signed) WEIR,

Chairman. MINISTRY OF TRANSPORT.

Confidential.

REPORT

OF THE Committee appointed to review the National Problem of the Supply of Electrical Energy. MINISTRY OF TRANSPORT.

Confidential.

REPORT

OF THE

Committee appointed to review the National Problem of the Supply of Electrical Energy. Members of the Committee.

THE EIGHT HON. LORD WEIR OF EASTWOOD (Chairman).

THE RIGHT HON. LORD FORRES OF GLENOGIL.

SIR S. HARDMAN LEVER, BART., K.C.B.

MR. 0. A. SHERRARD (Secretary).

Technical Adviser.

SIR JOHN SNELL, M.INST.C.E., M.I.E.E. REPORT.

To the Right Hon. Lt.-Col. WILFRID ASHLEY, M.P., Minister of Transport.

PART I. SIR, 1. Terms of Reference.-We were appointed in January of this year to review the national problem of the supply of electrical energy and to present a report on the broad lines of policy which should be adopted to ensure its most efficient and effective development. 2. Introduction.—The position of the electrical supply in Great Britain was very thoroughly and completely investigated in 1918 by the Electric Power Supply Committee under the Chairmanship of Sir Archibald Williamson, Bart, (now Lord Forres), following upon the work of several earlier committees. This fact has absolved us from the necessity for tracing in detail the early history, legislative and otherwise, of the causes which have led to the present position. 3. We have, however, enjoyed one advantage which was denied to our predecessors, While they took the evidence of many expert witnesses, technical, administrative and commercial, besides hearing the representatives of diverse interests, they were necessarily deprived of the assistance and experience of the body which they themselves brought into existence—the Electricity Commis­ sioners. Whatever may be the position of electricity here compared with other countries, Great Britain is unique in having a body of men who, for over five years, have devoted their entire energies, their patience and their technical and administrative ability to investigating the detailed conditions of this industry and public service throughout the country. The Commissioners, in fact, have functioned as an expert committee carrying out a continuous investigation. The results of their endeavours and experience have been at our disposal. 4. The subject is complex, entailing a mass of technical, administrative and legislative considerations. In order, therefore, that a proper sense of proportion might be preserved, we felt it essential to adopt some one central objective at which to aim. The terms of reference, the necessities of the case, and the whole course of our investigations have led us to adopt, as this definite goal, the reduction in price and the greatest availability of electrical energy to the consumer, ranging from the largest industrial user to the artisan in his home. We felt that if this was kept steadily in vieAv , individual and local interests would fall into their proper place. 5. Regarding the matter from this view-point of the needs of the country as a whole, we find a great consensus of expert opinion, with which we fully and entirely agree, that Great Britain is undoubtedly favourably placed as a potential producer and distributor of cheap electrical energy. We lay stress on this point owing to the very prevalent impression that there are many countries, more especially those with large sources of water power, with which Great Britain cannot compete. In our opinion this view is an exaggeration which is likely to encourage the inadequate methods now employed and prevent expansion on a better system. 6. In the broadest sense, it cannot be denied that while the influence of the Electricity Commissioners during the last five years has been good, their powers have been inadequate to produce effective results; and our review confirms the opinion of the earlier Committee, that, generally speaking, we are still to-day neither generating, transmitting nor distributing electrical energy as cheaply as we might, nor are we consuming electrical energy to anything like the same extent as other highly civilised industrial countries. V. We are also bound to add, without necessarily subscribing to-day to the exact recommendations of the earlier Committee, that if effective legislative action had been taken on the general lines of the recommendations of the Williamson Committee, very substantial savings would have been made. Electricity would nave been cheaper, and our task would have been infinitely easier and possibly unnecessary. 8. We have been greatly impressed by the time element involved in this subject, and regard it as a dominating factor. Great expenditure is being mcurred in many directions, and as in our view that expenditure is not being

52561 A 2 employed to the best advantage, not only is waste taking place, but further obstacles are being placed in the way of rapid and efficient development along the right lines. Accordingly, any change in direction and method must be made at once if it is to be fully effective.

- 9- Present Position.—The fundamental data representative of the present position, as shown by the latest figures available, are set out in the following table, to' which frequent reference will be made.

TABLE I. A uthorised Undertakings with Supply Powers : Local Authorities ...... 335 Electricity -Companies ...... 209 Power Companies ...... 28

Total ...... 572 Generating Stations owned by A uthorised Undertakings : Local Authorities ...... 248 Companies ...... 190

Total ... 438* Capital Invested: (a) Local A utkorities—' £ On generation 49,360,000 On distribution and other items ...... 54,120,000 Total 103,480,000 (6) Companies— £ On generation 24,320,000 On distribution and other items 33,950,000

Total 58,270,000

(c) Total Capital Expenditure— £ Local Authorities 103,480,000 Companies ... 58,270,000 Total ...... 161,750,000 Average Price Charged to Consumers for all Purposes.—2'047d per unit. Gross Revenue.—£34,256,000. Revenue per £100 invested.—£21'2. Plant Installed.—3,096,535 k.w. Maximum Load.—1,844,000 k.w. Spare Plant.—68 per cent, of maximum load. Units Sold.-4,016,000,000., Units Sold per head of population.—110. Annual Load Factor.—24'9 per cent. Capital per K.W. Installed.-Generation, £23'8; distribution, £28-5; total, £523. 1 * There are in addition 48 stations owned by Railway Companies, 27 by Tramway Authorities and 28 by Non-statutory Undertakings. Detailed information regarding these stations is lacking, and they have therefore been omitted from this and other tables which deal solely with Authorised Undertakings. It should, however, be noted that the grand total of generating stations in the country is 541. 10. Future Requirements.—It is a commonplace that the coming age will be one oi electricity, and it is well known tnat the uses to whicn electricity can be put are continually being augmented. At the present moment the average annual rate of increase of consumption in this country is 19 per cent., but a comparison of the position here with the position in other countries suggests that the room for expansion is immense and that the rate of increase is likely to grow. In this connection we may draw attention to the evidence of Mr. Insull of Chicago. He stated that the consumption in and around Chicago is almost 1,000 units per head of population, and in the course of the next fifteen years he anticipates that it will be doubled. Continuing, he used these very striking words, " The only limit to the amount of business we can get—and I think that is so in any great industrial area, if the proper amount of brains is devoted to the engineering of selling the energy—is the amount of capital you are willing to invest in the business. I do not know where the point of saturation is. I have been looking for it for 15 years." 11. The following, Table 2, gives the latest available returns of the con­ sumption per head of population in Great Britain and certain other industrial towns and countries. TABLE 2. Consumption

a; " Country. population. California " -... 1,200 units Chicago 1,000 ,, Canada ...... 900 ,, North East States of U.S.A 800 Switzerland ... ..- 700 ,, Tasmania ...... 550 ,, U.S.A. as a whole 500 ,, JNorway ... 500 ,, Sweden ...... 500 ,, Sydney 161 Shanghai ...... 145 ,, Great Britain ... i i11 12. In using these figures it must be remembered that they include only the consumption from authorised undertakings. In this country due to the existing high price of electrical energy in many parts of the country, and the dependence on small generating stations, many industrial users, and private persons, prefer to generate their own electricity. The amount of privately generated current is not accurately known, though a census was made in" two given areas to form some opinion. It is estimated that if energy from every source, both public and private, were included, the consumption per head in this country would be raised from 110 units to about 200. The amount of private generation in other countries is probably less than in Great Britain, but whatever adjustment must be made, there can be no doubt that we are not consuming electrical energy at the rate of many other countries. As pointed out in the Williamson Report, this has a very disquieting industrial aspect, inasmuch as the national productivity in civilised countries is to a fair degree represented by its energy consumption. 13. Effect of Price on Consumption.—The effect of price upon consumption is well illustrated in the following chart, * which shows the relationship between the average price of electricity supplied to consumers and the number of units sold per head of population. The chart includes provincial companies and both metropolitan and provincial local authorities. It shows that where the average price is Sd. to 10d. the number of units sold per head of population is 20. At an average price of 4eL the number of units has risen to 50. At 2d. the units sold are 140; and thereafter the number rises rapidly with each decrease of price. If electricity is cheap, its use will spread, private generation will tend to cease; and the greater demand and more diverse load will react favourably on the cost of production and distribution. * This chart was submitted by Mr. J. M. Kennedy. \o-

CURVE SHOWING RELATIONSHIP BETWEEN

AVERACE PRICE OF ELECTRICITY supplied

to C onsumers ft. NUMBER of UNITS 5ol p

PER HEAP or POPULATION

iVoile.—Each cross represents an undertaking. 7-t

": ' ' ' w o 3 0 0 '. SoT -tOO SOO 60S 700 UNITS SOLD PER HEAD. 14. On the basis of the present increase of 19 per cent, per annum, the demand in Great Britain will have reached 500 units per head of population by about 1940. Compared with other countries this seems a very conservative estimate, but it will serve to demonstrate our point. We have already stated the present national electricity bill on the basis of 110 units per head of population. In the following Table 3 we set out. the increase in the bill on the basis of 500 units per head of population. To arrive at a reasonably correct figure it is necessary to bear in mind that with a much larger output the average price will certainly decrease. It is difficult to forecast how far the price could be reduced if existing methods continued; it is even problematical if in such ciroum­ stances an output of 500 units per head could be obtained. While a few of the larger undertakings are selling to-day at an average price of 15d. or less, nine­ tenths of the undertakings are selling at an average which exceeds 3d. We are advised that under the best circumstances the average for the whole country might, with to-da3^'s methods, fall as low a,s V5d.; but would probably not fail below V7bd. To get a clear picture we set out the increase (a) if the average price,remains unaltered, (b) if it falls to V75d., and (c) if it falls to l'5d. To-day's bill for Bill for Increase over 110 units. 500 units. to-day's bill.

L (a) At to-day's price 182,396,000 148,140,000 £34,256,000 ... (b) At an average price of l-75rf. 155,932,000 121,676,000 (n) At an average price of V5d. ... 133,656,000 99,400,000

15. We have no hesitation in declaring- that, even if circumstances demanded that to-daj^s conditions should still subsist for to-day's consumption, the vast additional requirements of the country in the next few years must be efficiently secured to the consumer at the lowest possible price, and we hope to show that the possible savings are so large that they might even justify ignoring present conditions altogether, and concentrating solely on the increment. 16. Technical Considerations.—The technical considerations governing the generation and main transmission of cheap electrical energy in an industrial area, which are generally accepted and confirmed by practical experience both here and abroad, may be briefly summed up as follows :—Generation in large stations, favourably situated as regards fuel, water and load with units of comparatively large capacity; the minimum legitimate amount of stand-by plant; and the highest obtainable load factor, to secure which stations should be inter-connected with one another. (On account of the frequent reference to load factor, a term which may not be generally understood, we annex a short explanatory note in Appendix 5.) 17. As was shown by the earlier Committee, the parochial policy of genera­ tion, which to-day permits the existence of 572 authorised undertakings owning 438 generating stations, definitely ignores the technical considerations essential to cheap generation. Of the 438 generating stations owned by authorised under­ takings, not more than about 5 0 can be regarded as being of really suitable size and efficiency. Twenty-eight stations generate 50 per cent, of the total energy while 322 stations between them only account for 11 per cent. The percentage of stand-by plant is unduly high, and the load factor is unreasonably low. Inter­ connection is not carried out as a definite policy. These technical considerations have been continually subordinated to other interests, and the resultant loss to the country has been heavy, and becomes daily heavier. 18. Supply of Electricity.—In studying these electrical problems, it is convenient to consider the problems under two heads, (a) the generation of energy and (6) the distribution of energy. 19. Parliament has in the past granted authorised undertakers the right to supply. The right to generate was not given specifically, but only as an incidental adjunct to the right to supply. The detailed distribution of electrical energy—in other words, its sale, transport and delivery—is essentially a local matter, and a suitable function for decentralisation. 20. Generation.—Owing to the fact that this country was a pioneer in the development of electricity, and that no formulated scheme of generation existed, the widespread sub-division of supply rights granted by Parliament necessarily led to a similar sub-division of manufacture or genera­ tion. Thus grew up the present system of individual generation and independent undertakings, each pursuing an unco-ordinated and unrelated policy of develop­ ment. This natural prooess, which was perhaps inevitable in the circumstances, has for some time now been in direct conflict with the technical considerations which a wider and more mature knowledge has shown to be essential for cheap and efficient generation. 21. In 1918 the Williamson Committee recommended that a co-ordinated policy should be secured by the division of the country into electrical areas, each under the executive direction of a District Electricity Board, who would purchase and operate the generating stations and regional transmission lines, leaving the local distribution to the existing undertakers. 22. The 1919 Bill was drafted on these lines, but was modified in the House of Lords, where in the last few days of the session there was no time

525C1 A i to discuss the proposals. As a compromise, therefore, most of the compulsory clauses were left out, on the understanding that they would be incorporated JU a new Bill during the next session. This was done, but no progress was made" with the new Bill. Accordingly the Electricity Commissioners were left with very inadequate powers, being required, in fact, to secure the requisite co-opera­ tion and co-ordination by mere powers of suasion. Five years of patient and capable effort have been unavailing. Co-ordination has not been achieved. The advisory bodies created under the Act have agreed on technical schemes, but local interests have prevented the carrying out of those schemes. Delay and procrastination are widespread, and the policy of suasion can only be written clown as a failure. 23. Inter-connection.—Turning from generating stations to their inter­ connection, the Williamson Committee clearly indicated the importance and value of inter-connection and laid down means for securing efficient inter­ connection tvithin the areas. They also referred, but less specifically, to the importance of inter-connection between the areas. The seven years which have elapsed since the Williamson Committee reported have produced almost complete evidence that this further degree of inter-connection bet-ween the areas is a sine qua non to any really effective electrical system in a heavily populated industrial country, such as is represented by the areas between, roughly, the Clyde and the Tay on the North, and the Severn and Thames on the South. 24. This evidence is based on the results achieved in certain areas of this and other countries, and the economies which have been proved on a smaller scale may be reasonably assumed for inter-connection on a larger scale, more especially when it is borne in mind that Great Britain is in many respects an ideal electrical area, and is far more compact than other countries. The proved economies can be divided into three classes, viz. (1) those which are produced by an over-all reduction in capital expenditure; (2) those which are produced by a saving in the cost of operation (chiefly coal); and (3) those which result- front increased load due to the demand for electricity in areas which could not be -economically developed but for the possibility of tapping the inter-connecting transmission lines. We set out in Appendix 3 a more detailed statement of the saving under these three heads. 25. In this connection we would again refer to the evidence of Mr. Insuli, who said, " In my judgment any man who refuses it (inter-connection)—and. 1 will not exclude England—does not understand the fundamental economies of the business." And again, " It (inter-oonnection) cannot possibly be a, doubtful proposition." 26. The establishment of a comprehensive network of transmission mains will make it possible to absorb much energy generated from waste heat, to develop and use many sources of water power and also to join up with some of the larger generating plants already installed by groups of collieries and some other industries. There is now much waste heat derivable from coke ovens, etc., some of which is used for local generation of electricity, but the main obstacle to further progress is the lack of a free market for the energy produced. With a widespread system of transmission mains laid out with waste heat conservation in view, there should be a quickening of enterprise on the part of coke oven owners and others towards the installation of generating plant. The provision of a market for energy from such sources will result in lower energy costs and also in reduced costs of coke and other products. 27! Technical Scheme.—On all these technical questions we have had the invaluable help of our Technical Adviser, Sir John Snell, and the benefit of the practical experience of his colleagues. We have also- had most valuable assistance from Mr. C. H. Merz and Mr. J. M. Kennedy. Each of these three authorities submitted to us independently outline pictures of the technical considerations necessary to achieve efficient conditions of generation in 1940 or at a date when the per capita demand had reached 500 units. These suggestions were remarkable for their similarity in technical detail, and even more so in their financial estimates, and were corroborated by the evidence of Mr. Instill on American practice. ' ; 28. In view of this, we asked Sir John Snell to prepare for us a definite and practical technical scheme setting forth a picture of what should be aimed * Extracted from a memorandum by Mr. C. II. Merz. at to secure efficient generation of H.T. energy in 1940, or, alternatively, at the­ date when the per capita demand had reached 500 units, leaving aside at the moment ail questions of administration, ownership and organisation of genera­ tion and supply. We did not ask for a mere ideal but for a detailed picture with the essential financial data and estimates, taking full cognisance of whatever was of value in to-day's equipment or in immediate contemplation. This scheme is set out in Appendix I, and for the immediate purpose of uus Report the essential figures are given in comparison with to-day's figures in the following table. TABLE 4. Position in 1940 or Present when the consump­ position. tion has reached 500 units per head. Units sold per head of population 110 500 Maximum Load 1,844,000 K.W. 8,135,000 K.W. K.W. Installed 3,096,000 K.W. 10,000,000 K.W. Spare Plant 68 per cent. 25 per cent. Units Sold ... 4,016,000,000 21,385,000,000. Load Factor 24'9 per cent. 30 per cent. Total Capital : Generation £73,680,000 £127,000,000 " Gridiron " Transmission £29,000,000 Distribution £88.070.00— 0 £243,500.000 Total Revenue £34.256,000 £88,100,000 Average Price per Unit ... 2047^. Id. or under. Number of Main Stations ... \ 2R Secondary Stations ... ( 438 of all kinds, j 30 29. Estimated Economies under the Scheme.—It is of the greatest import­ ance to note, as already stated in paragraph 14, that under existing conditions of individual development the utmost that could be expected by 1940 would be a reduction in the average price per unit from 2'047c?. to 15d. The estimated saving on the electricity bill to the country by the adoption of the new technical scheme, when the consumption has reached 500 units per head and the average price is Id., is shown in the following table :—

TABLE 5. Estimated annual saving. If price remained 2'047cZ. £93,296,000 per annum. ,, ,, fell to 175c?. £66,832,000 ,, ,, ,, 1 5d. £44,556,000 30. We have in these figures the direct objective of our review stated in the most concrete possible form, namely, the reduction in the future electricity bill of the country. We suggest that on the lowest computation the magnitude and importance of the saving demand immediate and decisive action. 31. Following on the submission of this scheme we arranged for the appoint­ ment of an Advisory Expert Committee, consisting of Mr. Merz, Mr. Kennedy and Mr. Pearce, to review the scheme and figures and check the estimates. Their Report, which broadly confirms the estimates, is given in Appendix 2. Here we desire to say that Sir John Snell's technical scheme was prepared at very short notice, and although its conclusions and estimates are fully supported by the Advisory Expert Committee, the scheme which is perfectly practical and realisable in character must only be regarded as a broad picture subject to modifi­ cations and improvement when the fully detailed and comprehensive survey which we advocate has been completed. For example, no allowance whatever has been made for Waste Heat Schemes or for any Water Power Schemes other than those now under consideration, and as noted by the Advisory Committee an even better selection of existing stations may be possible. 32. Comparison of Technical Scheme and Actual Position.-An analysis of the scheme discloses certain outstanding changes from1 the existing system in regard to the generation of energy. The salient points are : — (a) All energy will be generated in certain selected Main and Secondary Power' Stations, of which 43 are existing and 15 are new. (b) 432 existing stations will be eventually closed down. (c) A " gridiron " of high tension transmission mains will be erected inter-connecting all the selected stations and coupling up with existing regional transmission systems and other existing stations. It should be noted that the scheme provides fully for the new demand, together with a replace supply to meet that now given by the closed down stations! and that the area to which the scheme refers is the whole of Great Britain excluding the northern and extreme western parts of Scotland and the extreme western part of England. 33. Due weight has been given to the economy factors of generation by large units in large stations, the qualifying influence of the position of station sites in relation to the load served and theutilisation of existing suitable plant, as well as the economic effect of transmitting high load factor energy over the lines and the utilisation of selected local generating plant to meet the peak loads of the district. 34. We should at this point perhaps refer to the fact that there exists a body of opinion holding the view that the ideal scheme for this country involves generation in a small number of very large stations termed Super Power or Giant Stations, and that enormous blocks of energy should be transmitted over quite long distances. We believe it is possible to exaggerate the value of concen­ tration of generation in very large stations and of securing the lowest possible cost of energy at the station bus-bars which may be partly neutralised by the cost of transmission. ' The vitally important factor is to secure the supply to the consumer at the lowest possible price, and this involves a compromise between a large number of factors. For example, taking to-day's conditions it is seen that on capital expenditure alone 73 millions are expended on Generating Plant and 88 millions on Transmission and Distribution, i.e., the capital charge is less than half expended on energy at the bus-bars. In 1923 the average cost at the bus-bars was 1"098^. per unit, and to the consumer 2'047'rf. Under the scheme the average* price at the bus-bars will be 0'36^. or thereabouts, and at the consumers meter Id. or under.

PART II. 35. Constructive steps.—In the foregoing part of our Report we have outlined the present conditions governing the generation of H.T. energy, and by way of comparison have drawn a picture of a practical scheme, showing broadly its financial justification. We now propose to consider the constructive steps necessary to realise the scheme with the minimum of interference to existing conditions, rights and interests. 36. The key to the scheme lies in an element new to the British electrical industry, viz., complete interconnection of the generating stations. We have referred in paragraph 24 to the technical and economic advantages likely to be gained. We would here point out that these advantages will have reactions favourable in nature though varying in degree on all existing undertakers. In a word all will benefit by the creation and use of something which no' one of them could create individually. 37. At the present time there exists no authority with powers to construct and operate a transmission system on the scale contemplated. Further it will involve heavy capital expenditure, and therefore presents a financial problem unlikely to be solved without some measure of State assistance or guarantee. 38. These two considerations point to the conclusion that the generation of H.T. enerew must be regarded in an entirely new light. It must be recognised that a beneficial mechanism created by the help of the State must be operated so :\s to secure the best results for all, and the realised economies must inure in the main to the consumer. 39. Central Electricity Board.—As a first step, therefore, we recommend that a new body should be created by Act of Parliament, termed the Central

(* As an illustration of how the average price is distributed among various classes of consumers-, see chart (Appendix C) following page 34. Electricity Board. The constitution, powers and duties of the Board are more fully set out in Appendix 4. The duties and meetings of the Board would not involve whole-time service, but the Board must be assisted by a carefully selected Managing Director and an expert staff. In addition, we recommend that the Board should constitute an Advisory Committee from the Chief Engineers and Managers of the selected generating stations who should meet from time to time to assist the Board.- The capital of the Board should be raised by means of Electricity Stock guaranteed as to principal and interest by the Treasury. The first duty of the Board will be to construct at the earliest possible date a " gridiron " system of H.T. transmission lines, in general conformity with a technical scheme approved by the Commissioners, interconnecting certain selected generating stations, and also connecting through existing or new lines with existing regional transmission svstems and other generating stations. Several districts have been carefully studied and detailed estimates have been prepared in order to determine how soon the Board could be financially self-supporting. These figures have also been checked by the Advisory Expert Committee and are supported by them. We are satisfied that a comparatively small working capital, coupled with the ability to capitalise interest for a period of up to five years, will enable the Board to transmit energy at about 0'15d. per unit for the first few years, and eventually at a figure of 0'ld or less, and to pay its way from the beginning of its operation. 40. The problem with which we are faced at this point is the manner in which this " gridiron " and its directing Board can be super-imposed on the existing system. Several alternatives are possible. The Board might be viewed as a transmission enterprise pure and simple. As such it would purchase cheap energy from efficient stations and by disposing of this energy to less well-favoured undertakers, enable them automatically to close down their own inefficient stations. A second alternative would be for the Board to act as a common carrier of energy, merely charging for the use of the lines and leaving all purchase and sales to the ordinary negotiations between buyer and seller. Thirdly, a policy might be adopted, under which all generating stations would be purchased, the less efficient, closed down and the best operated by the Board, thus bringing all generation definitely under the control of a single body. 41. If the first alternative were adopted it is clear to us that the transactions in regard to purchase and sale would be infinite in variety. No security would be offered to undertakers and consumers that the operations of the Board would be on any uniform or definitely economic scale. Purchases would represent trans­ actions made by dealing in marginal supplies of energy, and the prices would tend to be on a by-product, or even dumped, basis, involving a distinct measure of insecurity and instability. 42. The second alternative is open to the very grave objection that before the lines could be used Authorised Undertakers (Local Authorities and Companies alike) would be required to bargain with one another, a practice which past experience has shown to involve very real difficulty and delay. Neither this alternative nor the first would secure co-ordination in the control of generating stations, and both would leave the closing clown of inefficient stations to the incidence of commercial bargaining on the unstable basis of prices of dumped energy. 43. The third alternative is an extension of the recommendations of the Williamson Committee. That Committee proposed the creation of Joint Elec­ tricity Authorities who should acquire and run the generating stations in each electricity area. In the case of a Central Electricity Board it would mean the ownership of all stations in the hands of one Board. Apart altogether from the difficulties which would attend the wholesale.purchase of all existing stations, and the delay involved in the change of ownership, it is clear that this alternative would lead to the creation of a huge and unwieldy organisation. It might lead to stereotyped practice, check development and progress, remove incentive from the officials and tend to bureaucratic administration. Under such an arrange­ ment we doubt if the stations would be run as well as they are to-day. There would be a sharp cleavage between generation and distribution which might lead to lack of co-ordination between manufacture and demand. 44. We feel compelled to reject any proposals under which the Board would act merely as transmission agents or as merchants of surplus energy. Our objective should be to secure that the Board deals with electrical energy on terms and conditions which are a definite reflection of the costs of the total amount of electricity generated throughout the country or at least the costs associated with large areas of supply, and not merely on the artificial basis of marginal cost, arrived at by negotiations with independent authorities. 45. Bearing this and other factors in mind, we have reached the following definite conclusion, which represents the main feature of our Report. In our view the advent for the first time of a complete interconnecting " gridiron " of transmission mains warrants the segregation of generation of H.T. energy, and the energy thus generated should be available to all undertakers at cost price. Much may, however, be gained by leaving the operation of the selected stations to the existing authorities and confining the change to the sphere of control. Briefly, therefore, we recommend that all H.T. energy generated by authorised undertakers in this country after a certain date should be generated under control in accordance with a technical scheme for the country, and sold through the Board to all authorised undertakers at cost price. 46. Undertakers who own other than selected stations will find themselves justified in closing down their stations gradually as H.T. energy supplies become available from the " gridiron " at lower prices than they can themselves generate. We think that the benefits of the availability of cheap energy to be obtained by our proposals will lead to the rapid closing down of inefficient stations on a voluntary basis after the erection of the " gridiron." As a precautionary measure, however, we recommend that the Commissioners should have power to require the closing down of stations after a specified period, provided a supply from the " gridiron " at cheaper prices is available. In this connection we would refer to the powers which the Cormmssioners possess to extend periods for repay­ ments of loans, and we suggest that they should give sympathetic consideration to requests of this nature from undertakers whose stations are closed down. 47. Accordingly we recommend that the Act constituting the Board should give it the power, and at the same time require generating authorities who are owners of the selected stations, to make the following contractual arrangements with the Board :— (a) Owners to operate the selected stations as directed by the Board in the best interests of generation as a whole. We believe that the interfering nature of this control has been exaggerated. It is not exacting as shown by American and other experience. To a large extent it is predetermined, e.g., certain stations will be run only in the winter; others will close down at week-ends; the best stations will be run continuously on a high load factor basis, while others less efficient will deal with peak loads only. Generally, the condi­ tions of operation will be such as any knowledgable electrical engineer would subscribe to as representing sound practice. (b) All generation to be for the account of the Board. Cost will include interest on the capital properly attributable to the generating stations (the interest will be at a uniform rate of, say, 6^ per cent., whether the generating stations to be controlled are owned by public autho­ rities or companies); an agreed, depreciation allowance sufficient to cover all renewals and replacements, obsolescence, &c.; all manage­ ment and general establishment charges attributable to the stations; rent, rat.es and taxes; fuel, oil, water and stores; wages and salaries; repairs and maintenace. Interest on Sinking or Renewal Funds to be brought to account. It should be noted that the interest of 6£ per cent, referred to above applies only to capital already expended on stations. We deal in paragraph 50 with the interest on future capital. (c) Owners to repurchase the energy required for their own supply areas either at the actual cost as above from their own stations (adjusted to their area load factors), or the " gridiron " price, whichever is the lower. If the stations are run only on peak loads, or if the owners require more than a station can itself generate, they will pay the " gridiron " price. (d) In the event of dispute between the Board and the owners of selected generating stations, either party to have the right to make repre­ sentations to the Commissioners; but pending the Commissioners' decision, the stations shall be operated and the costs apportioned under the direction of the Board, subject to such adjustments as may be decided thereafter by the Commissioners. 48. The reaction of complete interconnection on the owner of even the most modern station will be a reduction in the cost of generation unattainable by any action of his own. This is due to the economic factors mentioned in paragraph 24. He secures a further advantage, viz., the larger output resulting from reduced price. He sells more at a lower price, gets a better load and obtains a better yield on his distribution investment. 49. We have considered the advisability of recommending that the tariff of the " gridiron " should be uniform throughout the country. While we are convinced that this should be the ultimate aim, we recognise that variations in the price of coal will probably render it prudent to have zone or area tariffs in the early years, and we do not consider it wise to tie the hands of the Board during its initial stages by rigid regulations. 50. New Generating Stations.—In paragraph 47 (&) we have recommended a uniform interest allowance of 6-^ per cent, on capital already expended on generating stations. For all future extensions of selected stations or the building of new stations we suggest that the capital should be provided under Treasury guarantee of principal and interest. It might appear unnecessary to provide such a guarantee in the case of Local Authorities, but in view of the possibility, and even probability, of some of the larger Local Authorities being asked to erect and operate a new station for the Board much in excess of local requirements, we do not think that the burden should rest locally, and we recommend that the Treasury guarantee should apply. This guarantee will secure the generation of energy at the lowest possible cost so far as interest charges are concerned. Consequently all undertakers will be enabled to concentrate their entire financial strength on the development of their distribution system, which is, after all, their real business. 51. It is our recommendation that the ownership and operation of all selected stations should remain in the hands of Authorised Undertakers. We recognise, however, that circumstances may occasionally make this impossible—e.g,, the " gridiron " may extend into sparsely populated areas where no authority is available, or exceptional cases may arise in which the more obviously appropriate authority is unwilling to undertake the work. To meet such cases, which we think will be rare, or others which may be unforeseen, we recommend that the Board should, as a last lesort, have power to build and operate stations, but only, of course, with the consent of the Commissioners. 52. The conception of the owners of selected stations as generating agents of the Board may be challenged on the ground that when their operating costs and future capital requirements are being met, there remains no incentive for them to operate the stations efficiently. This, however, is a misconception. They have to repurchase the energy they require for their own business, and the lower its cost the greater their advantage. Further, their cost figures will be compared with the figures of other stations : the comparison will be open to all and emulation definitely promoted.

53. : We fully realise the apparently drastic nature of our proposal, but we are convinced that in operation it will not involve any hardship to existing interests. The Williamson Committee proposed the acquisition of all generating stations in each Electricity Area by a Public Authority, the economy to be realised being that due to complete co-ordination in the Areas. Our aim is to achieve the beneficial reactions of co-ordination not only in separate Areas but over the country as a whole. We propose not a change of ownership, but the partial subordination of vested interests in generation to that of a new authority for the benefit of all, and this only under proper safeguards and in a manner which will preserve the value of the incentive of private enterprise. PART III. 54. Effect on Existing Authorised Undertakers.—The creation of a new Electricity Authority such as we have proposed is bound to have reactions in many directions, and there are points at which its powers may conflict with those of existing Authorities. We have already dealt with generation, and we propose in this Section of our Report to deal with these other points. 55. At the outset we would state that we do not desire to impair or interfere unnecessarily with existing rights. Any modifications that may be suggested arise directly out of the existence of the " gridiron," and we would emphasise the fact that the existence of the "gridiron" adds definitely to the value

525(51 A 7 of existing rights. To-day, distribution is a practical monopoly: under our proposals the commodity to be distributed will become available to the monopolist at lower prices, and, therefore, his monopoly will become more valuable. 56. Existing Authorised Undertakers may be divided into three classes :— (1) Local Authority Undertakers : (2) Power Companies : and (3) Distribution Companies. 57. Local Authority Undertakers.-So far as existing Local Authority Undertakers are concerned, we do not find it necessary to interfere with their position in any direction. There are, however, 71 of the smaller Local Authorities not themselves undertakers, who have a statutory right to purchase the undertaking in their area whioh now forms part of the distribution area of a larger Local Authority. We do not consider that any real benefit can result f rom the exercise of this right. The creation of the smaller authorities as new undertakers would merely add to distribution costs and advance prices. We, therefore recommend the repeal of this right. 58. Power Companies.—The position is more complicated in the case of Power Companies. Under the existing Power Companies' Acts these companies are authorised to supply, inter alia, electricity in bulk to Authorised Undertakers. 59. In many of the separate Acts there are, however, towns-generally of the larger class—which have obtained, special protective clauses; and in them the Power Company has no right to supply except under the written consent of the Local Authority. This type of undertaker we may term a '' free town.': The other Local Authorities in the Power Company's area who have no such protection may be termed " tied towns." 60. Bulk Supplies.—It must be understood that the Power Company's right of bulk supply is not entirely monopolistic, for the 1909 Electricity Act permits two adjacent Local Authorities to give a bulk supply from one tojJie other; and under the 1919 Act, any two Local Authorities-wherever situated within the Power Company's area—may be authorised to give a bulk supply one to the other. 61. There is no practical injustice to the Power Company in enabling the Board, as we now recommend, to give a direct supply to the " free towns "; and in the case of the '' tied, towns '' we do not propose to alter the Companies' right to supply. It is, however, necessary to see in such cases that the cheaper energy which will be afforded by the Board shall be passed on to the Authorised Undertaker by the Power Company and that that Authorised Undertaker shall obtain that benefit. 62. An arrangement has been made in the South East Lancashire Electricity District between the Lancashire Power Company and the various important local authorities in that District which we think can be well adopted in other Power Company areas, namely that in such cases as we are here dealing with, the Power Company passes on the cheaper electricity to the Authorised Undertaker and is content to charge only the working expenses and a reasonable remuneration upon the capital expended on the necessary transmission lines provided by that Com­ pany. This involves charging against the actual capital expended on the whole or part of a transmission line used for the bulk supply the proper contribution to depreciation, a proper proportion of management and general establishment charges, rent, rates and taxes, maintenance of the line, cost of units lost in transmission and interest on capital which we think should be fixed at 6i per cent. 63. Power Supplies.—Passing from bulk supplies to the supplies given by Power Companies to individual consumers, we do not feel that it is necessary to suggest more than a slight revision of the present maximum price clause. This should be strengthened and rendered more effective by providing for :— (a) An initial revision at the instance of the Commissioners on the coming into force of the new arrangements; (b) Subsequent revisions at intervals of each 10 years. 64. Sliding Scale.—We have very carefully considered whether, in addition to our other proposals, it would be desirable to provide for a revision of the present sliding scale of price and dividend for Power Companies, and have reached the conclusion that this is not necessary. 65, Existing Acts provide for a limitation after 8 per cent, has been paid, and in the case of the recent London and Home Counties Order the Com­ panies agreed to a standard rate of 7 per cent, in association with a new prescribed distribution of excess profits. While the Power Companies have rights that are definitely monopolistic, it would be unfair to ignore the fact that very valuable development has been achieved under their aegis. All of them have taken big risks and few of them have yet attained the standard dividend. 66. We have specifically safeguarded the bulk supplies to other under­ takers—a point on which the action of the Power Companies has sometimes been criticised—and we have made the maximum price clause more effective. In view of this and the fact that the large power consumer will deal with a Power Com­ pany only at prices definitely below the price at which he could himself generate, we feel that it would not be in the interests of electrical development to place any further handicap on the enterprise of Power Companies. Bather we take the view that, now their rights have been recognised and the essential safeguards imposed, they should be encouraged to proceed with a feeling of security to the acceleration of the development of their network of transmission mains. 67. We think, however, that the powers which they now possess to make up back dividends to 8 per cent, should be repealed. We understand that this power has never yet been exercised, and that in the case of the North Wales Power Company it has been voluntarily surrendered. It is unusual for public utilities to possess such a power, which, if exercised, would in effect make the sliding scale provisions meaningless. 68. Distribution Companies,—Turning to Distribution Companies, we find only one point in which we suggest that an alteration should be made. This relates to the purchase of undertakings by Local Authorities. Under the existing law any Local Authority may at the end of 42 years purchase the undertaking in its area on six months' notice, and this right recurs at the expiration of every subsequent period of 10 years. It appears to us that the possibility of purchase at such short notice has the effect of sterilizing the activities of the undertaker during the latter years of his franchise owing to his reluctance to sink capital in an undertaking which may be compulsorily purchased. We recommend that in the interests of electrical development this statutory right of purchase should be modified in the following manner :— (a) The undertaker should have the right at any time within seven years of the end of his franchise to require the Local Authority to declare their intentions; (b) If the Local Authority fail to notify their intention within six months, or require unreasonable terms and conditions for the non­ exercise of their powers, the Commissioners may by Order suspend the right of purchase for such period as they think fit; (c) If the Local Authority declare their intention to purchase, they shall advance by way of loan such moneys as the-undertaker may reason­ ably require for expenditure on capital account during the remaining seven years, and so assure the continued development of the undertaking. PABT IV. 69. Regional transmission.-We now turn to another vital aspect of the situation, namely, the steps essential to the creation of widespread secondary transmission lines, and distribution net works. To show the extent to which electricity is now available in this country, we cannot do better than quote from the last Report of the Electricity Commissioners : — " Dealing now with the classes of local government areas specified in Table 2, the approximate position at 31st March, 1924, in respect of authorised supplies of electricity, was as summarised in the following notes:— " (i) Administrative County of London. ' c (ii) County Boroughs. " General supplies of electricity are available throughout the whole of the Administrative County of London, and in each of the 82 County Boroughs in England and Wales. " (iii) Municipal Boroughs. " General supplies are available or in process of being established in 175 (or 69 per cent.) of the Municipal Boroughs in England and A 8 82661

' \" ',v''rj.---- r-i-rr^^fc-^-SSI^^wa^^m^ Wales, such Boroughs having a total area of 882 square miles, and a total population of 4,236,338, representing an average density of population amounting to 4,803 per square mile. '' The remaining 78 Municipal Boroughs in which general supplies are not available or in process of establishment, comprise a total area of 378 square miles and a total population of 407,631, representing an average density of 1,078 per square mile. Only eight of the Boroughs in question have a population of 10,000 or over, and four of these Boroughs are situated within the areas of supply of Power Companies. " (iv) Urban Districts. '' General supplies are available or in process of being established in 448 (or 57 per cent.) of the Urban Districts in England and Wales, such districts having a total area of 2,330 square miles and a total population of 6,505,652, representing an average density of 2,792 per square mile. '' The remaining 342 Urban Districts in which general supplies are not available or in process of being established, comprise a total area of 1,800 square miles and a total population of 1,818,349, representing an average density of 1,010 per square mile. Of these districts, 42 have a population of 10,000 or over, and 22 are situated within the areas of supply of Power Companies. " (v) Rural Districts. "An analysis on the foregoing lines has not been extended to the case of Rural Districts in England and Wales, figures showing the approximate extent to which the area and population of such districts are included in areas where general supplies are available or in process of being established, not being readily ascertainable. Broadly speaking, however, there are not more than about 10 per cent, of the Rural Districts wholly included in the areas of supply of undertakers authorised to give general supplies for all purposes, although in a number of other cases such districts are within the statutory limits of Power Companies. With regard, however, to portions of Rural Districts, there are numerous cases in which the more populous parishes, townships and villages in the vicinity of urban centres form part of the area of supply of the undertakers operating in such centres, " From a broad review of the present position, it will thus be seen that general supplies are available or in process of establishment in areas in England and Wales having a population of the order of 28,000,000, or about 74 per cent, of the total population of the country. Some indication of the potentialities of the remaining areas is afforded by the fact that there are no less than 50 Municipal Boroughs and Urban Districts with populations of 10,000 or over, in which general supplies have not yet been authorised." (Report for 1923-24, paras. 10 and 11.) The position as disclosed shows that there is ample room for a more widespread availability of supply. 70. Joint Electricity Authorities.—Under the Act of 1919 it was contem­ plated that Joint Electricity Authorities would be set up as executive bodies in each electricity area, and that they would acquire the generating stations and con­ struct the area " gridiron," leaving local distribution to the authorised under­ takers. This scheme has been realised only to a very slight extent. At the momenf there is one Joint Electricity Authority in being, and that Authority has handed its executive duties over to a Power Company. The Commissioners have made an Order now awaiting confirmation for the constitution of an Authority in London and the Home Counties, but here again for reasons which it is unnecessary to discuss, the Authority will not for many years function in the manner contem­ plated by the Act. One other Order to establish a complete Joint Electricity Authority is awaiting confirmation,' 71. We fully realise the importance of securing co-ordinated regional effort, but we must point out that the existence of the " gridiron " and the overall co-ordination of generation will remove many of the defects which it was hoped to eliminate by the constitution of Joint Electricity Authorities. The stumbling­ block has always been the generating stations, and this is now removed. 72. Power Company Areas.—Practically ail the important industrial areas are covered by the Power Companies, whose duty it is to provide for regional transmission. The main defect is that no definite machinery exists to provide for co-ordination or regional transmission between the Power Companies and the large municipalities in their area. In our view the advent of the '' gridiron '' will go a long way towards remedying this evil. In the first place, by interconnecting the selected stations and connecting up1 with existing systems, the " gridiron " will itself provide a very useful backbone of transmission mains. We have further suggested that the 73oard should have power to connect up with the " Tree Towns " or to arrange for the Power Companies to do so. This will carry the position a stage further. 73. We do not, therefore, regard it as necessary to lay down any rigid policy for the creation of regional authorities. We think it wise to leave in existence those Joint Electricity Authorities already formed. Further, we see no objection to the creation of additional Joint Electricity Authorities, if the Commissioners regard this as desirable and provided the necessary co-operation can be secured. We do not, however, suggest any extensions of the Commissioners' powers in this direction, being of the opinion that they will find far less difficulty in creating such bodies when the generating stations have been lifted out of the picture, and supplies have been made available through the medium of the " gridiron." 74. Advisory Committees.—In certain cases where the Commissioners have failed to secure Joint Electricity Authorities, they have made Orders constituting Advisory Committees. The question of retaining these Committees is one which we think should be left entirely to the discretion of the Commis­ sioners. 75. New Areas.—Leaving the areas covered, by the Power Companies, we would point out that a distinctive feature of the '' gridiron '' will be the Oipening up of definite possibilities of development in the more sparsely populated districts through which, it passes. It is therefore necessary to- consider the methods by which regional transmission systems can be secured in areas where no Power Company exists. We have given much thought to this aspect of our problem, and have come to the conclusion that in such areas regional transmission and local distribution cannot be dealt with separately. At this point we desire to recommend that under no conditions should the Board be empowered to under­ take distribution in the ordinary sense of the word. At most it should be authorised to supply large individual consumers who require power for industrial purposes and cannot reasonably obtain such power from other sources. 76. The areas will differ in potentialities. There will be purely non­ industrial areas and also' areas in which there exist definite possibilities of a future demand for power. In the latter case, particularly, the most obvious course would be to encourage the setting up of new Power Companies in accordance with the present practice, but for the reasons which we set out below, we are of opinion that such a course should not be adopted. 77. Supply Companies.—Cnder the existing system there are two types of company differing in certain essential respects. In the first place there are Power Companies endowed by Act of Parliament with powers limited in nature, but monopolistic and perpetual in tenure. In the second place there are Distribution Companies set up by Special Order with power to supply for all purposes, but over a restricted area and subject to purchase after 42 years. Neither type is wholly satisfactory, and in other parts of our Report we recom­ mend various modifications which we believe will improve the position without unduly affecting existing rights and interests. We do not, however, regard the system even with the alterations we have suggested as ideal, and for the future, more especially so far as the new areas are concerned, we recommend as a substitute for both Power and Distribution Companies alike, a new type of Supply Company which will embody the more desirable principles of both. We recommend that Supply Companies should be created by Special Order so as to avoid the greater expense of a Private Bill, and should be authorised to supply for all purposes. The Company should be required to justify the area over which it asks for rights, but it should be the policy of the Commissioners to encourage applications for wider rather than more restricted areas. So far as extent of area is concerned the Supply Companies will thus approximate at one end to existing Distribution

52561 A i ) - Companies, and at the other end to Power Companies. They should be subject to a purchase clause which can be exercised after 50 years, with right of notice seven years before the expiry of their franchise. Where the area is confined to a single local government area, the right should be exerciseable by the Local Authority concerned; where it is larger, it should be exerciseable either by a Joint Electricity Authority or an Association of Local Authorities in the area. The purchase clause should be simple in character and based upon the capital properly expended less such depreciation as the Commissioners may allow. If notice of purchase is not given, the Commissioners should have power to extend the franchise for such period as they think fit. 78. Where these new Supply Companies cover wide areas, they will be responsible not only for actual distribution, but also for regional transmission. Where their activities are confined to a limited area, as will probably be the case in the purely non-industrial regions, the Board should be empowered to lay down secondary lines connecting their system to the " gridiron." This will at once provide the nucleus of a regional transmission system, and open up the possibilities of development in further directions.

PART V. 79. Finance.—It is necessary to consider in rather more detail the financial effects of our proposals. The technical scheme will, we think, involve during the next fifteen years new money to the extent of upwards of £250,000,000, which is substantially less than would have been required if development continued under existing conditions. We estimate that one-half of this new money will be required in connection with the development of distribution schemes, and this capital should be provided by the Local Authorities, Power or Distribution Companies as now. 80. Loans required by Local Authorities are subject to the sanction of the Electricity Commissioners. In view of the benefits to all undertakers, including companies, which will flow from our proposals, we recommend that all further capital raised by companies should also- be subject to the approval of the Com­ missioners so as to ensure that the capital is raised on terms that are most advantageous to the consumers and the undertakers alike. This should secure inter alia a proper ratio being maintained as between Ordinary Stock, Preference Stock and Debentures. 81. The other half of the new capital can be conveniently divided into two sections : (a) The amount necessary to construct the " gridiron " for bulk trans­ mission plus (1) The necessary working capital (2) Sufficient reserve to cover the initial expenses of management (3) Interest capitalized for a period of say five years, at which date the net earnings from the " gridiron " should be sufficient for all purposes. We estimate that a sum of £25,000,000 would be absorbed in the foregoing by the end of five years from the date the scheme is put into operation, and this sum should represent the original authorised capital of the Board. (&) The amount necessary to provide local authorities or other authorised undertakers with the capital required for the erection of new selected capital stations or additions to present selected stations as fore­ shadowed by Sir John Snell in his report covering the period to 1940. 82. In regard to Section (a), we recommend that this capital should be in the shape of " Electricity Stock " issued by the Board with Government guarantee as to principal and interest, Sinking Fund provisions to be operative only after five years, and power given to the Board to capitalize interest if necessary during the first five years. 83. In regard to Section (b), we recommend that this capital should be issued by the Authorised Undertakers empowered to construct the new stations, but with Government guarantee as to principal and interest, and with safeguards as to Government credit and responsibility similar to those now given effect to by the Advisory Committee under the Trade Facilities Act. Schemes should be submitted through the Board to the Treasury with the prior approval of the Commissioners. 84. The whole of the foregoing capital is for the purpose of the development. of an important and essential public utility, and in so far as the expenditure is to be incurred by local authorities or private enterprise, their operations will be clearly monopolistic and must, therefore, be surrounded by safeguards for the public interest. 85. In our view, the scheme will assist those associated with the financing of this public utility to strengthen and deepen the confidence of the public in the stability of the electricity business, and, we would hope, lead to the continuous growth of investments in electricity concerns by the consumers of the energy. 86. We feel that it would be of considerable social value if these electricity securities be held by as wide a body as possible, and accordingly we recommend that they be made available in small denominations.

PART VI. 87. In this final part of our Report we deal with a variety of points arising directly or indirectly out of the recommendations we have made. 88. Standardisation of Frequency.—Our attention has been called to an im­ portant proposal to.unify the varying frequencies of electrical energy supply over the whole of industrial Great Britain, originally made to the late Government by the Electricity Commissioners and accepted by them but not put into force. 89. The definite proposals are contained in two documents :— (a) A memorandum dated 2nd January, 1925, from the Electricity Com­ missioners to the Minister of Transport. (b) A report of a closely detailed investigation based on the Clyde area into the financial, technical and commercial aspects of the problem, made by Messrs. Merz and McLellan at the request of the Commissioners and with the concurrence of the late Minister of Transport. 90. The Memorandum and Report indicate clearly the benefits to the elec­ trical industry, the electricity manufacturing industry and the consumers. They make it equally clear that the entire cost must be borne by the State if the change is to be made within a reasonable period, and that any long drawn-out scheme would fritter away the ultimate economies. 91. The estimated gross cost, which would be spread over a period of 3-4 years, would be under 10^ millions, while the estimated net cost after allowing for expenditure represented by useful additions to the plant capacity of supply under­ takings should not exceed 8 millions. 92. In recommending the late Government to adopt this scheme the Com­ missioners did not definitely associate it with any proposals for remedying the general situation although it is clear to us that they had in mind the probability that an interconnecting " gridiron " such as we recommend might be created in the future. 93. We have carefully considered the scheme and have heard evidence from the Commissioners, Messrs. C. H. Merz, J. M. Kennedy, J. S. Highfield and R. A. Chattock, the City Electrical Engineer of Birmingham. We were not, however, prepared to make a recommendation for the whole country based on the report from a single area, and we therefore arranged as a preliminary step­ for a detailed survey of the Birmingham district in addition. This survey is now being carried out and the report will be available shortly. 94. Subject to this Report broadly confirming the original Report for the Clyde Area, we have come to the following conclusions :— (a) While we recognise the advantages of Standardisation of Frequency in this country and appreciate its stimulating influence on the develop­ ment of electricity, we are not prepared to recommend the expendi­ ture of 10 millions to- achieve these advantages except as part of a comprehensive scheme for improving our existing electricity system. (b) Interconnection on the complete scale which we recommend is the first essential towards bringing about subsequent and far-reaching­ improvements in our present system, and interconnection cannot be entirely effective without standardisation of frequency.

52561 A 10 (c) Accordingly we recommend that immediately the detailed Report on the Birmingham area is available and provided that it gives broad confirmation of the practicability and cost, the Government should instruct the Minister of Transport to proceed at once with the pro­ posal and to defray the cost from State Funds. In view, however of the ultimate advantages which the undertakers will reap, we do not think that compensation should be included for' any temporary loss of revenue during the change-over period. (d) On this question of cost we recommend that consideration should be given to the possibility of repaying to the Treasury this expenditure through the operation of the Board. In our view it would be thoroughly justifiable to fix a date (say) six years from the constitu­ tion of the Board, after which for a further period of (say) 20 years the Board would impose a levy on the costs of all energy sold which would in that period enable the Treasury to be repaid without interest the sum it had advanced. 95. Rating.—Our attention has been drawn to the fact that in the year 1923 the electrical industry paid £2,191,437 in local rates. As the gross receipts for the same period amounted to £34,256,000, it appears that rates account for some 6 per cent, to 7 per cent, of the total bill. 96- We have considered what effect this will have on the operations of the Board. As one of the main conditions governing the creation of the Board is that it should make no profit, it follows that the payment of rates will involve an increase of the price at which energy is supplied. 97. The paramount importance of a cheap and abundant supply demands a careful consideration of the question whether the Board should be saddled with fie necessity of adding to the price of high tension energy for the-sole purpose of paying rates. 98. The existing system of rating electrical undertakings may be roughly described as a payment based on profits : in other words, the undertaking itself shares its prosperity with the local community. In the case of the Board, as we have already pointed out, rates will have to be paid by increasing the price, and this increase will in effect be a direct levy of rates upon the consumers, not on the Board. Hence the consumers will be called upon to pay rates not only in their own areas, but also in other areas through which the " Grid " lines pass and in which the consumers have no direct interest. 99. While we are not prepared to make any recommendation for a general revision of rating in its application to electricity undertakings, as a whole, we feel that this new transmission enterprise can be usefully considered apart, and we recommend that it should be definitely provided that the transmission lines and substations of the Board should not be liable to rates. 100. Railway Electrification.—Although the matter is perhaps not strictly within our terms of reference, wTe could not fail to note the effect which the advent of the " gridiron " would have on the possibilities of the electrification of British Railways. At the same time we have made no allowance in our calculations for the possible demands over and above the present slow rate of growth of the traction demand. We definitely recommend that the Board should have power to supply Railways direct. 101. The existence of the " gridiron," the layout of which from! the point of view of Avayleaves must necessarily conform in a considerable measure to that of the railways, cannot but have a vital influence on reducing the amount of capital required for electrification. The availability of ample supplies of cheap energy from the " gridiron " would also relieve the Railway Companies from the necessity of heavy expenditure for power stations. At the same time a railway demand for energy, which might approximate to 20 per cent, of the whole national demand for other purposes, would most favourably affect the national load factor and thus reduce still further the cost of energy. 102. The position would be so radically altered that we think that if the Government adopt our proposals generally, then at the same time they should take steps to ensure that Railway Electrification is reviewed and reconsidered. 103. Sales of Electricity.-There has in the past been a serious lack of organisation in the encouragement of the use of electricity, especially by domestic consumers, which compares most unfavourably with the great enterprise shown in America. We have had the benefit of the experience of Mr. Insull, of Chicago, and Mr. Alexander Dow, of Detroit, and we find that in America the great supply systems have developed the business of selling electricity into a very fine art, with the result that there has been a rapid increase in the consumption of electricity per head of population. There is active canvassing for new consumers; existing consumers are encouraged to use electricity for all sorts of purposes; and dissatisfaction is avoided and consumption increased by a free service of lamps and certain parts of apparatus such as flat irons and domestic electrical utensils. 104. In this country an attempt has recently been made to improve conditions, and an organisation is now in being, the British Electrical Develop­ ment Association, which by growing propaganda is, we are advised, doing good work and should be encouraged. There is, however, a good deal of restriction which hampers expansion. 105. The restrictions are of three types. Partly they are due to the diversity of practice among Authorised Undertakers, e.g., the large number of pressures which tend to maintain the cost of appliances at a high level, the numerous methods of charge and scales of prices, etc. We understand that the Commissioners have recently appointed an Advisory Committee to enquire into many of these points, and we have not therefore felt it necessary to consider them in detail. We venture, however, to hope that the Advisory Committee will be able to report quickly so that their recommendations, if requiring new legislation, may be included in the Bill to effect the main purposes herein advocated. 106. Partly the restrictions are legislative. Most Local Authority Under­ takers are prevented by their Acts from selling any electrical apparatus. No such restriction exists in America, and it should be removed here. All under­ takers should be encouraged, not only to sell apparatus, but also to provide showrooms and exhibit appliances with which they can demonstrate the numerous practical applications of electricity in the home. 107. A third restriction arises from a tendency prevalent in this country to regard the engineering side as necessarily being of higher status and greater importance than the commercial side. We under­ stand that this view is so deep-rooted that when an undertaking takes a bulk supply and closes down its own generating station, it frequently happens that the salaries of the staff are reduced on the ground that they are now only concerned with sales. We consider this policy to be unsound. In our opinion it is obvious that the interests of the consumers and the success of the undertaking depend as much, if not more, on the efficient and enterprising management of the com­ mercial side as on the technical management of the stations. Where an under­ taking is small, it may happen that both duties must be entrusted to the same staff, and it is probable in such cases that the enterprise as a whole will suffer through attention being unduly concentrated on the engineering side. The staff should be set free for work which is at once more lucrative for the enterprise, and better for the consumers. If this essential work is to be performed to the best advantage, the present attitude towards the engineering and commercial sides must be profoundly altered. The work requires capacity of no mean order, and the best available capacity should be employed. The freeing of officials from the dual task of engineer and manager should be regarded, not as a lowering of status, but as opening up a possibility of even more fruitful endeavour. 108.. Small consumers should be encouraged and electricity should, as far as possible, be made available for the new housing schemes which are being extensively developed. In America and elsewhere an electric supply would be considered indispensable in such cases. We are convinced that a wide scope exists, and every effort should be made to demonstrate, especially in new districts, the advantages which can be afforded by the use of electricity for a great variety of useful purposes. All such steps would result in cheapening both the cost of the supply and also the cost of the apparatus. 109. Conditions of Supply.—By the existing law undertakers are entitled before giving a supply of electricity to require new customers to enter into a con­ tract to take such a supply as will give the undertaker a return of 20 per cent, on the outlay incurred in giving the supply. The duration of the contract is two years in the case of Distribution Companies, and seven years in the case of Power

Companies. :, 110. We recognise that undertakers should not be obliged to give a supply at a serious loss to themselves, more particularly as this would tend to raise prices and so penalise the community as a whole. On the other hand it must be borne in mind that the undertaker enjoys a virtual monopoly in a public service. We think therefore that the onus of proof should be laid on the company and not the con­ sumers. This is the practice in the U.S.A., where the duty of supplying is imposed on the undertaker in every case subject only to a right of appeal to the State Com mission. We recommend that a similar course should be adopted in this country.

111. Waste Heat, Water Power, etc.—We have already referred to the utilisation of waste heat and water power, and we recommend that the Board be given full powers to purchase energy from all economic sources. In making the surveys and developing the layout of the transmission scheme we have outlined for the future wholesale generation and transmission of electrical energy, the following technical developments (some of which may be immediately realisable) must be kept in view from the beginning and provided for, viz :— (a) The existence of the " gridiron " as providing a free market for the disposal of surplus energy will inevitably and in a valuable sense extend the utilisation of waste heat stations, the economical use of which is now limited to strictly local applications. (b) Similarly, the " gridiron " opens up entirely new possibilities for utilising small water power schemes, and much energy now wasted throughout the country will be conserved by small automatic plants selling and delivering current over the 24 hours into- the " gridiron." (c) The possibilities of the large northern water power resources indicated in the Water Power Resources Committee Report should be again brought under consideration in view of their increased practicability under the new circumstances. (d) Progress in the successful low temperature carbonisation of coal may hereafter influence the location of new power stations in relation both to coal mines and to the larger gas undertakings. 112. Wayleaves.—The Williamson Committee made certain recommenda­ tions to ameliorate the position in which undertakers found themselves when­ attempting to obtain wayleaves. These recommendations were largely incor­ porated in the Acts of 1919 and 1922. Experience, however, has shown that further amendment is desirable in certain respects, more particularly in connection with the compulsory acquisition of land for the purpose of erecting overhead lines and building sub-stations. We recommend that the necessary amendments should be made. 113. Amendments to Legislation.—We have heard some evidence which suggests that the machinery laid down by statute for administering the Acts is in certain respects cumbersome and involves unnecessary delay. We have not considered it necessary to investigate these points in detail, but we desire to record our opinion that amendments to the law which experience has shown to be desirable for the purpose of speeding up and improving the machinery of administration, should be embodied in the new Bill. 114. Future Technical Developments.—In conclusion, we would add that as our proposals involve large expenditure over a long period of time, Ave felt it incumbent to establish whether or not there is any tendency in the development of electrical technique which might render our proposals obsolete within the period in question. We are advised that within the region of justifiable specula­ tion there is nothing to warrant hesitation. Improvements will probably be made in transmission technique, but so far as can be seen their influence on our proposals can only be of a favourable nature. 115. Summary.—It is customary to conclude reports of this nature with a summary of recommendations. In view, however, of the many matters dealt with and their complexity and interaction, we feel that a summary on the usual lines would fail to give a clear picture of our proposals, and would also be wholly inadequate for the preparation of a Bill. 116. In conclusion we desire to express our indebtedness to our Secretary, Mr. O. A. Sherrard, for the assistance he has given us, and our appreciation of his thoroughness and capacity. We have the honour to be, Sir, Your obedient Servants, WEIR (Chairman). FORRES. S. HARDMAN LEVER. 0. A. SHERRARD (Secretary). 14th May, 1925. APPENDIX 1. ABSTRACT OF MEMORANDUM BY SIR JOHN SNELL, THE CHAHfc MAN OF THE ELECTRICITY COMMISSION, ON THE EFFECT OF A MAIN TRANSMISSION SYSTEM AND ELECTRICITY GENERATED IN CERTAIN CAPITAL AND SECONDARY STATIONS WHEN AN AVERAGE ELECTRICAL CONSUMPTION OF 500 UNITS PER HEAD IS OBTAINED THROUGHOUT GREAT BRITAIN. (1) Exhibit No. 1 shows the distribution of sales with an average of 500 units per head. The total is 21,385 million units sold, with a maximum demand of 8,135,000 k.w. and an annual load factor of 30 per cent. It will be noted that a consumption of 700 units per head has been adopted for the industrial districts, 500 for the special case of London and the Home Counties, and 300 or 255 per head for the other parts of the country. (2) Exhibit No. 2.-Actual load curves, each extending over a period of one week, have been obtained for both winter and summer for all the principal Scottish undertakings. As these undertakings contain a fair admixture of Power Companies and Local Authorities, they have been adopted as a basis for the calculations which follow. In each of the winter and summer curves shown the load curves of all the undertakings have been integrated so as to get a true relation between winter and summer peak loads, and the high load factor component. These are as under :— Winter Peak load, 160,700 k.w. Summer Peak load, 100,000 k.w. High Load Factor Component, 40,000 k.w. The ratio of the high load factor component to the maximum load is in the winter curve 41'5 per cent., and in the summer curve 44'4 per cent. A similar combination of curves has been made for the district of Central England and the relation of the load curves is essentially similar to those for Scotland. It has been assumed, therefore, that at least as good a curve for the whole country would be obtained when complete interconnection has been made, the probability being that a further improvement would be realised. (3) Exhibit No. 3 shows selected existing stations in certain of the districts, some of a capital station nature, others of a secondary station kind, from which survey have been deduced certain further new capital stations, 15 in number, required to meet the conditions in 1940. In addition to 13 existing capital stations situated on the main waterways and in proximity to coalfields, there are 30 secondary stations which are so situated and equipped as to be worth retaining. It will thus be seen that 58 power stations would take the place of some 490 out of the 541 stations in the country at the present time. The remaining 51 stations are small in size and situated in remote places not likely to be affected by the main transmission system for a long time to come. (4) Maps have been prepared of England and Scotland respectively, on which the proposed new capital stations are shown in red, existing capital stations in blue, secondary stations in green and the existing hydro-electric stations in North Wales and the Scottish hydro-electric stations (under construction) in violet. The main arterial system of transmission is shown in red and is probably as accurate and practicable a lay-out as can be devised at the present time with­ out making the complete field survey which would be necessary before this network can be finally designed. (5) Exhibit No. 4 is a detailed study of the capital cost and total working expenses of the Scottish area when the prescribed stage of development has been reached. Shortly, it may be said that high tension untransformed energy could be sold at an average price of 0'4c?. per unit and low tension energy, after all the local detail charges have been added, including street distribution, at T038d. per unit or round about Id. per unit. Attention is directed to the two curves at the end of Exhibit 4, which show these figures applied to various load factors. (6) Exhibit No. 5.—A similar detailed study has been made of Central England, the details of which are given in Exhibit No. 5, and from this it will be seen that the results are very similar to those for Scotland. (7) It may, therefore, be taken that these figures for Scotland and for Central England can be applied as being approximately true for the whole country. The result, as applied to the whole country, may be briefly summarised.as under :—

Estimated Figures Actual Figures Growth at.500 units sold per cent. 1923. per head.

Units sold per head by supply undertakings 110 500 455-0 Maximum load k.w. ... 1,844,000 8,135,000 441-0 K.W. Installed 3,096,000 10,000,000 323-0 Units sold 4,016,000,000 21,385,000,000 532-0 Annual load factor ... 24-9% 30% Capital expended £161,750,000 £399,428,500 247-0 ,, perk.w.i. ... £52-25 £30-94 - 23-6 per k.w.d. £87-7 £49-10 -44-0­ ,, ,, per thousand units sold... £40-3 £18-68 -53-6 Total Revenue £34,256,000 £89,100,000 260-0 Revenue per £100 invested... £21-2 £22-3 5-2 Average price per unit sold... 2-047^. Id. - 48-8

(8) If individualistic' development continued, further improvement and a. reduction in the present average cost of energy would certainly be attained, though not to the degree possible by the transmission scheme. It is not possible actually to estimate the reduction attainable by individual development. Were the average price per unit sold reduced from 2047d. to- Tl'5d., then the scheme would show a total annual saving of £66,800,000 when the units sold amounted to 500 per head. Were the average price reduced from 2'047c?, to V5d., the annual saving effected by the scheme would be £44,550,000. That is to say, at the best possible valuation of individual development the public would have to pay over 44 millions more in each year than they would pay under the Scheme. (9) There are a few general observations of a detailed character which it may be interesting to put on record. (a) While 23 per cent, of spare plant only is allowed for in the scheme­ at the time of winter maximum load—it is to be observed that during seven months of the year (due to the reduced summer demand) the spare plant would be increased to 50 per cent, or thereabouts,, thus allowing an ample margin of plant and time for complete overhaul. (b) Calculations have been made by the Ministry of Transport of the total consumption of electrical energy by British railways were the whole of the lines to be electrified. The result is a total output of 6,862,000,000 units (equivalent to a sale of 160 units per capita).. At a load factor of 40 per cent, this output is equivalent to a maximum demand of 1,985,000 k.w., or practically 2,000,000 k.w. As some 2,138,000,000 units may be assumed in any case to be included in the sales when the total consumption of the country is 500 per capita, it follows that main line electrification on a big scale would add a further 4,724 million units with a maximum demand of 1,350,000 k.w. The total consumption per head of population would then be raised from 500 to 610 units. (c) The existence of a main transmission system would encourage! the­ development of water power, the sources of which are (excepting a North Wales and certain large Scottish schemes now under con­ struction) generally remote from any likely distribution area at the present time. When it is remembered that a modest computation of the available water power in Great Britain amounts to 265,000 k.w. continuous output (equivalent to, say, 2,120,000,000 units per annum) as shown by the Report of the Water Power : . ' Resources Committee, or about one-tenth of the total output throughout the country when a sale of 500 units per head is reached —-it is evident that in the interests of the community so important a source of power must not be neglected. A general transmission network when established will enable these sources of power to be-, economically used.

"vT:.'.-^-^rrft-7rTr?eM^ " - . " Exhibit No. 1. ESTIMATED FIGURES FOR 1940. 500 units per cap: will reach 21,385,000,000 units. Average 30 per cent, load factor = 8,135,000 k.w.

Unite, Sold Maximum Load Factor District. Population. Units Sold. per capita. demand. (on units sold).

Thousands. Millions. K.W. Per cent. Lower Severn 1,449 434-7 300 198,500 25-0 Mid Lancashire 985 689-5 700 254,500 31-0 South East Lancashire 2,862 2,003-0 700 737,500 31-0 West Riding ...... ; 2,202 1,541-0 700 567,500 31-0 Mersey and West Lancashire 1,796 538-8 300 220,0U0 28-0 North Wales ... 805 241-5 300 11,500 24-0 London and Home Counties 8,265 4,130-0 500 1,682,000 28-0 North West Midlands 1,367 957-0 700 352,500 31-0 North East Midlands 1,284 898-5 700 331,000 31-0 South West Midlands 1,516 1,060-5 700 390,500 31-0 East Midlands 1,455 1,018-0 700 374,500 31-0 South Wales ... 2,066 1,445-0 700 532,500 31-0 North Lancashire 263 78-9 300 38,000 24-0 Kent 803 24-9 300 11,500 25-0 South East Midlands 1,703 210-9 300 96,500 25-0 Berks., Bucks., etc. North East Coast 3,334 2,333-0 700 701,500 38-0 Westmorland... 278. 70-9 255 34,500 23-5 Eastern Counties 2,160 550-5 255 267,500 23-5 Southern Counties ... 2,166 552-5 255 268,500 23-5 Devon and Cornwall 1,127 286-9 255 139,500 23-5 West of Scotland 2,173 1,522-0 700 560,500 31-0 Lothians 554 166-2 300 79,500 24-0 Central Scotland 587 176-1 300 67,500 30-0 South Scotland 354 90-2 255 44,000 23-5 North Scotland 1,215 364-5 300 . 173,500 24-0 Great Britain ...... 42,769 21,385-0 500 8,135,000 30

NOTE.—It is recognised that these figures represent only an arbitrary sub-division for the purposes of illustration, and that there are a few districts which, are already approaching the 1940 estimate. With the adoption of a comprehensive economic scheme it is probable that this average consumption will be reached long before 1940. Exhibit No. 3.

Year 1922--23. 1940. Plant available. Ultimate.

Area Steam District. Units Maxi- Maxi- Total Total Remarks. No. Units Largest Pres- Effective Output, mum Output, mum Plant Plant Station. Unit, sure, Capacity, Thou- Demand, Thou- Demand, Installed, Capacity, k.w. lbs. per k.w. k.w. k.w. ! sands. k.w. sands. k.w. sq.in.

Set spare. S.l. West 294,041 140,778 1,522,000 560,500 Dalmarnock 131,250 18,7501 275 168,750 150,000 One 18,750 k.iv of Yoker 35,750 18,750! 225 100,000 81,250 Scot- Clydesmill 49,500 18,750 225 150,000 131,250 land. Greenoek... 25,000 7,000 250 40,000 30,000 One 10,000 k.wi Kilmarnock 20,000 10,000 250 40,000 30,000

Totals 261,500, [ 498,750! 422,500,

K.W. Maximum demand 1940 ...... 560,500 Ultimate total capacity of existing stations ... 498,750 Additional plant to be provided (without spare) 61,750 Add 20 per cent, of 560,500 k.w. for spare ... 112,100 173,850

Total additional plant required in area, after above existing stations (say) 175,000 k.w are extended to the limit of their capacities Year 1922-23 1940. Plant available. Ultimate.

Steam rea Maxi- Units Maxi- i District. Units Total Pres- Total RemarksRemarks.. mum Output, mum Largest Effective Output, Station. Plant sure, - Plant Demand, Thou- Deman (1, Unit, Capacity. Thou- Installed. lbs.per Capacity. k.w. sands. k.w. k.w. k.w. sands. k.w. sq.in. k.w.

Set spare. 1 16 N.E. 552,676 182,889 2,333,000 701,500 Hull 33,000 10,000 200 60,000 50,000 One 10,000 k.w. Coast. Carville B. 55,000 11,000 275 100,000 80,000 ,, 20,000 k.w. Dunston ... 78,850 15,000 200 180,000 145,000 ,, 35,000 lew. N. Tees ... 100,000 20,000 425 S250,000 215,000 ,, 35,000 k.w. 1 i

Totals ... 176,850 590,000 490,000

K.W. Maximum demand 1940 701,500 Ultimate total capacity of existing stations ...... 590,000 Additional plant to be provided (without spare) ...... 111,500 Add 20 per cent, of 701,500 k.w. for spare plant ... 140,800 251,800 Total additional plant required in area, after above existing stations are extended to the limit of their capacities ...... (say) 252,000 k.w.

Year 1922-23 1940. Plant available. Ultimate. rea District. Units Maxi- Units Maxi- Total Steam Total Remarks. 'o. Output mum Output mum Largest Pres- Effectve Station. Plant Plant Thou- Demand. Thou-' Demand, Installed. Unit, sure, Capacity Capacity, sands. k.w. sands. k.w. k.w. k.w. lbs. per k.w. k.w. sq. in.

8 ]ST.W. 272,971 151,013,2,017,500 743,000. Nechells 90,000 15,000 320 110,000 90,000 nd Mid- permanent 10. lands (Birming­ and ham). S.W. Mid­ lands, Stour port... 30,000 15,000. 350 125,000 105,000

Totals 120,000 235.000 195,000

Maximum demand 1940 ... 748,000 Ultimate total capacity of existing stations ... 235,000 Additional plant to be provided (without spare) 508,000 Add 20 per cent, of 743,000 k.w. for spare plant . 148,600 656,600

Total additional plant required in area, after above existing stations are extended to the limit of their capacity ...... (say) 660,000 k.w. The following have been, put before the Commissioners as new stations: —

Ultimate k.w. k.w. Minimum sammer flow. Installed. Effective.

Birmingham (Hams Hall) ... 300,000 265,000 5,700,000 galls, per hour natural Ironbridge 150,000 water to be increased by im­ 120,000 j pounding to 8,400,000 galls, per hour. Stone ...... 30,000 -': 1,750,000 galls, per hour natural 20,000 flow. Rugeley 80,000 3,300,000 galls, per hour natural 60,000 How.

560,000 465,000 -

Year 1922-23. 1940. Plant available. Ultimate.

Area Steam District. Units Maxi- Units Maxi- Total Remarks No. Pres- Output, mum Output, mum Plant Largest ilanTota 1l i Bffective Scat: Capacity Thou- Demand, Thou- Demand, Installed, Unit, sure, Capacityp . ; , I £ sands. k.w. sands. k.w. lew. k.w. lbs. per k.w. sq. in.

2,3 Mid. 764,538 369,090 3,231,300 1,212,000 Blackburn 20,000 10,000 210 60,000 50,000 and Lanes., (Whitebirk) 5. S.E. Preston 20,000 10,000 325 125,000] 100,000 Lanes. (Ribble). and Padiham ... ! 12,000 6,000 250 50,000 37,500 Mersey Bolton ... i 46,500 12,500 215 46,500 34,000 and Manchester ' 106,750 25,000 200 106,750 81,750 W. (Stuart St.) Lanes. Manchester 82,500 27,500 375 167,500 140,000 (Barton). Oldham ... 32,000 6,000 215 32,000 26,000 Salford 37,500 18,750 300 100,000 75,000 (Ageci oft). Stockport... 40,500 10,000 200 40,500 30,500 Radcliffe ... 48.375 10,000 165 48,375 38,375 Liverpool... 91,000 25,000 200 91,000 66,000 Percival 25,000 12,500 270 1-25.000 100,000 Lane.

Totals 992,625 779,125

Maximum demand 1940 ... 1,212,000 Ultimate total capacity of existing stations ... 992,000 Additional plant to be provided (without spare) 220,000 Add 20 per cent, of 1,212,000 lew. for spare plant 242,4-00 462,400

Total additional plant required in area, after above existing stations are extended to the limit of their capacities (say) 462,000 ii Thi following have been put before the Commissioners as new stations: —

Ultimate k w. k w. Remarks. Installed. Effective.

Oldham (Chadderton) 100,000 75,000 Cooling Tower Station Wigan ... 80,000 60,000 Natural Water. Lancashire E. P. Co. (Kearsley) 100,000 75,000 Half only Natural Water. Manchester (Carrington) 150,000 125,000 Natural Water. Stockport (Cheadle) 50,000 30,000 Includes 10,000 k.w. Cooling- Towers.

480,000 365,000 Year 1922-23." 1940. Plant available. Ultimate.

rea Steam Units Maxi- Remarks. I District. Units Maxi- Total Pres- Total Output mum Largest Effective Output mum Plant sure, Plant Thou- Demand, Station. Unit, Capacity, Thou- Demand, Installed, lbs. per Capacity, sands. k.w. k.w. k,w. Sandb. k.w. k.w. sq. in. k.w.

11 West 269,766 127,998 154,100 567,500 Bradford ... 64,000 20,000 210 64,000 44,000 i 1 Riding. Leeds 79,000 12,000 200 79,000 67,000 ; Thornhil l 40,000 12,500 200 75,000 60,000 Ferrybridge 30,000 15,000 325 180,000 150,000

j Totals ... 213,000 398,000 321,000 i

Maximum demand 1940 ... 576,500 Ultimate total capacity of existing stations 398,000

Additional plant to be provided (without spare) 169,500 Add 20 per cent, of 567,500 k.w. for spare plant 113,500

283,000

Total additional plant required in area, after above existing stations are extended to the limit of their capacities (say) 285,000 k.w.

Year 1922-23. 1940. Plant available. Ultimate.

Steam area District. Units Maxi- Units Maxi- Total To:al Remarks. Pres- So. Output mura Output m ran Plant Largest Plant Effective Station. sure, Thou- Demand, Thou- Demand. Installed, Unit, Capacity Capacity, lbs. per sands. k.w. sands. k.w. k.w. k.w. k.w. k.w. scj. in.

1 1 anj-d N.E. 357,509 195,993 2,127,400 802,000 Rotherham 68,000 30,000 220 100,000 70,000 Mid- Sheffield 48,000 10,000 190 80,000 60,000 15 lands, (Blackburn- E. Mid- Meadow). lands, Derby 27,500 10,000 300 50,000! 30,000 S.E. 17,000 k.w. Mid- i natural water lands. Leicester 20,000 10,000 250 60,000 50,000 balance (Central). with cooling towers. Nottingham 30,000 10,000 250 200,000 175,000 (N.Wilford) Spoudon ... 24,000 12,000 215 50,000 40,000 Avon 12,000 6,000 260 30,000 20,000

Totals ... 229,500 88,000 570,000 445,000:

K.W. Maximum demand 1940 ... 802,000 Ultimate total capacity of existing stations ... 570,000

Additional plant to be provided (without spare) 232,000 Add 20 per cent, of 802,000 k.w. for spare plant 160,400 392,400

Total additional plant required in area., after above existing stations are extended to the limit of their capacities (say) 400,000 k.w Tear 1922-23. 1940. Plant available. Ultimate.

Area District. Units Maxi- Units Maxi- Total Steam Total No. Largest Remarks. Output Output, mum Plant Pies- Plant Effective Station. Unit, Thou- Demand, Thou- Demand, I In stalled. sure, Capacity, Capacity, k.w. sancls. k.w. sands. k,w. k.w. lbs. per k.w k.w. sq. in.

Fulham ... 12,000: 6,000: 275 80,000: 60,000: Stepney ... 40,000: 10,000 200 70,000 50,000 London 714,978 417,975 4,130,00011,682,000 Bankside ... 45,000 15,000 260 80,000 60,000 Barking ... 100,000! 35,000 375 600.000 500,000 Deptford ... 60,000! 15,000 200 70,000 55,000 Poplar 26,000 10,000 200 55,000 40,000 Marylebone 35,500! 12,500 350 50,000 35,000 Grove Rd. 80,000 15,000 210 80,000! - 65,000 Bow 64,000 15,000 260 75,000 60,000 Met. Co. ... 72,000 20,000 275 75,000 55,000

Totals 534,500 1,235,000 980,000

K.W. Maximum demand 1940 ... 1,682,000 Ultimate total capacity of existing stations ... 1,235,000

Additional plant to be provided (withotit spare) 447,000 Add 20 per cent, of 1,682,000 k.w. for spare ... 336,400

783,400 Total additional plant required in area, after above existing stations are extended to the limit of their capacities (say) 785,000 k.w

Year 1922-23. 1940. Plant available. Ultimate. i AreAreaa Steam DistrictDistrict.. Units Maxi- Maxi- Total Total RemarksRemarks.. NoNo.. Units Largest Pres- Output mum mum Plant Plant Effective Output Station. snre, Thou- Demand, Demand, Installed. Unit, Capacity, Capacity. Thou- lbs. per sands. k.w. k.w. k.w. k.w. sands. k.w. k.w. sq. in.

South 117,209 46,951 5,000 16,000 12 1,445,000 532,500 Cardiff ... 21,000 200 21,000 1 Wales. Newport ... 21,750 10,000 260 50,000 40,000 Swansea ... 20,000 10,000 200 65,000 50,000 S. Wales 41,000 15,000 200 75,000 60,000 Power Co.

Totals^ ... 103,750 211,000 166,000

K.W. Maximum demand 1940 ... 532,500 Ultimate total capacity for existing stations, ... 211.000 Additional plant to be provided (without spare) 321,500 Add 20 per cent, of 532,500 lew. for spare plant 106,500 428,000

Total additional plant required in area, after above existing stations are extended to the limit of their capacities (say) 430.000 k.w

* In addition there is a total of 132,000 k.w. of plant installed in private generating stations in the area with a total maximum demand of 60,000 k.w. Exhibit No. 4. SCOTLAND. Distribution of loads among selected stations and total cost of generating H.T. untransformed. 3 phase energy (including annual capital charges) when units sold average 475 per head of population in that area. Data.—Coal 16s. per ton (10,500 B.Th.TJ.) delivered, including handling and removal of ashes : Interest and Sinking Fund in Local Authorities' stations, 8 per cent.; Interest and Depreciation in Power Companies' stations, 10 per cent.

Units sent Anual Load Cost of Cost per Generating Station. K.W.D. out in Unit Factor. Generation. millions. sent out.

Per cent. £ d. High. Load Factor Stations— Grampians H.E. ... 80,000 343-0 50-0 397,000 0'2778 tFalls of Clyde H.E. 10,000 44-0 50-0 45,800 0-2500 No. 1 Capital Station .130,000 769-0 67-5 805,700 0-2515 Low Load Factor Capital Stations— No. 1 supplemental 87,000 J 250-0 32-8 384,280 0-3689 Dalmarnock 150,000 332-5 25-3 557,280 0-4022 Clydes Mill 131,000 292-7 25-3 530,400 0-4348 *Yoker (winter only) 81,000 99-8 14-0 285,920 0-6876 Portobello ... 100,000 218-4 25-0 357,752 0-3930 Secondary Stations— *Kilmarnock ...... 30,000 37-0 14-0 91,930 0-5964 *Greenock ... 30,000 ' 37-0 14-0 95,418 0-6190 * Dundee 20,000 24-6 14-0 78,900 0-7691

Totals and averages ... 849,000 2,448-0 33-0 3,630,380 0-356 (aver.) * These four stations are assumed to be shut down, during the summer six or seven months. I This water power at thei Falls of Clyde is intermittent in character varying from 4j,00G to 13,000 k.w., but the annual output is stated to be not less than 44 million units sent out. (For details of cost of generation see Annex to Appendix 1.) The cost and details of main transmission lines are given in Appendix B. The estimated capital expenditure would be approximately £3,000,000. The distribution and management expenses, plus local rates on the whole undertaking (excluding rates on main transmission already provided for) and in­ cluding capital charges (taken at 7^ per cent.), is actually in the case of the Power Companies 0"423ci. per unit sent out and 0'8rf. in the Local Authorities. Com­ pounded, the average to-day is 0'666c?. This figure must be considerably reduced by reason of a bigger system, a larger proportion of overhead mains and the cheaper A.C. distribution in nearly all future extensions. It is considered toj be a very safe figure to adopt 0'5af. per unit sent out as applying at the 1940 stage. Estimated total costs of electricity supplied. Per unit sent out. d. (a) Generating . costs per unit sent out from stations (coal at 16s. per ton) ...... 0 356 (b) Operating expenses and capital charges on main transmission lines, including local rates—see Appendix B ...... 00265 03825 or 0M. per high tension unit sold. (c) Local distribution expenses, including capital charges, total management costs and local rates O5000 08825 or at an average distribution efficiency of 85 per cent, (the present average) 0'8825(i. ^-85 = 10386?. average cost per low tension unit sold to consumers. Applying this average cost to various classes of consumers at different load factors, the prices charged could be as in the two curves shown on Appendix C the lower curve A being for high tension energy supplied to large power consumers, in bulk to authorised undertakers and to high load factor consumers, such as chemical industries or collieries, for ventilation and pumping; and iCurv e B being the average price for loiv tension energy supplied to consumers after street distribution has been charged for, whether the supply be A.C. or converted to direct current. It will be seen from the former curve A that bulk supplies and ordinary large power consumers could be dealt with at less than a halfpenny per unit and high load factor chemical consumers, &c, under one-third of a penny. From curve B it will be seen that small supplies for house lighting would vary between Ifd and 2fd. and small power and domestic supplies would average less than l\d. These figures are certainly on the high side, as curve B is derived from existing distribution costs in Scotland, a large proportion of which is on the direct current system, and material economies would be gained in future by a. bigger utilisation of the simpler and cheaper alternating current system. It must also be observed that all these figures are based o n coal at 16s. per ton, and a reduction in the price of coal would correspondingly reduce the figures in the curves. It is difficult to estimate the amount of plant involved if individual develop­ ment were to continue, but approximately an additional 132,000 k.w. o f plant would be required, costing about £2,000,000. The transmission system for the scheme includes a part also necessary if individual development wer e continued, particularly that part enabling the Grampians Hydro Electric Scheme to supply the Fife Power and Central Power Companies. The extra cost of the scheme of transmission system over and above that necessary part is £1.800.000. The total capital, therefore, is very much the same under the scheme o r under individual growth, but the cost of energy under the former must obviously I e less. The pooling system is safer and much new territory is opened up by the scheme. Exhibit No. 5. CENTRAL ENGLAND. Distribution of loads among selected stations and total cost of generating H.T. Untransformed 3 phase energy (including annual capital charges) when units sold average 612 per head of population in that Data.—Coal 16s. per ton (10,500 B.Th.U.) delivered, including handling and removal of ashes : Interest and sinking fund in Local Authorities' stations, 8 per cent.; interest and depreciation in Power Companies' stations, 10 per cent.

A.L.F. Total Cost Amount. K.W.D. Source. U.S.O. in M. per cent. per U.S.O.

H.L.FH.L.FH.L.F... StationsStationsStations... £ IronbridgIronbridgIronbridgeee 420 - 9 60 0-2656 465,800 80,000 NNN... WilforWilforWilforddd ...... :.:.:.... 735-0 60 0-2656 813,400 139,800 StourporStourporStourporttt 420-9 60 0-2656 465,S00 80,000

1576-8 60 0-2656 1,745,000 299,800 OtheOtheOtherrr StationStationStationsss (L.L.F.(L.L.F.(L.L.F.))) H.L.FH.L.FH.L.F... StationStationStationsss aaasss abovabovaboveee 295-7 33-7 0-3689 454,500 100,200 SpondoSpondoSpondonnn 118-1 33-7 0-4200 206,690 40,000 RngeleRngeleRngeleyyy 177-.1 33-7 0-3422 252,500 . 60,000 HamHamHamsss HalHalHallll 733-0 31-6 0-3544 1,082,450 265,000 Nechells*Nechells*Nechells*''' 124-9 31-6 0-6134 319,272 90,000 LeicesteLeicesteLeicesterrr 147-6 33-7 0-3983 245,018 50,000 Warwick''Warwick''Warwick''''' 27-7 31-6 0-8935 103,130 20,000 DerbDerbDerbyyy *** 41-6 31-6 0-6677 115,741 30,000 DrawDrawDrawnnn frofrofrommm otheotheotherrr districtdistrictdistrictsss 225-5 31-6 0-5000 469,792 162,500 (say)

3468-0 35-4 av. 0-3456 4,994,093 I 1,117,500

* These three stations are assumed to be shut down during the summer six or seven mon (For details of cost of generation see Annex to Appendix 1.) The cost and details of main transmission lines are given in Appendix B, the estimated capital expenditure being approximately £3,632,000. The cost of L.T. distribution, management and local rates on the whole undertaking (excluding the main transmission system already provided for) and including capital charges on distribution are taken at 0 5d. per unit sent out at the 1940 stage of development, as in the case of Scotland.

Estimated total costs of electricity supplied. Per unit : sent out. d. (a) Generating costs per unit sent out from stations (coal at 16s. per ton) 03456 (b) Operating expenses and capital charges on main transmission lines, including local rates 00291 03747 or 039(1 per high -tension unit sold. (c) Local distribution expenses, including capital charges, total management costs and local rates ... 05000 0-8747 or at an average distribution efficiency of 85 per cent, the average price per low tension unit sold to consumers would be 1029^. Applying this average cost to various classes of consumers at different load factors, the prices which could be charged are as shown in the two curves given on Appendix C, the lower curve A being for high tension energy supplied to large power consumers, in bulk to authorised undertakers and to high load factor consumers, such as chemical industries or collieries for ventilation and pumping purposes. Curve B shows the average price for low tension energy, either D.C. or A.C., supplied to consumers after street distribution has been charged for. It will be seen that the figures are very similar to those for the Scottish district.

ANNEX TO APPENDIX I.

ESTIMATED COST OF A RIVERSIDE CAPITAL STATION OF 133,000 K.W. INSTALLED- CAPABLE OF MEETING A MAXIMUM LOAD OF 100,000 K.W. FIGURES BASED ON THE BARKING CONTRACTS. I. £ £ per K.WI. (a) Land as at Barking-308 acres ...... 97,500 0-733 (b) Civil engineering works, piling, wharfs, rail-, wav sidings, roads, water culverts and screens and foundations - 250,067 1-880 (c) Buildings (above raft) and cranes 229,000 1-722 id) 3 * 33,000 k.w. turbo alternators (economic rating), condensers, reheaters and pumps, plus 2 x 15,000 k.w. sets ... 525,312 3-950 (e) Boilers (1,250,000 lb. total evaporation), 375 lbs. per square inch, stokers, superheaters, balanced draught fans, auxiliary plant and ash removal plant ... --. 460,800 3-464 (/) Switchgear and cabling ... 90,840 0683 ig) Transformers, step-up, and station auxiliaries 78,860 0-593 I.—continued.

' \ £ £ per K.W.I. (h) Pipework, steam, water, feed, &c...... 61,840 0-465 \i) Coal storage equipment (cranes, grabs, loco­ motives, wagons, &c.) ...... 19,678 0-148 (j) Sundries (battery and charging sets, oil coolers and pumps, oil filter plant, auxiliary sets and wiring, fittings, &c.) (say) 40,000 0-301 1,853,897 13-939 Add for engineering supervision, legal and incidental expenses (5 per cent.) 92,700 0-697 £1,946,597 £14-636

II. Cost of Units Delivered to Feeders from 100,000 K.W.D. Station operating at an annual load factor of 60 per cent. :— Data: Maximum demand : 100,000 k.w. Units generated: 525-6 millions. Units delivered to feeders : 483-6 millions. Coal assumed thermal value 10,500 B.Th.U. at 165. per ton delivered including handling. Consumption per Kilowatt hour delivered to feeders 17,000 B.Th.U. or 1-619 lbs. Superintendence, repairs and maintenance, wages and stores, taken at the actual observed figures at Dalmarnock Power Station. Interest taken at 5 per cent., and sinking fund on the Commissioners' usual periods for repayment based on 3^ per cent, table.

Amount. Pence £ Per cent. per unit. CoaCoall 279,600 52-2 0-1387 Superintendence,, wageswages,, repairsrepairs,, storestoress 100,740 18-8 0-0500 AnnuaAnnuall capitacapitall chargechargess 155,013 29-0 0-0769

535,353 100-0 0-2656 **

NOTE.—The sinking fund or depreciation is based as under :— Sinking Fund (3^ -per cent. Table).

Capital Annual expended. amount. PePerr centcent.. £ LanLandd ...... 6600 yearyearss ...... 0-500-5099 97,500 496 CiviCivill engineeringg workworkss anandd buildingbuildingss 3300 yearyearss ...... 1-931-9377 479,067 9,280 PlanPlantt 2200 yearyearss ...... 3-533-5366 1,277,330 45,169 Supervision,, etcetc.. AveragAveragee ...... 2-962-9644 92,700 2,747 1,946,597 57,683 LOAD CURVES. CENTRAL ENGLAND EXHIBIT N?2. NORTH WEST MIDLANDS, SOUTH WEST MIDLANDS AND EAST MIDLANDS COMBINED.

18 6 12 6 12 6 12 6 12 6 12 6 - 12 6 12 6 12 6 12 6 12 6 12 6 12 6 12 NOON RM. MID, AM, MOON RM. MID. AM. NOON RM. MID A.M. NOON RM. MID. A.M. NOON EM. MID. A.M. NOON RM. MID. A.M. NOON RM; MID. I0NDW . TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY

f/blby &. Sorta, i-ith. LOAD CURVES.

WEST OF SCOTLAND,CENTRAL SCOTLAND,EAST OF SCOTLAND AND DUNDEE COMBINED . EXHIBIT!N0 2l

160,000

140,000

120.000 w 100,000 i­ i­ ^ q 8o,ooo

12 6 12 6 12 6 12 6 12 6 12 6 12 6 12 6 12 6 18 6 12 6 12 6 12 6 MID. A.M. NOON P.M MID. AM. NOON P.M. MID. A.M. NOON P.M. MID. A.M. NOON P.M. MID. A.M. NOON P.M. MID.- A.M. NOON P.M. MID. MONDAY FRIDAY SATURDAY TUESDAY WEDNESDAY ' THURSDAY

22S7, laSW 766/130,150,3.26. CENTRAL ENGLAND. APPENDIX. C.

L U o z a

IOpERCEsrl5 20 25 30 35 40 45 50

CONSUMERS LOAD FACTOR. Melby & Sons, Lith.

SCOTLAND APPENDIX C.

POSSIBLE AVERAGE PRICES TO CONSUMERS ANNUAANNUAANNUALLL AA BB LOALOALOADDD FACTOFACTOFACTORRRH.T.UNTRANSFORHE P LT- AC & DC PERCENPERCENPERCENTTT PENCE PENCE 111000 000 353535333 2-8I8VUFT2-8I8VUFT2-8I8VUFTSSS IIISSS 000 686868666 l;786l;786l;786JJJ LIGHTINLIGHTINLIGHTINGGG 222000 000*550*550*550--- DIIIDIIIDIII kkk I-3871SMALI-3871SMALI-3871SMALLLL 222555 046904690469111 luPPUEluPPUEluPPUESSS 111 141414333 POWERPOWERPOWERiii 333000 000-414/fl-414/fl-414/fl.ARG.ARG.ARGEEE 000 378JD0IIESTI378JD0IIESTI378JD0IIESTICCC 333555 0-370-370-37555 /FOWE/FOWE/FOWERRR 000-86-86-86 111 444000 000 777777333 B 444555 n^sllCOlilERIESSS 000-70-70-70 444 UJ 555000 000 305ICHEMICA305ICHEMICA305ICHEMICALLL 000 -65-65-65000 O 555555 000 290290290fff &&& 0-600-600-60555 z 666 000 000-278INETAIUISOCALLL 000-56-56-56 888 a.LrJ

A asvggrg P TO Dr.

EO(Blll ie.SUPPLIF 3 S LARGE POWER

CONSUMERS LOAD FACTOR Mai by & Sons, Lith. APPENDIX 2. PHNCLUSIONS OF TECHNICAL ADVISORY COMMITTEE ON THE " MEMORANDUM BY THE CHAIRMAN OF THE ELECTRICITY COMMISSION." We have accepted the statistics on which the Memorandum is based. We have also considered the detailed estimates on which the figures in the Memorandum are based. The conclusions at which we have arrived are as follows :— (1) Cost of New Capital Stations.—We have taken a figure of £14 per k.w. of Maximum Continuous Rating in our calculations for new capital stations. (2) Reserve Plant.—We consider that 10 per cent, reserve plant capacity is ample for the proposed conditions. (3) Cost of Generation.—W e consider that allowing for the above and other considerations, the cost per unit sent out from new capital stations will be at least 10 per cent, below the estimate on which the Memorandum is based. (4) Load Factor.—Exhibit No. 1.—We consider that when a sale of 500 units per head has been reached for the whole country, the average load factor for the proposed conditions will certainly not be less than 35 per cent, as compared with the average load factor of 30 per cent, assumed in the Memorandum. This reduces the estimated maximum demand in each district and consequently the amount of plant required at that stage of development (5) Cost of Transmission.—W e consider that the transmission costs, including capital charges, will be 10 per cent, above the estimates on which the Memorandum is based. (6) Distribution Efficiency.—We consider that, for the country as a whole, a distribution efficiency of 85 per cent, is sufficient to allow for all losses from the high pressure busbars of the generating stations to the consumers' terminals. (7) Cost of detailed Distribution.—The cost of detailed distribution stated as 0500 pence per unit sent out, which is equivalent to 0'588 pence per unit sold, represents more than half the total cost of each unit sold. It may be assumed that the costs of detailed distribution would be the same whether a National Transmission Scheme is adopted or not. The estimate appears to be very reasonable, especially for the more densely populated areas. (8) Exhibit No. 4.-Scotland.—Based on the above, and assuming an annual output of 2,448 million units, our estimate for Scotland is as follows :.- - Pence per unit sent out. Generating Costs ...... 0311 Transmission Costs ... 0 029 Local Distribution as in the Memorandum ...... 0500 Total Annual Cost 0'840 The average cost per unit sold to consumers, at 85 per cent, distribution efficiency, would therefore be 0'988 pence, as compared with 1"038 pence given ni the Memorandum. (9) Exhibit No. 5.—Central England.—O n the same basis, and assuming an annual output of 3,468 million units, our estimate for Central England is as follows :— Pence per unit sent out. Generating Costs ...... 0'314 Transmission Costs ...... 0'030 Local Distribution as in the Memorandum ...... 0'500 Total Annual Costs 0-844 The average cost per unit sold to consumers, at 85 per cent, distribution efficiency, would therefore be 0993 pence, as compared with 1 029 pence given in the Memorandum. (10) Lancashire District.—The South East Lanes., Mid Lanes, and Mersey and West Lanes. Districts have been investigated as a check on Exhibits Nos. 4 and 5, and we find that on the sarnie assumptions the average cost per unit sold to consumers works out at 1'037 pence. (11) Location of Generating Stations.—We are not in complete agreement with the locations indicated for some of the future extensions of generating plant, and it is probable that with the reduction in reserve plant and the increase in load factor, referred to above, the requirements could be met by a rather more economical grouping of stations than that proposed in Exhibit No. 3. As such modifications would not affect adversely the financial conclusions of the Memor andum, we have not investigated the proposed location and plant capacity of generating stations other than to estimate the total amount of plant required Per the districts of Scotland, Central England and Lancashire. (12) Routes of Transmission Lines.—We have not investigated in detail the proposed routes for the high tension transmission lines, but in our estimates we have allowed sufficient margin to cover all probable difficulties which may be encountered, provided that the position as regards obtaining wayleaves is improved. (13) Summary of Conclusions.—-The foregoing conclusions are based on the assumption that the standardisation of frequency throughout the /country is deemed to be technically possible and economically justifiable on national grounds, but that the cost thereof is not debited against the cost of electricity. The Technical Scheme outlined in the Memorandum is based on a system of interconnecting lines throughout the country coupled with the generation of electricity in the more economical stations. We consider that the additional electrical requirements of the country—which must be very large----can be most economically dealt with in this manner. The actual estimates are necessarily based upon the assumption that no unforeseen and fundamental changes take place in the cost of labour, coal and plant. Generally speaking, however, any increase in these items would relatively improve this method of developing electricity supply as compared with present methods. (Signed) J. M. KENNEDY. CHARLES H. MERZ. S. L. PEARCE. 23rd April, 1925. APPENDIX 3.

THE EFFECT OF INTERCONNECTION ON REDUCING THE COST OF GENERATION OF ELECTRICAL ENERGY.

In paragraph 24 of our Report we have referred to the economies under three heads which may be expected to follow from interconnection. These savings are here set out in greater detail

1. Savings in Capital Expenditure.—These take place under the following heads : ­ (a) It is possible to design generating plants which are cheaper per kilowatt installed due to the use of larger units. Larger units can be used because the limitation to the size of the individual unit becomes less the larger the system of which it forms a part. (b) The percentage of useful output obtained from the plant is increased be"ause h is not necessary to provide such a large percentage of plant as reserve against breakdown, since the interconnected stations are, to some extent, emergency standbys to each other. (c) The capital expenditure on plant is, almost directly proportional to the maximum demand which has to be met. This maximum demand occurs at somewhat different times in different districts. If all such districts draw their energy from a common system the amount of plant to supply the combined loads is reduced. (d) Extensions of plant have to be made in advance of the demand and the interest on such plant during the period that it is not profit earning is an appreciable item. If the various areas were interconnected this would be reduced for three reasons : (1) The annual increase of demand is multiplied at a. greater rate than the size of the individual units of plant, so that the amount of non-profit earning plant in the whole country is reduced. (2) All extensions of plant must be made on estimates of demand, which must include a margin for contingencies. If all these margins are pooled a smaller margin is sufficient. ­ (3) Trade fluctuations in different districts are not coincident and idle plant in a district where trade is poor may be used to supplement plant in a district where the demand is unexpectedly high. (e) The erection of small stations, with their high costs per kilowatt installed, can be avoided by the undertaker taking supply in bulk from the transmission network. This improves the load on the larger stations and therefore still further increases their efficiency.

2. Savings in Operating Costs.—These divide into the following heads :— (a) The site of new stations can be chosen without any regard for local boundaries so as to obtain plentiful water and cheap coal. (b) The larger units of plant are more efficient in coal consumption and the labour costs of operating do not increase at the same rate as the size of unit'. (c) Due to plant having to be provided to deal with the maximum demand a proportion of generating plant is only required for a few hours per week. It is therefore desirable that the plant which is idle should be the least efficient plant. By interconnection it is possible so to arrange that the most efficient plant runs for the longest period (d) Not only is the inefficient small station eliminated through purchasing in bulk, but the transfer of the load to the larger stations would still further improve the emciencj' of the latter. (e) The appreciable waste heat and water power resources of the country are rendered available, as they can be fed into the common network.

3. Those due to Load picked up by the Interconnecting Mains.—Increased load increases economy both by enabling production to take place on a larger scale and also by improving the load factor of the generating plant.The rural load which would be picked up by the inter­ connecting transmission mains would be of a different type from the urban loads, and should therefore be specially useful in improving load factor. Quite apart from the technical advantage of this load, the social benefits of electrically developing rural areas and of promoting de-centralisation of industry are of national importance. APPENDIX 4.

CONSTITUTION, POWERS AND DUTIES OP THE CENTRAL ELECTRICITY BOARD. (I) The Board to be composed as follows : — (a) To be nominated by the Minister of Transport after consultation with the Elec­ tricity Commissioners and such other bodies as he may think fit— A Chairman. Two members experienced in Municipal or Local Government affairs. Two members experienced in Electrical Company undertakings. One member with Railway experience. (b) To be nominated by the Minister of Transport after consultation with the Board of Trade— One member representative of Industry. (c) To be nominated by the Minister of Transport after consultation with the Treasury— A Government nominee. In addition to the above there will be a whole time Managing Director, to be appointed by the Board with the approval of the Minister, who will also be Vice-Chairman and will require to be paid a substantial salary. The Chairman and other members to receive fees and expenses only. (2) The Board to provide or secure the provision of a comprehensive scheme of generation of electricity and its transmission and delivery to any undertakers requiring a supply at a price which shall cover all expenditure on income account (including interest and sinking fund charges) (3) To appoint an Engineer-in-Chief, Secretary and such officers and servants as the Board may determine. (4) To be authorised to create stock, and borrow money subject to regulations to be made by the Minister of Transport with the approval of the Treasury, up to a present limit of £25,000,000. (Note.—They should have power, with the consent of the Commissioners, to postpone sinking fund up to a limit of five years, and to capitalise interest while the expenditure remains unremunerative up to a similar period.) (5) The money raised to be applied to the following purposes :— (a) To enable the Board to construct transmission lines, sub-stations and other trans­ mission works; (b) to enable the Board to make any other payment or to undertake any permanent work or other thing which the Board are authorised to execute or do; (c) to provide working capital. (6) To make agreements as to the working of selected stations and to direct the general operation of such stations for the supply of electricity by them to the Board. (7) In connection with (6) the Commissioners on the application of the Board may require by Order any authorised undertakers to give reasonable facilities :—­ (a) for the generating of electrical energy for the purposes of the Board; (b) for connecting the undertakers' station with the transmission system of the Board. (8) The Commissioners, on the application of the Board, may after a specified period prohibit any authorised undertakers from using generating plant which is imeconomical if the Commissioners are satisfied that as cheap a supply can be afforded through the operation of the Board. (9) The Board to be authorised to purchase energy derived from water power, waste heat or other forms of energy. (10) To have powers to break up roads, railways and tramways as may be necessary for the purposes of transmitting electrical energy for the purposes of the Board and power to erect overhead lines. (II) To have power to supply to authorised undertakers with certain limitations, railways, and canals, and to any body, company or person in areas not covered by authorised under­ takers. (12) The Board and the Commissioners to act jointly in recommending the Treasury to allow the owners of selected generating stations to issue capital at cheap rates. (13) The Board to prepare an Annual Report of their proceedings, to which should be appended their Annual Statement of Accounts in a form to be prescribed by the Minister of Transport. The Report to be published and placed on sale at a small charge. (14) The accounts of the Board to be audited in accordance with such regulations as may be prescribed by the Minister of Transport and by an Auditor to be appointed by him. (15) The Board to submit statistics and returns to the Commissioners as required by them. (16) To have power to establish a Consultative Engineering "Committee formed from the Engineers and Managers of the selected generating stations, which should meet from time to time to discuss the continued improvements in the generation of electricity and the most advantageous way of working the plant at their collective disposal.

CURVE SHOWING EFFECT OF LOAD FACTOR ON COST. BASED UPON THE COSTS PER UNIT SENT OUT FROM A CAPITAL STATION DESIGNED TO MEET A MAXIMUM DEMAND OF 100,000 K.W.

LOALOALOADDD FACTOFACTOFACTORRR COSCOSCOSTTT OOOFFF COACOACOALLL 2*2*2*000 0-3260-3260-326999 333 000 0-2470-2470-247777 444 000 019801980198222 555 000 015801580158555 666000 013801380138777 777000 012301230123888 666 000 010901090109000

2 0 PER CENT 3 0 4 0 SO. 6 0 7 0 8 0

ANNUAL LOAD FACTOR. Malby Sc Sons, Llth. APPENDIX 5.

NOTE TO EXPLAIN THE MEANING OP " LOAD PACTOE " AND ITS BEAEING- UPON THE COST OP ELECTEICAL ENEEG-Y.

DEFINITIONS. A Kilowatt is equivalent to 1J- h.p. j A Kilowatt hour is a synonym for a unit, of electricity A year contains 8,760 hours. Thus a Kilowatt of generating plant working continuously throughout the year would produce 8,760 units. If, as is more general, a Kilowatt only produced 2,190 units, then the ratio of the smaller number of units actually produced, to the larger number which would have been generated had the Kilowatt of plant worked continuously throughout the year, represents the Load Factor. In the above example the ratio is :— 2190 1 25 8760 4" ­ 100 and thus the result is generally expressed, as an " Annual Load Factor of 25 per cent." The costs of generating electricity are divided into two parts :— (a) Fixed charges (such as interest on capital, depreciation or sinking fund for repay­ ment of capital, management, wages, etc.) which do not vary with the actual units generated by any given plant. (b) Eunning costs—mainly coal and stores—which vary almost proportionately to the units generated by any given plant. Thus it is that in the attached curve the influence of the -fixed charges necessarily raises the cost per unit at low-load factors, because the divisor (or the number of units) is less: the cost- progressively declines as the load factor increases in value. In the curve the cost is as high as 0'7'd. per unit at a 20 per cent, load factor, and automatically reduces to 0'2d. only at the high-load factor of 80 per cent.

(SS641-1J) Wt 1854-786. 150 5/25 H. St. G. 6