Los Angeles daily herald., 1889-04-14
The irrigation Problem.


A suit has been begun by the Spring
Valley Water Company of San Francisco,
the result of which will have great in
fluence on the future prosperity OF every
part of the State which depends upon
irrigation or is capable of being improved
by the use OF stored water.
AS the law stands, Boards OF Super
yisors are authorized to fix the rates at
which water companies must supply
their customers, but there does not seem
to be any provision for basis on which
rates are to be fixed, except the rather
vague expression, reasonable profit' to
the water company.
The complaint of the Spring Valley
Water Company sets forth that the Su-
pervisors of San Francisco arbitrarily cut
down their rates to figure at which they
will not afford the company one-half the
revenue needed to pay expenses and de-
clare a reasonable dividend on the capital
stock; that this reduction Of revenue was
made by the Supervisors without their
having taken any pains to inform them
selves about the cost of supplying water,
and that the company had even been
refused an opportunity to appear before
the Board and, by its books and accounts,
demonstrate the necessity for permitting
the continued collection of the revenue
rates that had prevailed in the past.
Therefore the company prays that the
arbitrary reduction may not be enforced,
and that the Supervisors be ordered to
fix the rates at figure sufficient to pro-
duce the revenue needed to carry on the
business of the company and pay its
stockholders reasonable dividends.
Without attempting to enter into any
discussion of the merits of the case at
issue, the importance of the principle in
volved, to the State at large can be easily
shown.
The storage and distribution of water
for irrigation and domestic uses requires
large capital, and works of this character
can only be carried on by an aggrega-
ton of the capital of many persons, who,
while not active in the management of
the enterprise, invest their money in the
hope of receiving dividends. Any such
corporation must come under the law OF
the State and submit to have its rates
fixed by the Board of Supervisors Of
the district in which it does business.
1t must be clear that people will be
more ready to put their money into such
enterprises if fair profit is guaranteed
to them, than if their profit, or even nec-
essary income for expenses of operating,
is entirely dependent on the mere whim
of Board of Supervisors, and we do not
believe that it is good public policy to
permit supervisors to fix rates on any
such basis as their mere pleasure.
If it is legal, there is nothing to prevent
any Board, from running water COM
pany. A Board could fix rates be-
low the cost of pipe repairs and force the
company to cease operations even
though the persons purchasing water
| were able and willing to pay fair price.
This would practically mean confsca-
ton, and if water bitches and reservoirs
can be confscated at any moment, the
State will find it impossible to induce
capital to invest in irrigation enterprises,
the need for which we are constantly
pointing out.
This is not alone the concern of the
San Francisco Company, but of every
water company in the State and of every
land owner who hopes at some time to
secure irrigation for his land.
Ii cost is not to be considered in deter
mining rates then irrigation will stop.
No doubt it is proper to make the bur-
den of the proof of cost lie on the water
company, but that is vastly different
thing from refusing the company any op-
portunity to be heard on that subject. 1t
certainly seems only the commonest
kind of justice to permit an enterprise
which is of vast public benefit to receive
as much profit on its investment as a
man who lends money on any other kind
of security.
In the case of the Spring Valley Com
pany it has been limited that the cut in
rates was made by the Supervisors be-
cause expected Doodle was not forth
coming. If that be true, proper basis
for fixing rates cannot be reached too
soon; if untrue, it shows the necessity
for such an arrangement that an honest
Board of Supervisors could not have such
charges made against them.
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