Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1904-04-29
FOR THE COMPANY.
Continued from page 81

Snedu figures OF SoO,oOt. AS a matter
of fact, it took the company IA years
TO reach the present rental at Togus,
IL years to reach present rental at
State House, and five years at Insane
Hospital.
Mr.. Baker denied that the present
rates are either unlawful or unreason-
able: and argued that per cent, as
ccntended by Mr.. Heath, was not the
maximum reasonable return on water
works investments made in 1856. At
that time savings banks were paying
6 per cent. Water works property is
different and safer now than it was
Is years ago. The net earnings from
1886 to 1904 have been $344,257 an aver
age of Sl?,124 yearly. Allowing $1,000
for depreciation and the yearly net in
come has been $1S,12i. The value Of
the physical plant and the going con-
corn value, as claimed by the company,
make total of sS67.0CO. and the earn
ings as given above show that there
has been an interest of Ito per cent
on the investment for the IS years.
This is not an unreasonable return.
There has been no evidence here to
show that the consumers complain of
the water rates. The rates are deter
mined by contract with the city which
runs to 1927. Nobody expects the rates
will be lower under the District. Fifty
four per cent of the consumers pay
less than so yearly, and SS1a per cent
less than $40 yearly. Testimony has
shown that the lowest meter rates to
manufacturing concerns which take
large quantities is 10 cents per 1000
gallons. With the consumption in this
city 2,225 900 gallons daily as at present
the gross income ut the lowest meter
rate would be $SS,000 yearly instead of
$4,000 as it is.
Mr.. Baker then took up the earning
power of the system. which after all,
sums uD all other values. The gross
earnings for the present year are $685.
44S, all Of which declared Mr.. Baker. are
reasonable and proper. The gain for the
first five years. exclusive of increase in
Togus rate, has averaged S1035. and for
the past Is years 1863. The average Of
expense for Is years has been $500,
and for this year is set at $4,000. The
net earnings for this year are estimated
at S31.271. The operating expense of a
filtration plant costing $9O,OO1 would be
S-tOt ulillutilly Oll tlc blStI III dA Ss''
To this, add 1923 for depreciation, $1,000
for taxes and $4,000 for interest making
a total annual cost of s1160 for the fill
ter plant. Substract this sum from
S3I.oo77, the net earnings for the coming
year and S23,117 is left for permanent
annual dividends. This capitalized at
per cent. gives S5H.929, or, in round
numbers, $4,000 as the total value of
this system.
In this process Of capitalization
which is taken merely for purposes of
convenience, 4 per cent. is taken be-
cause water works are the safest kind
of investment. The income as taken
is conservative because there is the
annual increase and also the large in
crease which would follow the introduce
ton of pure water. If the District pays
$J75000 for this system, the investment
will yield per cent? at the start and D
per cent. within a few years, and Will
also allow the setting aside of two sink
ing funds, one of which will replace
the entire destructable part of the
plant in Sc years and the other will re-
store TO the District in IS years the en-
tire purchase price. The plant is
worth more to the District than to the
company, for the former can borrow
money at 81 or per cent. where the
latter pays 4. In 1910 the net earnings
of the District will be s3S,14S. or about
as much as the gross earnings are now.
AS to the continuance of the present
income, Mr.. Baker argued that it is
not usual when a party is deprived of
property against it's will to make that
party guarantee a future income for the
one seiZinS the property. The plant is
to be taken as it is, and with its earn
ing capacity as it is. The cost of n fill
ter plant should not be deducted from
the present system because it adds just
so much value to the system. Mr.. Ba-
kcr ridiculed the idea that TOguS is in
danger of being given up as home for
old soldiers. There is an abundance of
material not only from the Civil war.
but from other wars and from regular
service and there is the possibility of fu-
ture wars. The government does not
give up such institutions and within
three years has paid out 100000 for
new buildings there. Mr.. Baker point
cd out that the three trustees of the
District, who are afraid Togus is dying
have Just built an electric road out
there. Mr.. Heath attempted to explain
that the road is going through to Rock
land, nut Mr.. Baker declined to be in
terrupted. Mr.. Baker then went on to
argue that the cost of running the in
dependent plant at Togus would be
more than it pays for water here.
The matter Of taxes was then taken
up and Mr.. Baker contended that the
board of appraisers is not to review or
revise the work of the Augusta assess
ors. The city has fixed its taxes in its
own way and after proper considera-
ton. No city gets it's fire service at
such a low price as Augusta. The hy-
drant rental is ridiculOusly low and the
city has recognized this in fixing the
tax on the company's property. In clos
ing. Mr.. Baker laid emphasis that Mr..
West from the point of view of an own
or. Mr.. Goodhue from the point of view
of an expert, and the Paysons from the
point of view of investment bankers,
AL approximated in their estimates very
closely the sum of s515.000 set by the
company as the total value of it's plant
and based on careful and detailed ex-
oil