The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1908-12-24

that gas plant shOulu IN us operating
expense account charge its repairs and
requirements and then should make
enough money to pay operating expens
es and lay aside each yeara sinking fund
sufficient to accumulate the entire in
vestment at the end of thirty years and
during each year of the thirty years pay
its investors seven per cent upon the to-
tai investment. The company then dur.
ing the 80 years gets q per annum on
its investment, and at the end of the 30
years has the plant and Sl'2OOO cash.
The Commission figured ont a rate upon
which the local gas plant should earn
that much money out of the consumers
that it had last May, although the Com
mission states that the plant was not
fully developed and ought to have had
great many more consumers than 1t
did have and that since May it had in
creased its gas consumption little over
33 q. The rule laid down by the Commits
sion is neither reasonable nor legal. In
rate making it is not question of how
much gas is consumed, but how much
gas ought TO be consumed under u rea.
sonable rate. 1t is not question of how
much plant does earn, but how much
can a plant earn.
According to the decision of the Rate
Commission, the week after the plant
was first in operation the one hundred
consumers who We're then on the plant
would have had to pay enough to make
the desired results for the company. In
their decision, on page l6, they say the
rates can not be reduced until the pro.
fits are sufficiently large, and on page
10, increased consumption and conse
quently increased profits depend on low
rates, and low rates depend on increased
profits.
The only logical and reasonable posi-
tion is to let experience fix the reason
able rate rs it had done in the past. Then
let the Gas Company develop its system
to its highest efficiency, if it can, and
let the owners of the utility alone carry
the business risk of increasing the con
sumption and successfully managing
the business That is the business risk
of the owners of the plant and the res
possibility of earning dividends should
not be put upon the shoulders of the
public. The reasonable value of the
service from plant that has not devel
oped its business is no greater than
from one that has.
The Commission classified the expenses
of the Gas. Company as fixed and var.
liable. The fixed expenses are the over
head charges, which comprise interest
on the investment, taxes. insurance aud
the like. and they say, on page ~, that
the fixed expenses depend upon the size
or capacity of the plant and upon the
number Of consumers, and then they
proceed to divide these fixed expenses
by the number of consumers and make
each consumer pay the same amount
towards the fixed expense. Now the
fixed expense depends on the size or ca
pacity of the plant The size or capa.
city of the plant depends on the demand
1t is simple proposition that 1000 con-
sumers demanding each 1000 feet per
month would not require as large an ov
erhead expense as 1000 consumers de-
manding 1000 feet per month, and 600
consumers each demanding 5000 feet per
month Illustrating this by the local
situation, it would seem to be unfair to
make the tailor who uses gas to heat his
pressing iron pay the same amont to-
wards the over head expense as one of
our business institutions here which
uses 5000 feet of gas per day. This illus
tration is also true in regard to the ser
vice charge The concerns using gas for
power pay the same service charge rs
the consumer who uses it for light only
or for light and cooking, or for light,
heating and power.
The Commission says, on page 23, that
when the Gas Company has increased
its business so that it will be earning
more money, then the rates ought to be
reduced. They also say, on page 81
that the Company ought to have secur-
ed this large increase ofits business long
ago This amounts to that the consum-
ers must pay for the lack of business
ability on the part of the company. And
Furthermore, if the company is given a
rate. as it was, under which it earned all
it was entitled to, why should it expend
any effort to increase its business?
On page Is, the Commission says that
if the actual net earnings of the com
pany were as large as the fgnres given
in the statement advertising their bonds
that is 500, SAG 40, then a reduction il
the rates might be warranted.
Mr.. Douglas, the manager of the Gas
Company, since the decision was made
has stated that the earnings Of the com
pany are higher than what the Commits
sion says they are The Commission
says the net earnings of the company are
1886. 16. 1t wonld be quite satisfying
to know what the truth is on thi. mat.
ter.
The order that is entered the Commits.
sion says is only temporary and that il
will continue further investigation OF