The Owosso times. (Owosso, Mich.) 1897-1926, 1909-05-14


ure to Provide For Depreciation, Al
though Showing an Apparent Profit,
Means Worse Trouble BY and BY.
BY GLENN MARSTON.
Burlington is a city of 10000 inhab-
Itants, with a municipal. electric light
plant which completes with a private
company. According to the report of
the expert accountants who audited
the books In 1908, the plant had up to
that time lost $7,13S.29, although the
accounts Of the plant have been manip-
ulated to show profit. This was done
by emitting depreciation charges and
sinking fund charges except for one
year $500.
The report Of the audit of the light
ing plant, which was conducted in con-
nection with general audit Of all city
departments, reads in part as follows:
1--WE find, after providing for depre-
citation, bond interest, ETC., that the de-
partment has sustained loss Of ST.
1899. The actual net income from
operating the department amounts In
all to $14.9O0.65, but this amount is
more than Offset by interest charges,
reserves for depreciation, street light
ing charges for 1905 and the balance
Of the current account in 1906 charged
of. The amounts which we have set
up for depreciation, in our opinion, are
by no means excessive, that for build
ings being per cent, machinery 8 per
cent and tools, fixtures, etc, 10 per
cent"
G. w. Taggart, manager of the plant,
is of the opinion that the depreciation
charge is fair one, but it is under
stood that the light commissioners are
the ones who do not recognize this
item. 1t is again omitted from the
1908 report, which has just been is
sued, but the commissioners admit de-
probation Of the boiler equipment and
recommend the installation Of addi-
tional boilers, although the present in
stallation is rated at a sufficient ca
pacity to carry the existing load and
has done so up to the present time.
The Burlington municipal plant
shows several instances Of eXtraordi-
nary depreciation, one Of the chief ex-
amples being the collapse of brick
coal storage shortly after the erection
of the plant. This is attributed to poor
construction, not unusual excuse in
municipal enterprises.
Poor construction is also responsible
for the excessive vibration Of the ma
chinery due to the lack Of suitable
foundations. Fortunately the base OF
each unit is self contained, which re-
duces the damage to the building 70
minimum, but this does not prevent
each machine from racking itself to
pieces.
The report for 1908 shows that the
income from street lighting constitutes
almost half Of the gross earnings OF
the plant. For 1907 it was more than
half. peculiar feature of the stu
alton In Burlington is the fact that the
private company is responsible for the
reduction of $15 In the price of street
lights. When the present mayor took
office the company offered to do the
street lighting for $65 per year. In
stead of accepting this offer, which
would have bankrupted the municipal
plant entirely, the price paid to the
plant was reduced to $50. This gives
the municipal ownership advocates an
opportunity to point out the reductions
in price effected "by the city's plant!
The city has issued 1900 Of bonds
against the plant, and there is an ad-
ditional Indebtedness, chargeable to
construction. Of $37, 1880. This loan
draws per cent interest, while the
bonds draw per cent for thirty years.
Since the opening of the municipal
plant only $2O33.0S has been trans
ferred to a sinking fund to retire the
bonds, while nothing has been done In
regard to the floating debt In order
to handle the obligations of the plant
when they become due there should
be an appropriation Of ut least $4,000
a year. assuming the floating debt on
a twenty year basis.
AS the plant is now losing money 1t
cannot reduce rates, while the private
plant is constantly improving its plant
so as to give better service and lower
rates. While there is no criticism Of
Mr.. Taggart. 1t is said that the voltage
is very unsteady, resulting in high
bills for the consumers. Records OF
the voltage. show variations from 80
to 115 during the day.
Many people, including city officials,
realize that there is grave danger in
failing to provide for depreciation.
One Of the leading officials very terse'
iy expressed the general feeling wba~
he said:
| IF we do not provide for deprecia-
ton we are going to wake up some
day with a wornout plant and no
money to put 1t into shape"
Advocates of municipal ownership
can point out that in Burlington the
private company has met the rate for
commercial lighting being only slight
reduction over former rates and has
forced the municipal plant to reduce
the price of street lighting SIS. They
can point out poorly constructed,
rapidly detsriorating plant, which Is
operating at loss and cannot make a
favorable showing at rates which are
rotrrpinO n profit IN the nrfvato COM