The Richmond palladium and sun-telegram., 1913-08-30
Reasons For City Reduction.

Reasons For City Reduction.
The city plants reduction in price is
based on the fact that ii is now to be
paid for its entire output. that it is no
lonEer TO be "milked" to the tune of
fifteen or twenty thousand dollars a
year by the city. The reduction is fur
ther possible because the cost per
unit of service to the municipal plant
has been steadily decreased as its
volume OF business has increased and
new and more efficient machinery has
been added. The reduction has also
been possible of accomplishment be-
cause there is no ''watered stock" out
standing, the fictitious value of which
dividends must be paid from exhor-
bitant profits.
The Municipal plant and the Light,
Heat and Power company have both
filed statements about their business
with the state utilities commission.
These statements show that the muni-
cipal plant during its last fiscal year
produced 3.32S,670 kilowats at a cost
per kilowat of .0143 cents. During the
same period the l.. H. and p. company
produced 1855, $50 kilowats at a cost
per kilowat of .0277 cents
In other words, the municipal plant
according to these figures is producing
electricity for almost one-haif what il
costs the L. n. and p. company. There
fore, the municipal plant is in a posi-
tIon to reduce it's prices without cut
ting below the cost of production. The
/. n. and p. company, however, can
not reduce it's rates without cutting
below the cost of production. And that
is where the question Of maintaining
fair competition or of countenancing
unfair and cut throat competition be-
comes a question for the state utili-
ties commission to settle.
A Question For State Commission.
The statement made yesterday by
J. b. Wharton, manager of the Light,
Heat and Power company. that his
company would meet the rates of the
municipal plant or it might go even
further and cut under the announced
rates, has brought up the question as
to what action will be taken by the
state utilities commission in case the
Light. Heat and Power company at
tempts TO supply electricity below
what it costs TO produce it.
1t is pointed out that the real duty
of the commission is to act as judge
between the citizens and the corpora
ton, allowing the corporation only to
earn a reasonable amount on a reason
able valuation and at the same time
prevent cut throat competition.
Duty of Commission.
Members of the commission have
stated privately that s per cent would
be considered a reasonable profit and
that il would be the duty of the com
mission TO regulate all rates so that
the corporations would approximate
this amount. Il is also claimed to be
the duty of the commission in case
any corporation is cutting rates such
as is proposed in Richmond by the
L. H. and P. company. that the COM
mission step in and prevent such a re-
duction, where such competition will
ruin one or the other of the concerns
in the rate war.
Owing to improved machinery in
the local municipal plant. Superintend-
ent Johnson claims that the city can
manufacture current at .0143 cents per
kilowat- II the statements of the two
companies are correct the municipal
plant can proftably reduce rates to a
/ point that cannot be met by the L. H.
and P. company If the commission will
prevent the latter company from cut
ting below cost.
Superintendent Johnson, Manager
Wharton and City Attorney Bond
have all been before the commission
None Of these has any definite knowl-