The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1915-04-21

| hoIors, anotner Tor signs, another for
residences, another for stores), for. If
the rate is properly worked out, these
Will take care Of themselves auto
/ matically.
we all agree that the rate question
Is OF vital Importance in the develop
ment of the central station.
The natural laws which govern the
sale of electric current do no differ
| to any great extent from those of any
other commercial business, EXCEPT
that the average business Is at lib
erty to bargain and sell with each
customer and to discriminate in prices
or methods.
Subject to Regulation.
Nearly every electric company is at
the present time subject to state or
local regulation and frequent suits
nave been brought to determine the
right to discriminate in rates be.
! tween customers. In nearly every
case the courts have held the so-called
discrimination Illegal and these de.
clsions, coupled with the teachings of
the various commission heads and ex-
perts. seem to warrant us in consider
ing the illegality of discrimination to
be an established fact.
The whole question: then, hinges on
what Is discrimination. From a study
of all the decisions upon this subject
We find that we can legally discrimi-
nate in our rates between different
branches of service and between DIFF
ferant classes of customers.
The right to bargain with every
customer is Of doubtful advantage and
while in the end the lack OF this priv
lese may lose some business, yet it
is generally found that the private
business houses which are not sub
ject to regulation are fast abandoning
this policy in favor OF the one forced
upon us by law and regulation.
The modern cry for what is hap
PLY termed square dear' Is s,xercis-
ing great influence upon the direction
and operation OF all utility companies,
particularly in their rate making. It
is considered necessary that all ser
vice rendered shall be paid for by
those using that service and that THIS
payment shall be in proportion to
what it costs to furnish the same, so
that no one consumer. large or small,
shall receive special favors and bene-
Ills lAoIH IdISS lO"cT Iudu are Id1T, OF
shall suffer from rates higher than
fair. The basic principle of all rate
making Is that fair rate of profit
must be allowed the company and
that this profit shall be made up Of
correspondingly uniform rate of pro-
fit upon all classes OF service rem
dered Wholesale rates and quantity
discounts are to be justified only in
so far as they ara based upon re-
duced cost Of service under such con-
ditions.
Adequacy Of Service.
Electric lighting and power corpora
tons must furnish adequate service
at justifiable rates and without unjust
discrimination. What is meant by
adequate service" and what is meant
by "justifiable rates" is largely a
question OF fact. We all know what
Ia meant by adequate service but
what are reasonable and justifiable
rates is a matter that has to be de-
cided largely by the circumstances
under which each company Is operat-
ing. Plants operating under abnormal
may have to accept con-
tracts for the supply Of service at
rates that will yield less than what
under different conditions might be
regarded as iustifiable compensation.
When everything Is normal the rule
has been laid down that the rates
charged must be sufficient to cover
all reasonable allowances for operat-
ing expense. to care for depreciation
and to enable us to earn a profit on
our investment Such allowances are
the normal cost of service and as nor
NAL costs are the economic basis for
normal prices there is thus seen to
be a close relation between the legal
and the economic basis for making
rates.
Variation In Rates.
When one has occasion to examine
or to tabulate any considerable num-
her of rate schedules for the different
of service rendered by cleo
tric light and power companies, he is
at once impressed by the great varia-
lion in them. They vary in form. in
.he maximum and minimum values
employed for different localities and
In tia methods for determining the
rate to be granted each Individual
customer. The average user of cleo
trio service can hardly be blamed for
raising the question of why the rates
1uoted him are just what they are or
why his competitor in a neighboring
town should enjoy the benefit of q
rate lower than that in his home city. |
rhe failure to answer either OF these
questions or to furnish him with an
which he can accept as
right is one of the causes for the
spread of municipal ownership.
How Rates Determined.