Willmar tribune. [volume] (Willmar, Minn.) 1895-1931, 1917-07-18
$7,342.4s divided by 47527o equals

purchased at proposed rates.
.04649 minus .03975 equals !00674, diff
ference per K. W. hour, between
the comparative rates.
The Items of depreciation, interest
on bonds, and insurance are items of
production and have been figured as
such in ascertaining our cost of pro-
duction; but in case electric energy
is purchased, these same items with
the exception of part of the employ
er's liability insurance) will not be
eliminated by the change. They will
then be considered expense items OF
distribution. In other words, items
that are now figured as production
expenses will then be figured as dis
tribution expenses. Therefore to get
a true comparative rate these items,
togther with the receipts on the heat
ing contracts must be either added to
the proposed rates at the switch
board, as is shown in the above state
ment, or subtracted from our cost.
II current had been purchased for
the fiscal year 1916-1917 at the pro-
posed rates, the net Earnings of the
plant would have been reduced by
s., 203 80.
The question of interest on invest
ment has been mentioned, it being
claimed that this must be figured to
arrive at the cost of production. This
may be true, hut the fact remains that
the City would have the same invest
ment in the plant whether it bought
current. or produced it; hence If in
terest on investment is figured in ar
irving at the cost of production, 1t
must also be added to the price paid
for current, If purchased.
The Board calls attention to the
foregoing statement by the Auditor
under the heading "Salaries" 1t is
assumed that If the City were to buy
current 1t could eliminate the salaries
of three engineers. The Board is not
satisfied that this is practicable and
still continue to give good and reliable
service to the patrons of the plant. lr
: other words the Board feels that il
order to provide good and reliable
service at all times and under all con
: ditiOns, both as respects the Watel
: and electric department., it will be alb
, sOlutely necessary to have a reliabl,
and responsible man in charge at tn
: plant. This then cannot be accom-
pished without the employment Of a
least two men, whose salaries WOult
! then have to be added to the cost O
distribution. It is also assumed tina
: one-half of the Superintendent's sal
i: airy applies against production.
current were purchased his entire sal
airy would 60 to the cost of distribu
ton. Assuming that the services o
the superintendent and two me-
would still be required, this would adj
to the cost of current approximate
one-haf cent per K. w. hour, whicl
must be added to thu comparativ
cost, as shown, on the Auditors state
: ment, and would bring it to $.0514
; per K. w. hour. On this basis, tn
difference between the comparativ
rates, as shown, would then b
: SOFIA. Therefore had the City pul
chased current during the fiscal yea
:, 1916-1917 at the proposed rates an
;. retained the services of it's superir
tendent and two men in the plant, tn
net earnings of the plant would hav
n been reduced by $5,579.66.
y The Board has made some invest
y cation as to rates paid at other point
= where electric energy is purchase
y and finds that they are very muc
n lower than the rates offered this City
' It might be mentioned that the boar
? has reports from at least one plac
where the current consumed is sma
? as compared to this plant and tn
same is furnished at the rate of Il
cents per K. w. hour.
The question of the cost of coal
one that the Board feels should ne
be determining factor. Present COZ
prices are abnormally high, and
! WnI1d mt IN
up to fifteen year contract becaus
of these abnormally high coal price
now in effect. The plant now has i
it's bin about 200 tons of Youghioghen
coal bought on it's last years contrac
and has in the yard between 800 an
900 tons of Illinois coal. It lis reason
\ able to suppose that the coal situatio
will be improved before this coal is a
u consumed.
With reference to the recommend
ton by the City Council that the Wa
er and Light Board employ a comp
J" tent accountant to check up cost {
producing current along the lines SUI
gested In letter from Mr.. Whitne
the Board wishes to report that
does not at this time feel warrante
in mourning the expense that tn
"A6AI AASOAS0. IL Has figures 1Ur1
ished by the City Auditor with whic
1t is satisfied, as any other accoun
ant would have to get figures from til
same source, and any other result tn:
n might be obtained would simply CON
v about thru different distribution
% the figures. The Board is unable
d see what is to be gained by such
D. procedure at this time. The Munie
pal Plant is giving good service
IS very fair rates to the patron, and
E. profit to the plant, hence cannot u
It derstand what is to be gained by ha
a. Ing an accountant determine wheth,
e the cost of production per unit ma
It be fraction of cent more or less.
The recommendation of the Wat,
y and Light Commission is that no flu
Their action be taken at this time wit
regard to the purchasing of electr
energy.
Respectfully submitted,
c. S. OLSON,
CHARLES WALLIN,
70 L. FR1DLUND,
Water and LIGHT rom miss IL