Evening star., 1919-03-27
CURR|ER UTILITIES:
RATE PLAN STUDIED
Mr.. Babson States Belief
That 1t Is Superior to Serv-
ice at Cost.
ONE OF THREE METHODS

! Belief that the Currier method of slid
| ing fares and dividends will go farther
| than the service ce-at-cost plan in solving
|Washington's street railway troubles is
Expressed by Roger w. Babson of the
Department of Labor, through whom the
de partment has submitted to the Dis
trict Public Utilities Commission certain
suggestions for meeting the local trac-
ton situation
| These two methods and the so called
guaranteed securities plan are the three
| general recommendations that the De-
partment of Labor would have the COM
mission consider in connection with the
petition of the Washington Railway and
Electric Company for financial relief.
Description of Method.
Mr.. Babson expresses the opinion that
| the service at cost ARA ngement. de-
! Scribed in an interview in The Star
Tuesday. will tend. like municipal own
ershlp, to uneconomical operation. De-
scribing the Currier method, he says:
! The Currier method is named for
Guy W. Currier of Boston. who was
appointed by the Lieutenant Cover
nor of Canada as the head of a com
mission to develop an arrangement
between the city of st. John: New
Power Company, which controls the
street railways. lighting and power
systems of that city. The commits
sion went up against one of the
fundamental difficulties of the Wash
ington situation, namely. that the
company owned both the electric
light and street railway business
This complicated the situation and
made it difficult to bring about a fair
adjustment.
'The Commissioners first had the
property appraised on the basis Of
original cost. increased or decreased
by additions or depreciations. This
valuation was considered the rate
base, upon which a dividend of seven
per cent was allowed. Seven per cent
equivalent to about five or six per
cent on the replacement value. Of
course, in the appraisal of property,
it is always very debatable whether
the original cost or the present re-
replacement value should be consider
ed. the latter being always higher
than the former. To my mind. it does
not make so much difference which
appraisal is considered the base, pro-
vided the rate of interest is adjusted
accordingly.
Control Vested in Board.
Under the Currier method the con-
troll of the operations, maintenance,
service and rates of the company
is vested in board of seven directors.
Four of these directors are elected
by the company and three of them
would be. in the case of Washington.
appointed by the President or the
District Comm issioners. In the case
of Canada. these three public direct
ors are appointed by the lieutenant
governor. Each of these directors is
given a salary, the salary of the COM
pany directors being paid by the com
pany and the salary of the public
directors being paid by the city.
"Once year the public directors,
with the approval Of the company di-
rectors, select an impartial. expert
enced public utilities accountant. This
accountant examines the accounts of
the company and reports semi-ann
ualIy respecting the propriety and dis
tribution of charges to operating ex-
penses. maintenance. depreciation.
service. rate base and sinking fund
4ccoun+ during the preceding six
months, together with the result of
the preceding six months operation.
Features Of Currier Method.
"Under the Currier method all rates
for street railway fares, electricity
and power service are left to this joint
board of directors. They. however, are
put on their honor that said fares and
rates shall not exceed the cost of
operation, including taxes. mainte
nance, depreciation, allowances and
the agreed return on the investment.
Unlike the service-at-cost plan,
however, described by me yesterday,
the Currier method has another fea-
ture which 7 consider very valuable.
Personally. feel that the service-at-
cost plan viii tend, like municipal
oWDerShiD for unecCnOmical OPERA
ton, and that. sooner or later, there
will be a reaction from the same. The
Currier method. however, provides an
incentive for efficient operation lie the
form of a sliding scale Of dividends.
AS the fare is lowered the dividend
may be increased, and, as the fare is
raised the dividend may be de-
creased"