The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1924-05-26
Result Of Utility Service Rate Making

Some years ago there was no regulation by
the state of either the service of the Public
Utilities or the prices which were charged for
such service.
Uusually these were controlled by contracts
made with the local authorities The utilities
were confined in their operations to the local
tiles in which they operated Each Street
Car Line was operated in single city The
Electric Light Plants service was limited to
but one town. The Telephone Companys
service was local So was that of the Gas
Company. Water Service was generally mu-
nicipal A Private Water Company was an
exception Both usually limited their service
to the single city
Then the Street Car Line grew into the
suburbs, into other municipalities Then
came the Interurban Railway, operating in
many cities and towns Long distance ,Tele- Z
phone Lines connected the cities, making new
usefulness for the Local Telephone Systems, and
creating new business The Electric Light and
Power Companies first overran the limits of the
Cities and Villages, and as the art grew, one
Electric Light and Power Company served many
Cities and Villages
The results were that there was variety of
charges that could not be controlled by the local
authorities. Wherefore the States took up the
duty of regulating the Utilities.
There are two principles which underlie
Every User of a Public Utility Service Shall
Pay What the Service is Worth That means
that he shall pay his share of the Cost of
Furnishing the Service, and of providing an In
come on the fair value of the property Necessary
to Furnish it.
The Second Principle is that Every User of
a Public Utility Service Shall not be Required
to Pay Any more for the Service than is nee
essary to provide it and return a Reasonable
I'M on he oI1ra 4ho
produce the service. Incidentally State Reg
ulation also involves the right of the State to
see that the Service is kept up to Standard.
Put into Concrete form, a Gas Company, a
Telephone Company, a Street Railway Com
pany, Water Company Electric Com
pany may require the of property worth
a Million Dollars in its plant, or of Several
Millions Theeprinciple underlying State Reg
ulation is that the Customers of each class
of these Companies must pay for their re-
spectlve services, in the aggregate, enough
money to pay a reasonable income on the value
of the property used and enough more to paw
for the operation of providing the service. That
is all that there is to any kind Of Public Service
Rate-Mal1ing in this State.
To determine what the Income shall be the
State first determines what the value of the
property really is. It does this by using the
Most Experienced Judgment Available and
giving consideration to all the factors enter
ing, into the problem. Having reached the
Present fair Value of the Properties the State
says that Reasonable Return in Income NAV
be earned from the People for whose service
they were constructed.
Then the State goes into the Operating Costs,
the Amounts of Money Which are Really Nee
essary to Render the Service. In this determiina-
tion are taken account, the Cost of Supplies, the
Cost of Labor the Amount Necessary to be
spent to Maintain the Plant, Keep it in Repair,
Replace Destroyed Parts and the like of all
that.
Having Arrived at these Figures the State