Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-01-24
ELECTRIC JUICE. HERE AND
IN CANADA

tN SNtNHSS
Judging from comment OCCASION
ally made there is not in the public
mind an understanding of the con-
trasting methods employed on this
and on the other side of the diyid-
ing line with Canada. We hear re-
ports of cheaper. electricity across
the border. and expressions Of in
curry why we should not have it as
cheaply as it is said the Canadians
have. In view Of this a better un-
Outstanding is desirable and recent
survey, prepared by Samuel S. Wyer
for the Smithsonian Institutions
studies Of natural resources. should
help to that end.
From the report on this survey we
take the following:
1.-THE Niagara River is more than a
mere boundary stream between two
friendly nations. 1t is the dividing
line between two radically different
methods of rendering electric service
to the public. In Ontario the plants
are owned by the government. In
the United States the plants are
owned privately but regulated by the
government. These fundamentally
distinct methods have definite and
far reaching effect on the economic
structures Of the two nations. thus:
II. In Ontario. the government
owned system sells electric service to
domestic consumers at rates consid-
erably below those prevailing IN the
United States. because:
a. Governmentally owned proper
ty is exempt from taxation. This
means a gain to the electric consum-
er Of about 10 per cent, with. how
ever, corresponding loss to the tax
payers, as compared with conditions
in the United States.
b. The domestic electric rates are
below cost and the loss is made up
in part by higher rates for power
consumers than prevail in the United
States, which places Canadian indus
try at a disadvantage.
c. Part Of the cost comes directly
out Of the province treasury in the
forms Of contributions and subsidies
d. Part of the cost has been de-
1ayed by not making provision for
adequate sinking fund to retire the
bonds as they mature. thus placing
the. burden on a future group Of con-
suIhers or on the public generally to
be met out Of general taxation Of the
entire Province.
g. In the United States. the pri-
vately owned-but governmentally
neutrality-suspicious. sell electric serv-
ice to domestic consumers at rates
higher than those prevailing in On
tario because: ~
a. Since the property is taxed the
tax comes from the consumer and
about 10 per cent over and above the
average cost that would prevail If
the properties were tax free as in
Ontario. In the United States the
electric power utilities paid approx
ately $135, 900. 900 in local. state and
federal taxes in 1923.
b. Under the scheme of govern
mental regulation in the United
States, the rates correspond substan-
TALLY to the cost Of the service. The
domestic consumers cost per kilo-
watt hour is higher than the indus
trial. but it also results in giving the
United States industrial consumers
lower rates than the industrial con-
sumers in Canada, thus giving Unit
ed States manufacturers an advan-
tage over Canadian manufacturers.
c. Under the scheme of govern
mental regulation in the United
States the capital invested is not re-
tired, and frequently bonds are re-
funded. However, the income re-
ceived from the public in any normal
plant provides for at all times main
taining the integrity Of the property
value. There are no contributions
from the public treasury at present
Or any obligations that must be met
out of the public treasury in the
future. That is, the United States
governmentally regulated method is
based on the principle of pay as you
go without any deferred debt for
the future"
Regarding the opposite situations
in rate making, DIR. Wyer remarks:
THE major part of the cost of gen.
Grating electric current is fixed and
accrueS regardless of the current
output of the plant. This arises from
the large amount Of capital that is
necessary to rent or hire Just to get
able large capital hire or rental re-
sulting from continuing to stand
ready to serve for each of the $3.50
hours of the year. Therefore, the
greater the number of average kilo-
watt hours that current is used. the
smaller will be the fixed charge that
will be prorated on each kilowatt
hour. That is. increase in hours use
decreases the cost per hour.
The domestic consumer uses cur
rent but short time each day while
the average industrial consumer is a
long hour user. Therefore. the cost
per kilowatt hour Of industrial cur
rent is less than for the domestic
current.
1.-THE dominating fundamental
principles of rate charging in the
United States-approved by the
State Regulating COmmissions-is to
make each group of consumers self
sustaining and pay for the cost of
the service they are receiving. That
Is. not to carry one group at the eX-
pense Of some other group. This
means that the short hour domestic
consumer must pay higher rate
than the longer hour and greater
quantity industrial consumer.
THE Ontario method is diametri-
cally opposite. Here the short hour
domestic consumer is arbitrarily, and
without regard to the cost situation,
given a lower rate than the cost sit
uation would warrant. The loss is
made up by other consumers. The
Ontario domestic consumers, there
fore. are carried at the expense of
other consumers"
1t further would be interesting to