Excerpt from Journal of the New England Water Works Association, Vol. 35: June, 1921

With the present conception of a public utility, whether publicly or privately owned it is not fair for utilities to incur a cost which places an unfair burden upon consumers already connected with the system. The extra cost of an extension which does not pay necessarily places an unfair burden upon existing consumers. The reason for this is Obvious. The utility is entitled to earn a fair return on the fair value of the property. Every extension which does not pay a fair return, therefore, must of nec essitv be recouped from the rates earned by the pre-existing plant. Now, every utility in a growing community is called upon continually to extend its services into new territory. A man may build a house a thousand or fifteen hundred feet from existing lines. He makes an application for the extension of a main to give him water service. The total amount which he may pay for water under the rate schedule is a drop in the bucket compared to the total revenue required to pay a fair return on the exten sion, for this revenue must not only include a fair return on the investment in the extension proper, depreciation on the extension proper, and the cost of maintaining the extension proper, but also that extension's propor tion of the expenses of the entire property which may be fairly and reason ably chargeable to that extension. By the last I mean to say that whenever an extension has been made it becomes a part of the entire system and must bear its proportionate share of the costs of the entire system.

Now, the unfortunate part of the situation is that the accounting system of a great many water plants is not so framed that it is easy for them to allocate the general costs on the entire system to a new extension in a definite and accurate way. The problem of ascertaining the fair return on the extension proper, the taxes on the extension proper, and the depreciation on the extension proper is simple, but the allocation of a fair proportion of the gross cost on the entire system to the extension proper is not so easy.

About the Publisher

Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com

This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.