WHY IT COSTS MORE FOR ELECTRIC LIGHTS
Middleton, George
Why It Costs More For Electric Lights Senator R. B. Howell Makes a Striking Comparison Between Private and Public Ownership in Capitals of U. S. and Canada. THE LEAGUE of Women Voters of the...
...Another excuse offered by our light companies is that the publicly-owned plants in Ontario do not pay taxes...
...This saving alone invested in a sinking fund, earning 4 per cent at compound interest annually, will pay off the entire debt is something less than 20 years...
...Labor, Dec...
...Jamestown, New Yorit "Private companies in these cities are charging the small consumer around an average of 5 cents per kilowatt hour...
...Senator Howell was an engineer before he entered public life, and he refuted the stock claim of the power interests so convincingly and completely that LABOR is summarizing his remarks for the benefit of those who are interested in the light question...
...The cost of putting electric energy upon the .-v...
...ir-.-hboard in a modern steam plant of large capacity, at the general prices of coal prevailing in the United States, is in the neighborhood of .7 cents—seven-tenths of one cent—per kilowatt hour...
...It is that a public utility plant must be valued for rate-making purposes on the basis of the estimated cost of reproducing that plant new, at present or recent prices...
...An investigation of the accounts of the electric light plant in Washington shows that all the taxes paid by that company amount to only about three-tenths of one cent per kilowatt hour...
...On this the plant was required to earn 4.6 per cent...
...The people of Washington pay a rate based on what the plant would or might have cost if it had been built when prices were 50 to 60 per cent higher than they were when the plant actually was built...
...The Washington plant bad to earn $25.90 per year per customer to meet its capital charges...
...There is no magic in public ownership, and I do not advocate it as an end, merely as a means to an end...
...That is private ownership...
...Difference in Capital Charges "BUT how about the Washington plant...
...Figuring Cost of Plant T'HE actual investment in the Washington plant, for instance, is far less than its 'value' as fixed by the court...
...It is because: . First, it pays but 4.G per cent for the money invested in its plant, whereas the Public Service Commission of Ohio allows '8 per cent to private corporations...
...We are told that Ontario has cheap water power, whereas most of our cities are dependent on coal to produce their electric energy and, therefore, we ought to expect pay a very much higher rate...
...When discussing the low rate for electric energy in the cities and towns of Ontario, Canada, our electric interests foster the idea that conditions are different there from those which prevail in most cities of the United States," said Senator Howell...
...The company collects this, and over one-third more, or $1,200,000, or 3.3 per.cent of the value of the plant...
...THE LEAGUE of Women Voters of the District of Columbia, under the leadership of Mrs...
...Effect of Public Competition "A S A matter of fact, the total of the dif-ference in the cost of water power and steam power and of taxes amount to but six-tenths of a cent...
...Not Explained by Taxes ft-pVIDENTLY the difference between the -i— cost of water power and steam power does not account for our high rates...
...They failed utterly, and no small part of their failure was due to a remarkable speech by Senator Howell of Nebraska...
...Edward P. Costigan, recently held a most illuminating meeting in Washington, seeking an answer to this qdestion: "Why should the citizens of Washington, the capital of the United States, pay three times as much for electric light as the citizens of Ottawa, capital of Canada...
...and, of course, as the debt is paid year after year the amount that must be collected from the consumer automatically decreases...
...To put it another way, the people of Cleveland pay a rate based on what their plant actually cost, less reductions made by surplus earnings...
...South, and is now buying 'juice' from the Internment's plant at Muscle Shoals at .2— . c-tenths of a cent—per kilowatt hour, the i -'re to the small consumer is 8 cents |>er kilowatt hour, whereas in Woodstock, Ontario, with public ownership, the average charge to the small consumer works out at about 1.4 cents per kilowatt hour...
...But in Birmingham, Alabama, for example, where energy is supplied by the Alabama Power Company, which controls large water power in i^m...
...High Rates in Washington "SECOND, an investigation of net income of electric light plants throughout the country usually shows such results as we find in connection with the Washington plant...
...In other words, the Cleveland plant had to earn $8.65 per year per customer to meet its capital charges...
...24, 1927...
...That is what they have in Cleveland, Ohio, where the publicly-owned plant sells electricity at 3 cents per kilowatt hour, and in other cities, "uch as Lincoln, Nebraska...
...In other cities, with no public competition, the identical electrfe interests charge around 7.5 cents per kilowatt hour...
...It is not because it is relieved of taxes...
...Another advantage of public omnership is shown by the Cleveland plant, as compared, for instance, with the Washington plant...
...Cheap "Juice" in Cleveland "WHY can the publi electric plant in Cleveland afford a three-cent rate...
...That is public ownership...
...The total indebtedness of the Cleveland publicly-owned plant, divided by the number of consumers, was about $188 per consumer in 1925...
...This difference is due to the theory of valuation which has been accepted by some courts, and which I consider a very dangerous theory...
...If that surplus had been earned by a public plant, it would have gone into the pockets of the consumer, or been used to pay off the debt of the publicly-owned plant, but in this case it goes into the pockets of the company...
...The court allows the Washington company 7 per cent profit...
...And in Ottawa, the capital of the Dominion, the average is only one cent...
...I believe that public regulation has failed, and that the only really efficient form of regulation is public competition...
...The court fixed its 'valuation' so high that it averaged $370 per consumer, and on this the company was authorized to collect about 7 per cent...
...Therefore, it is evident that taxes do not account for the difference in rates—1.4 cents per kilowatt hour in Woodstock, Ontario, and what has been IV2 cents per kilowatt hour in Washington...
...Hagerstown, Maryland...
...The difference between the 4.6 per cent and 8 per cent is 3.4 per cent...
...High Rate Excuses Exploded "IN Woodstock, Ontario, about 100 miles West of Niagara Falls, the Ontario Hydro-Electric Commission delivers electric energy upon what we may call the Woodstock switchboard at about .4 cents—four-tenths of a cent—per kilowatt hour...
...Two representatives of the Power Trust, general and local, were present and did what they could to confuse the issue...
...Therefore, on the basis of the difference in cost between electric energy developed from rteam in the United States and that developed from water power in Ontario, the extra charge in this country to the small consumer should not exceed three mills—three-tenths of a cent—per kilowatt hour...
Vol. 20 • January 1928 • No. 1
