tract, shall be $. per year, averaging $. per month, and the company may at its option, render and collect the minimum bill each month, in which case, during those months of the year when more light is required and consumed by him than the minimum bill, the subscriber will be credited upon his monthly bills by such an amount as will equalize any sum paid in excess of the amount computed from the meter reading, providing, however, that he has paid the minimum amount of this contract pro-rated up to such a date." For consumers who are entitled to concessions, the following is submitted for the third clause:

"In consideration of the reduced rates herein provided, the subscriber hereby agrees that the minimum amount to be paid for current in any month shall be dollars.

"The company agrees to make discounts on bills paid before the 10th day of each month as follows:

"The minimum charge in the above case is based on 60 cents per lamp for the first five lamps of 16-cp or equivalent, and on 30 cents per lamp for each additional lamp of 16-cp or equivalent."

Conclusion

Of course, this method is not as popular with short-hour consumers as the plan of charging a fixed rate per unit, regardless of consumption; but the plan is, without question, more equitable and just to all concerned. All pay the increased expenses they cause, and in this way the long-hour consumers are not made to pay for the losses otherwise caused by the short-hour consumers. It is also possible to make concessions without encountering the dangers to be met with in discounting all bills of a certain amount or over, as where all bills of, say, $10 per month, or over, are discounted, a consumer having 100 lights and a bill of only $10 per month will get a discount, whereas he should have created a bill of from $20 to $30 per month, before he had reimbursed the company for expenses actually incurred in order to provide him with light subject to his voluntary

use.

The introduction of the minimum charge has checked the rapid rank growth which was bearing little fruit for the stockholders, and has given in its place a healthy and satisfactory increase in the company's business. About one person in one hundred will refuse to use the light, because he objects to the minimum charges, on principle. He thinks he is being compelled to pay something for nothing. A just and reasonable man, however, will soon see the fallacy of that argument. None will connect unless they either expect to use in excess of the minimum charge, or consider the light has sufficient value to make it worth the amount of the charge. A net increase of about 2000 lights, a decrease, with the above lamps added, of about 200 lights in the maximum station load, and a very satisfactory increase in the gross and net revenues have been made since the adoption of the minimum charge.

Cost of Electricity Supply

by

ARTHUR WRIGHT

Presented Before Municipal Electrical Association, Whitehall, England

June 11th, 1896

(Reprinted from Minutes of Municipal Electrical
Association, 1896, pp. 1-8)

Cost of Electricity Supply

BY ARTHUR WRIGHT

1896

Introduction

No manufacturing undertaking can be considered to trade on a sound commercial basis unless it has ascertained to some degree of accuracy the cost of supplying the commodity it produces. That the electricity supply business at present can hardly be said to pass this criterion of commercial soundness the author thinks will be generally admitted, when it is remembered that although electricity has been. regularly supplied for over five years from many large undertakings in quantities exceeding a million units annually, yet at the present time no very definite basis has been agreed upon by which the cost of energy wasted in feeders, transformers, shunted meters, etc., can be estimated, or on which to arrange tariffs for such varying classes of consumers as street lamps, motors, business premises, electric tramways and other industries consuming the electric current.

Lack of Uniformity in Rate Practice

To illustrate this great diversity of tariffs and presumably the uncertainty as to the true basis for costs calculations, the author points out that in many towns discounts are given in proportion to the amount of electricity consumed, thus assuming that the cost of supplying electricity depends mainly on the quantity taken; in other towns rebates are given on the basis of the time of the day during which the electricity is consumed, or on the lengthened use of the lamps or plant consuming or producing the electricity. Again, in others, the electricity consumed in motors is charged at a different rate to that consumed in lamps, implying thereby that it costs less in the one case than in the other. Curious instances of the uncertainty of opinion on this subject, which is of the first importance to Central Station Managers, are afforded by the varying and often quite arbitrary figures charged for the electricity consumed in public street lamps, and by the compiler of Electricity Works Costs in a largely circulated technical journal who, in estimating the profit or loss made on the supply to public street lamps, has actually to as