CORNELL UNIVERSITY LIBRARY GIFT OF G. H. STICKMBI ENGINEERING The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924004051052 Cornell University Library TK 4136.M4L73 The results of municipal electric lighti 3 1924 004 051 052 A complete list of the books published in the Hart, Schaffner & Marx Series of Prize Essays will be found at the end of this volume. %axt, $c$af|iter & (me iftftietjtibe fiejtf CambriDge 1918 PREFACE This series of books owes its existence to the generosity of Messrs. Hart, Schaffner & Marx, of Chicago, who have shown a special interest in trying to draw the attention of American youth to the study of economic and commercial subjects. For this purpose they have delegated to the un- dersigned committee the task of selecting or approving of topics, making announcements, and awarding prizes an- nually for those who wish to compete. * For the year ending June 1, 1917, there were offered: -7 In Class A, which included any American without restric- tion, a first prize of $1000, and a second prize of $300. In Class B, which included any who were at the time undergraduates of an American college, a first prize ©f $300, and a second prize of $200. ' * Any essay submitted in Class B, if deemed of sufficient merit, could receive a prize in Class A. The present volume, submitted in Class A, was awarded first prize in that class. J. Laurence Laughlin, Chairman University of Chicago J. 8. Clark Columbia University Henry C. Adams University of Michigan Edwin F. Gat Harvard University Theodoke E. Burton New York City PREFATORY NOTE The author takes this opportunity to acknowledge specifically his obligations to a number of friends who have critically read the manuscript of this book, either wholly or in part. Professor Harry E. Clifford, of the Electrical Engineering Department of Harvard University and of the Massachusetts Institute of Technology, has given special attention to the technical portions. Mr. Henry B. Sawyer, of the Stone & Webster Organization, has looked particularly over the financial parts of the book, and has generously extended the facilities of the firm to the writer. Mr. Alonzo R. Weed, Chairman of the Massachusetts Board of Gas and Electric Light Commissioners, has read the manuscript throughout, with special reference to ques- tions of law and regulation; and General Morris Schaff, also of the Commission, has taken great interest in the work. From all of these, helpful suggestions and many cour- tesies have been received, but especially from Professor Charles J. Bullock, Chairman of the Department of Eco- nomics at Harvard, who has given careful, constructive criticism at various stages. Mention should also be made of the kind assistance, both direct and indirect, rendered by Dean Edwin F. Gay, of the Harvard Graduate School of Business Administration, while the writer was carrying on the local survey of the lighting plants herein studied. To the hosts of others who have at one time and another been consulted, a general reference is made in the Intro- duction. For matters of opinion and methods of presen- tation, however, the author must assume full responsi- bility. x PREFATORY NOTE Finally, grateful acknowledgment is due the publishers for the consideration which they have shown and the ex- pedition with which they have prepared for the public a book which presents an unusual number of typographical difficulties. The Author Washington, D.C. August, 1918 CONTENTS Introduction 1 Point of view — Reasons for study of subject — Materials used — Scope and methods of investigation — Suggestions to readers. CHAPTER I A SURVEY AND CRITICISM OF THE LITERATURE ON THE SUB- JECT of Municipal Electric Lighting in the United States 9 Development of the industry — Comparisons — Early in- terest in the subject — 'Foster — ■ Francisco —Parsons — Massa- chusetts Board of Gas and Electric Light Commissioners — Commons — ■ Bemis — Fourteenth Annual Report of U.S. Commissioner of Labor (1900) — State Bureaus of Labor Statistics — Adams — U.S. Census of Central Electric Light and Power Stations — National Civic Federation Report — ■ Periodicals — ■ Miscellaneous — Present sources of information — Foreign experience. CHAPTER II The Massachusetts Laws and the Work of the Massachusetts Board of Gas and Electric Light Commissioners 36 Reasons for selection of Massachusetts — 'Board of Gas Commissioners (1885) — Authority extended to private electric lighting plants (1887) — Danvers Case (1889) — Municipal Ownership Act (1891) — Modified in 1893 — Present law — Method of acquiring a plant — ■ Basis of valuation -4- Munici- pal light boards and managers of municipal lighting — ■ Annual expenses defined — Cost — Depreciation — Fixing of prices (public and private) — Rates — Compulsory supply — Uni- form accounts — Control of capitalization of companies — Ex- tent of Authority of Board — Regulation of public plants — Regulation of companies — Competition — Principles of val- uation — General policy. xii CONTENTS CHAPTER in Municipal and Private Electric Lighting in Massa- chusetts: Methods of Comparison to be followed 55 Development of the" industry — General comparisons for all plants — Numerical — ■ Financial — ■ Purchase of current — ■ Distribution by population groups — Investment — Change from private to public ownership — Action taken by cities and towns regarding municipal ownership — Date of installation of plants — Difficulties of comparison — Testing the evidence — Physical data — Intangible items — Groups of plants se- lected as of 1915 — Generating plants (eighteen public and seventeen private) — Purchasing plants (twenty-one public and sixteen private) — General comparisons — Five-year period — Policy to be followed. CHAPTER IV Physical Statistics, Analyses, and Comparisons . . 88 1. Station equipment: — Boilers — Prime movers — Gener- ators. 2. Fuel consumption. 3. Output and disposal of current: — Load factor — Maxi- mum demand factor — Current unaccounted for — r Trans- formers — Increase in output — Disposal of current — Consumption of current — Per capita analysis — Other analyses. 4. Customers and per customer analyses. 5. Connected load and per connected load analyses: — Light load — Power load — Use of load, etc. 6. Street lighting data and analyses: — Character of lamps — Length of lines — Candle power — Hours' use per night. 7. Lines, poles, and transformers: — More rapid growth of private lines — Overhead — Relation to customers and population — Poles — Policy adopted by public plants — Size of transformers. 8. Physical statistics of purchasing plants: — Output — Sales — Character of business — ■ Customers — Connected load — Length of lines — • Poles — Conclusions. 9. Extent of territory, roads, and population: — Difficulty of separating rural from urban — Corrections made — Pro- portion of dwellings served. . Summary — • Tentative conclusion. CONTENTS CHAPTER V Financial Statistics of Generating Plants: The Capital Account 153 ^ Difficulty of comparison — Different accounts kept by pub- lic plants — Comparison of investment — Reasons for differ- ences — Analyses of investment — Station — Distribution — Policy of extension — Additions during year — Balance sheets — Municipal deficits — Methods of financing. Summary. CHAPTER VI Financial Statistics op Generating Plants (continued): Operating Expenses and Operating Income . . 180 1. Unit costs: — Total — Manufacturing — Fuel — Wages — Distribution — Other analyses. 2. Bates and income: — Total — General comparisons — ■ Light — Power — Bate schedules — Percentage analysis — Other analyses. CHAPTER VH Financial Statistics op Generating Plants (concluded) 212 1. Disposal of net income: — General analysis — Depreciation — Explanation of apparent differences — Comparison over period of years. 2. Other comparisons of financial results. 8. The cost of street lighting — Charges to be considered -r Various comparisons. Summary — Tentative conclusion. CHAPTER VHI Financial Statistics of the Purchasing Plants . . 242 1. The capital account. 2. Operating expenses and operating income. 3. Disposal of net income. 4. The cost of street lighting. Summary. xiv CONTENTS CHAPTER IX Miscellaneous Considerations 257 1. Labor and wages: ■*— Efficiency of labor tested — Wages analysis — Labor legislation. 2. Valuation of Estates and Tax Rates: — o. In municipalities served by generating plants — Rate of increase in valuations of real estate between certain periods — Increase of tax rates in municipalities own- ing plants — ■ Financial condition of municipalities in which plants are located. b. In municipalities served by purchasing plants — As above. 3. The intangible items: — Benefits and possibilities of mu- nicipal ownership — What are the actual conditions? — • Difficulties involved. CHAPTER X The Local Survey 286 The preliminaries — Schedules — Method of conducting — Data obtained — ■ Correspondence. CHAPTER XI The Local Background: Generating Plants . . . 299 1. The central station: — Equipment — "Housekeeping" — Capacity — ■ Adequacy — Why cease to generate current? — Condition of public plants. 2. Distribution: — Local conditions — Extension policy — Condition of lines, etc. 8. Consumption : — Complaints — Jobbing — Rates and serv- ices, etc. 4. Financial matters: — Free service rendered or received by municipal plants — Investment in dead assets — Other considerations. , Summary. CHAPTER XH The Local Background: Generating Plants (conelvded) 325 5. The management: — Methods of selecting municipal light- ing managers — Qualifications — Authority — Municipal light boards — Graft — A word for the present managers. CONTENTS xv 6. The employees: — Selection — Conditions of employment — Wages — Hours — Vacations, etc. 7. General considerations: — Reasons for acquiring public plants — Attitude of various parties — Getting new busi- ness — Result of policies adopted by municipalities — ■ Changes suggested. Summary — Brief Conclusion. CHAPTER XHI The Local Background: Purchasing Plants . . . 348 1. Distribution. 2. Consumption. 3. Financial considerations. 4. The management. 5. The employees. 6. General considerations. CHAPTER XTV Conclusion 358 Conclusions regarding municipal generating plants — Phys- ical — Financial — Opposite findings in the case of the dis- tributing plants — Under what conditions public owner- ship appears to be justified in Massachusetts — ■ A word about the companies — Need of revision of the present ac- counting system — Municipal plants should, if possible, be conducted as commercial enterprises — Results to be hoped for — Relation to the general question of public ownership. BIBLIOGRAPHY Note — Classified List of References 1. Books and Manuals 373 8. Public Documents and Bulletins (National, State, and Municipal), Laws, and Official Reports . . 377 S. Articles in Periodicals: Transactions and Pro- ceedings of Technical Societies 381 4. Monographs, Bulletins, Miscellaneous Reports, Addresses, etc 385 xvi CONTENTS STATISTICAL APPENDIX Note 391 A. Statistics op Generating Plants 393 B. Statistics of Pubchasing Plants 459 Index 479 MAPS, TABLES, CHARTS Map: Showing geographical distribution of 72 electric light plants in Massachusetts (1914-1915) .... 76 TABLES 1. Comparative data regarding private and municipal central electric stations in the United States . . 12 2. -Changes in ownership 13 3. Relation of the electrical industry in Massachusetts to that in other States 56 4. Number of central electric stations of all kinds in Massachusetts (1886-1915) 57 5. Assets of private and municipal electric light plants in Massachusetts (1891-1915) 58 6. Operating expenses and operating income per K.W.H. output in public and private plants (1902-1915) . 61 7. Number of K.W.H. generated and purchased (1907 and 1915) 64 8. Number of plants serving a given population (1916) . 65 9. Private plants changing to municipal ownership. . 70 10. Action taken by Massachusetts cities and towns re- garding municipal ownership of electric lighting (1895-1915) 72 11. Municipal plants beginning operation at certain dates 73 12. General information regarding company generating plants 78 13. General information regarding municipal generating plants 79 14. General information regarding public and private pur- chasing plants 80 15. Comparative averages of the two groups of plants . 81 16. Character of prime movers 91 17. Relations existing between the station units . . 93 18. Transformer data (generating plants, 1915) . . .103 xviii MAPS, TABLES, CHARTS 19. Relative amounts of current delivered .... 105 20. Relation between actual and possible light customers (1915) 110 21. Utilization of maximum demand 124 22. Street lighting data (generating plants, 1915) . . 128 23. Transformer data (purchasing plants, 1915) . . . 135 24. Connected load data (purchasing plants, 1915) . . 138 25. Generating plants — Relations between investment, equipment, and extent of business (Holyoke ex- cluded) 160 26. Operating expenses per K.W.H. delivered (1914-1915) 183 27. Percentage analysis of expenses (generating plants) . 195 28. Income per K.W.H. sold (Holyoke excluded) . . 198 29. Maximum net rates per K.W.H. (generating plants) 202 30. Percentage analysis of the various classes of income . 207 31. Percentage analysis of charges against income . . 213 32. Relation between investment, depreciation, and re- pairs, 1910-1915 220 '33. Generating plants: Comparison of financial results of operation 226 34. Ditto 226 35. Ditto 227 36. Ditto 228 ,37. Cost of street lighting to municipalities owning their generating plants 231 38. Ditto 232 39. Ditto 232 40. Ditto . ' . . . . ' 233 41. Ditto 233 42. Comparative investment data (purchasing plants) . 243 43. Comparative expenses per K.W.H. sold (purchasing plants) 247 44. Percentage analysis of expenses (purchasing plants) . 248 45. Maximum net rates per K.W.H. (purchasing plants, 1910 and 1915) 249 46. Comparative income (purchasing plants) . . . 250 47. Cost of street lighting to the towns owning their dis- tributing system 252 MAPS, TABLES, CHARTS xix 48. Comparative efficiency of labor . . . . . 260 49. Relative wages 262 50. Comparative wages for all plants in Massachusetts . 268 51. Adoption of labor legislation (close of 1916) . . . 265 52. Valuation of real estate and tax rates in municipalities in which generating plants are located . . . 269 53. Financial condition of municipalities in which generat- ing plants are located, 1915 276 64. Valuation of real estate and tax rates (purchasing plants) 275 55. Financial condition of municipalities in which pur- chasing plants are located, 1915 .... 279 56. Petitions of municipal government, citizens, or con- sumers regarding price or quality of service since 1910, and action of State Board thereon . . . 312 57. Voluntary reductions in maximum net commercial lighting rates since 1910 (cents per K.W.H.) . . 313 58. Voluntary reductions in maximum net commercial lighting rates since 1910 (cents per K.W.H.) . . 314 59. Action taken regarding municipal ownership by 33 cities and towns having private plants (until 1917) 344 CHARTS I. Number of watt hours generated per pound of coal 96 H. Total investment per K.W. capacity of dynamos . . 166 m. Station investment per K.W. capacity of dynamos . 168 IV. Distribution investment per K.W. capacity of dynamos 170 V. Manufacturing cost per K.W.H. generated . . . 184 VI. Cost of fuel per K.W.H. generated . . . .186 VH. Number of pounds of coal used per K.W.H. gen- erated 186 Vm. Cost of station labor per K.W.H. generated . . .188 IX. Distribution cost per K.W.H. delivered . . .190 X. Total operating costs per K.W.H. delivered . . .194 XI. Relation between maximum net and average commer- cial lighting rates (private generating plants) . . 202 Xn. Ditto (municipal generating plants) . . . .202 xx MAPS, TABLES, CHARTS XIII. Relation between maximum net and average power rates (private generating plants) 204 XIV. Ditto (municipal generating plants) 204 XV. Prices charged per K.W.H. for street lighting (gener- ating companies) 206 XVI. Operating income per K.W.H. sold — street lighting excluded (municipal and private generating plants) 208 INTRODUCTION Having read laboriously through a great mass of the writing which has appeared upon the subject of State in- dustries during the last twenty-five years, the writer is amazed at the futility of most of the attempts to prove or disprove the desirability of public ownership. Many who have made some study of the data necessary for compara- tive purposes have entered upon the task with strong pre- possessions and prejudices, and have accordingly seemed to find the conclusions which they had hoped to reach. Some have grievously ignored many significant considera- tions; while others have endeavored to particularize too minutely or to prove too much. The more careful his study, however, the less inclined is the investigator to draw sweeping conclusions, and the more ready will he be to do full justice to both sides of the argument. Probably the day has passed for seriously debating the feasibility of public ownership or operation of those enter- prises which directly involve the health and safety of a community. Yet there remains a large group of industries which are carried on primarily as commercial undertak- ings. Of this group, electric lighting is the only business which has thus far been generally attempted by public bodies in the United States. As to whether the public should engage in other forms of activity, particularly the agencies of communication and transportation, the dis- cussion in the future will doubtless be carried on with increasing intensity. In the meantime the experience which the United States is gaining in the operation of our railroads, and telephone and telegraph systems as a result of abnormal war conditions, will furnish us with some light on the possibilities of a nationalization of these industries. 2 INTRODUCTION As municipal electric lighting is now a well-seasoned business in this country, it affords the most fruitful field for an investigation of the results of public ownership. Hence the write! 4 , wholly impartial, holding no brief for either side, has selected for the present comparative study one small portion of the field — Municipal Electric Light- ing in Massachusetts. This selection is made because of the fact that probably for no other public industry in the United States is it possible to secure even reasonably com- parable data over a period of years, and adequate records for the purpose are to be found only in the State of Mas- sachusetts. 1 The aim of this book is to suggest and exem- plify those methods of approach and investigation which may most profitably be followed in future studies of the problems of municipal or state ownership, rather than to make any startling contributions to an already over- Worked field. Most of the statistical data on which the computations for this study are based, have been gathered laboriously from the annual returns filed with the Massachusetts Board of Gas and Electric Light Commissioners by the individual electric plants, as well as from numerous other State documents. None of the work at any stage has been delegated to others. In making his selections, the writer has carefully examined the returns of about 100 municipal and company plants for the ten-year period 1905-15. Of these, 72 plants, all 39 of the former and 32 of the latter, form the basis of this study. Unfortunately the returns are, for such comparison as is here attempted, distressingly inadequate. Absolutely no data are worked out, and not 1 Useful data for a much more extensive though probably less con- clusive study are being secured in connection with the 1917 Census of Central Electric Light and Power Stations in the United States, on which the writer is now serving as the expert in charge. Some interesting analyses of the available material will be made in the Fourth Quinquen- nial Report of this industry, which is being compiled by the author of the present book and which should be published during the coming year. INTRODUCTION 3 a single relation is deduced. Only the rawest of raw mate- rial is given. This fact has necessitated a rather involved series of computations. Countless mathematical operations were needed in order to get the data in such shape that relations could be determined and arranged for presenta- tion. Furthermore, in a majority of instances, the returns, particularly of the municipal plants, have been revised and corrected by a mass of detailed correspondence be- tween the Board and the separate plants. All of this cor- respondence, which in many cases exceeds in volume the returns themselves, has been carefully noted. To add to the difficulties of the student, the returns, even after this auditing by the Board, have frequently been found to be exasperatingly inconsistent with themselves or with those of the preceding or following years. This has been par- ticularly true with regard to some of the engineering data, and the figures for the connected load and the outputfand disposal of current. Under these circumstances the writer has occasionally found it necessary to use his best judg- ment in interpreting this material in the light of all the data available. In many cases the simple information re- quired has been absent altogether. Mention will be made of all these irregularities as they arise in course of the discussion. Finally, many highly important data are not at present called for by the Board. The Annual Reports of the Board have been of prac- tically no use in this part of the investigation. In them only the barest general summaries of a few items in the returns are given. And even this material is frequently inaccurate, not because it has been incorrectly transcribed from the returns, but because the data in the returns themselves are incorrect or inconsistent and have not been checked up. Needless to state, the data for gas companies liave been somewhat more carefully worked out. It must not, however, be inferred that the writer speaks thus 4 INTRODUCTION frankly for the sake of criticizing the admirable work of the Massachusetts Board of Gas and Electric Light Com- missioners. Rather, he merely wishes to suggest some of the difficulties which are bound to beset any one who attempts to make a careful study of the records in such a subject as this. 1 But a study of this sort lacks life and fails to command the full confidence of the public, if it has consisted only of an interpretation of the documents which are filed away in musty public archives, invaluable though they be. The desirability of a personal, first-hand knowledge of the various plants studied, a close acquaintance with the local background, became increasingly evident to the writer as his work progressed. Accordingly, after having thoroughly and sympathetically analyzed the recorded data for each plant, after having secured from all sources available the information which is significant, and after having carefully studied many of the fundamentals of the electric lighting business, both theoretically and from a practical point of view, as revealed by typical plants which are not on the present list, he arranged a painstaking survey of the plants under consideration. The methods used in carrying on this portion of the investigation are fully set forth in the proper place. 2 Suffice it to say in this connection, however, that the 18 municipal plants in the State which, prior to 1915, gen- erated current, were visited, as well as most of the cor- responding group of companies. In addition, the writer went to a reasonable number of the purchasing plants under both forms of management. And, finally, by means of schedules, extensive correspondence, _and conversation with those in a position to know, information was secured 1 In fairness it should be said that recently a few changes and im- provements have been introduced in the return forms and in the yearly reports, in accordance with suggestions which the writer has from time to time made. 2 Chapter x. INTRODUCTION 5 regarding the less important plants, which it was not pos- sible, and probably not necessary, to inspect in person. For the most part the data thus secured have been dis- cussed separately. The conclusions reached through this portion of the study have been further tested by the facts already known, and have in turn served as a check upon the deductions drawn from more purely statistical sources. Conducting the survey without prejudice, the writer was pleasantly surprised to find how closely the results arrived at by the different methods correspond. Prom time to time it has been necessary to consult a number of Massachusetts State Bureaus in order to obtain information not in published form as well as to receive suggestions regarding the correctness of some of the writ- er's deductions. Among these may be mentioned the Bureau of Statistics, the Waterways *and Public Lands Commission, the Highway Commission, the departments of the Secretary of the Commonwealth, the Tax Commis- sioner, and the State Forester, and the Industrial Accident Board. Certain information has also been obtained from the Federal Census Bureau at Washington. The writer is greatly indebted to the Massachusetts Board of Gas and Electric Light Commissioners for the courtesy which they have shown in answering his numer- ous questions and giving him access to the documents in their possession. Also, at various stages of his work, he has conferred with or written to a long list of persons who are thoroughly conversant with some phase of the subject under investigation, including men who are actively en- gaged in private or public electric light and power business, electrical engineers, public utility experts, accountants, lawyers, professors, municipal officials, and members of State commissions. To all of these, many of whom have contributed valuable suggestions or have confirmed the interpretations developed in this study, a general acknowl- edgment is here made. 6 INTRODUCTION Separate mention should be made of the debt which the writer owes to the managers of the municipal electric light plants in the State as well as to the officers and managers of the numerous private plants visited for purposes of com- parison. Had it not been for the interest which many of them have taken in the investigation and the personal kindness received at their hands, it would have been impossible to secure some of the most important informa- tion included in the present study. ■;» Finally, it is but fair to state that, whatever the author may owe to others for information regarding the facts involved, he has been absolutely independent in his method of handling the material at his disposal and in drawing conclusions therefrom. When the truth about public ownership is so beclouded by a mass of conflicting evidence and biased opinion* and when so many personal interests are at stake, it behooves the scientific student to weigh well his thoughts and to state as a fact only that which he has carefully verified; but, having taken these precautions, he should speak out boldly, no matter whose ox is gored. Accordingly, the writer himself assumes full responsibility for the findings herein presented, and trusts that the sub- ject has been so handled that the reader will be convinced of the fairness of the conclusions which are reached. Note to Readers: In conclusion it may be helpful for the writer to suggest those portions of this study which can be read to most advantage by the different classes of readers, for not every one has the leisure required for mastering the details of a scientific book. The general reader will be most interested in chapter xiv, which broadly summarizes the more important conclusions, in chapters x to xih, inclu- sive, in which the results of the Local Survey are discussed, and possibly in the summaries at the end of chapters v to IX, inclusive. The more careful student of affairs will no doubt wish to add chapters i to in, and probably chapter ix INTRODUCTION 7 and the summary at the end of chapter iv. Accountants will doubtless find some food for thought in chapters v to vin, engineers may be particularly interested in chapter iv, while public utility experts will naturally turn to all of the chapters from iv to viii. These three classes, also, should find it profitable to examine the Statistical Appen- dix. But active men in public or in private electric light and power business, as well as commissioners and thorough students of public finance, will do well to read all of the chapters consecutively, in order fully to appreciate the nature of the problems involved and the significance of the conclusions reached. THE RESULTS OF MUNICIPAL ELECTRIC LIGHTING IN MASSACHUSETTS CHAPTER I A SURVEY AND CRITICISM OP THE LITERATURE ON THE SUBJECT OP MUNICIPAL ELECTRIC LIGHTING IN THE UNITED STATES Though the first municipal electric lighting plant in the United States began to operate in 1881, l it was more than ten years later before students of public questions began to take any marked interest in this form of public activity. For the entire electrical industry this was a period of experiment — a time when, according to the well-known dictum of the economists, it was obviously most unwise for public authorities to risk the money of the taxpayers. Yet, probably due to the fact that many of the smaller towns could not offer sufficient inducements to private capital, 2 the increase in number of publicly owned stations was comparatively rapid. In 1892, so far as it can be ascer- tained, the entire number was 235, or 16.2 per cent of all central stations in the country. 3 Ten years later we find an increase of almost 250 per cent, to 815, or 22.5 per cent of the total; * while at the end of twenty years, in 1912, the number stood at 1562, 29.9 per cent of the total, an increase of 565 per cent for the period. 6 The number of private 1 Central, 1902 : 7; but cf. Mun. Monop. : 203-204. 2 Ibid., 1902 : 18; 1907 : 28. ' Ibid., 1902 : 7. * Ibid. 5 Ibid., 1912 : 17. Though exact figures are not available, it is probable that the number is at present 20 or 25 higher than here given. Cf. McGraw, and Thompson. 10 MUNICIPAL ELECTRIC LIGHTING plants, on the other hand.^ncreased from 1,219 in 1892 ' to 2,805 in 1902, 2 and 3,659 in 1912, 3 a growth of 130 per cent for the ten-year period and of only 200 per cent during twenty years. 4 Lest the foregoing figures should be misleading, some further comparisons and explanations are called for in this connection. In the first place, on account of the frequent combination and amalgamation of private plants during the past fifteen years or more, the census reports at a given time fail to show the real addition in numbers over a period of years. Also, in some cases, data have been returned as if for a single station when in reality they covered a group of separate plants operated by a single management. 5 Needless to state, these restrictions do not apply in the case of municipal plants. Here, further, we must observe that, while the number of municipal plants was increased by 310 during the period 1907-1912, a growth of about 25 per cent, the increase in the number of company plants between these dates was less than 6 per cent. This difference points to some rather important conclusions. The private plants appear to have been aware of the great advantages usually to be gained from consolidation and large-scale operation in the electric light and power business, and to have acted accordingly. The public plants, on the contrary, have, from the very nature of the case, been unable or unwilling to follow this policy. They have been prevented, no doubt, by local jeal- ousies, by the fact that they are often widely scattered, 1 Central, 1902: 7; but cf. Mun. Monop.: 203-204. s Cf . ibid., 1902 : 3, 6, 158; 118 central stations operating in connection with street railways are not included in the number given. 8 Ibid., 1912: 17, 18; 169 stations operated by street railways are not included. 4 To complete the data for the electric light and power business in the United States, the isolated stations, probably amounting to 75,000 should beadded. Cf. Central, 1902:8; 1907: 14; 1912: 17; also Census, N.Y.. 1890: 242. o Central, 1907: 28; 1912: 15, 20; U.S. Labor, xrv: 536. ' IN MASSACHUSETTS 11 and perhaps by legal difficulties. Accordingly, though the merging of the former has been very frequent, there is a record of only five such cases among the latter during the years 1902-1912. * As a result of the present war conditions, the incentives to combination have doubtless been increased to such an extent that there are now, in all probability, fewer independent, privately owned cen- tral stations than in 1912. Nor should we overlook the fact that, in 1902, 82.3 per cent of the municipal plants were in towns having less than 5,090 population, while in 1912 the percentage had risen to 85.1; 2 in spite of the very considerable growth in popu- lation within the period which had elapsed. This fact, of course, clearly indicates that municipalization of the indus- try is being confined in the main to the very small places, where frequently private concerns have not cared \P S°» and where the problems of operation are comparatively simple.? Hence it is reasonable to infer that 'most of the territory which seemed desirable, so far as private capital is concerned, has been for some time developed — another cause for the less rapid increase in the number of private plants. Again, it is interesting to note that, while the invest- ment in municipal plants was, in 1902, 4.4 per cent of the total for both groups,* it had declined in 1912 to 3.5 per cent, 5 a proportionate decrease of 20.5 per cent, hi spite of a proportionate increase in numbers of 33 per cent. Likewise the kilowatt hours output of the public plants decreased from 7.8 per cent of the total in 1902 6 to only 4.7 per cent in 1912, a proportionate decrease of 42.3 per cent. 7 These relations appear clearly in the accompanying table. » Cf . ibid., 1907 : 29, and 1912 : 22. 2 Ibid., 1912 : 23. i • The recent municipalization of the Cleveland plant is a conspicuous exception. It must he remembered, however, that this plant serves only a part of the city. ' Central, 1902: 6. '.. » Ibid., 1912: 66. • Ibid., 1902: 6. » Ibid., 1912: 17. s CO "4 H I i H 1 § OS I o I n 3 „ «D I t- e <* at i-i o s : S : § at • SO) 1 •& eo CO *> •.*■• o ^t . •O 00 £ „c 00 00 t- 00 &• 00 00 00 ■* e 1 1 si GO or § *" l> t- 09 oo" CD 00 at t> «e- «e a at ce O* at t- i-i 00 a t a> i » I-i CD •o 00 00 o 00 CO* g s CO* a CO eo" at 09 af ©■ •*" «& IH I •a I-I oo •O a) 1 af o af a< 00 •* s "• o» t- o 8 erf rH OJ i ** g 1 I § «o 00 of l-l to CO CD a» ■» . 03 £ 00 at* & af 00 3 1 a» 14 OS 00 af F-" s § U at to cv. ; n. : : 1 5 2~ oo l-H s cv. cv : : a~ O •*-' DO i 11 3 s j 3 o . -& : i 2 §§ 2 s "a : B e ft? 5 OQ o s s If ' 3 3 w ■+■- O fl £ 2 (3 «B e d o H 1 •8 11 8 ■ts * 8 -si 8 &4 n f*H 3 ■*- J 3 a* At 2 H o IN MASSACHUSETTS 13 Finally, attention should be called to the fact that 170 private plants were transferred to public ownership before 1902; 1 113 additional transfers were made between 1902 and 1907 ; 2 and 106 more between the latter date and 1912. 3 On the other hand, while only 13 municipal plants changed to private ownership before 1902, 4 and perhaps as many more were abandoned, 6 there is a record of 38 more cases of this sort between 1902 and 1907; 8 and a still more marked increase of 97 transferred and abandoned stations during the next period of five years. 7 8 With these general data as an introduction, it will be the purpose of this chapter to review briefly the numerous attempts which have been made to compare public and private electric lighting and power business in the United States, as well as to indicate sources which may be useful for suph purposes. The first compilation sufficiently exten- sive to be of much use was made by the United States Bureau of the Census in 1890, under the direction of Allen R. Foote. 9 Though at this time there were about 800 central stations in the country, of which more than 100 were publicly owned, 10 the survey was confined to the 139 private plants in the State of New York, — no data being » Central, 1902 : 7, 8. * Ibid., 1907 : 28. * Ibid., 1912: 22. * Ibid., 1902: 18. 5 Francisco, 1900: 22-28 (also Grant and Marston). » Central, 1907:29. » Ibid., 1912: 22. These changes are shown in the following table: — Table 2. Changes in Ownership Character 1914 : 45-47; and Albert E. Winches- ter, superintendent of the plant, in A. A. A., lvii: 228-245. 6 Cf. A. A. A., xxvii, nil, and Lvn, passim. 32 MUNICIPAL ELECTRIC LIGHTING ice." Arguments and facts on the public side can be found in the earlier numbers of the "Arena," in the more recently published "Utilities Magazine," and in the "Municipal Journal." The latter is particularly active in trying to show the economic waste of private ownership, proving conclusively in two pages of a recent number that municipal plants in Massachusetts are superior to the company plants in every way! 1 Finally, the more tech- nical publications, the electrical and engineering maga- zines, generally support the side of private enterprise, on scientific grounds. 2 There is also a large amount of miscellaneous material upon the subject. Some interesting comparative data have been collected by the special committees of investi- gation appointed by various municipalities considering the expediency of operating their own lighting systems. Of these mention should be made of the reports of Wellesley, Massachusetts (1900), Binghampton (1905) and Syracuse, New York (1907), South Hadley, Massachusetts (1913), and Geneseo, Illinois (191 ?). A series of eleven pamphlets entitled "Complete Reports on Municipally Owned Utility Plants in the State of Ohio," in which it was attempted to show that practically all of the 78 public electric stations studied are financial failures, was published in 1914-15 by the Public Service Publishing Company of Chicago. The same concern issues a list of municipal plants sold or abandoned, the 1915 edition being entitled "Facts on Mu- nicipal Ownership in 268 Towns and Cities." A similar list of " Defunct Municipal Lighting Plants," with a good deal of historical detail, is put out by the Municipal Own- ership Publishing Company of New York. Neither list is wholly trustworthy. 1 Mun. Jour., xl: 266-268; cf. also ibid., xxxin: 685-696; xxxv: 171- 186; and xxxvii: 264-272 and 274-278. 2 Cf. in particular various numbers of the Electrical World and the Electrical Engineer. IN MASSACHUSETTS sg More dependable in their facts and more scientific in their methods are some of the monographs which have recently appeared. A 1915 bulletin of the Iowa State Col- lege of Agriculture and Mechanic Arts, entitled "Electric Central Station Operation in Iowa," presents some inter- esting studies bearing directly on the subject, in which 10 public stations are contrasted with 46 privately owned. 1 Mr. Harold V. BdzelTs "Data on Municipal Plant Opera- tion in Oklahoma" (1916), seems to show that £6 of the larger water and light plants of the Static are running be- hind financially, when all legitimate expenses are charged against them, and that the municipal bookkeeping' is in a sorry state. 8 A third brief investigation, very well done, is that of Mr. A. G. Christie, on the "Municipally Operated Electrical Utilities of Western Canada/' presented at the Convention of the American Institute of Electrical Engi- neers in 1916. Nine public plants are carefully studied from many points of view, and some statistical "compari- sons are made with a group of 19 Massachusetts plants. 8 4 Finally, as general aids in investigation, in addition to the quinquennial Reports of the Census Bureau on Cen- tral Electric light and Power Stations, the Annual Reports of the Massachusetts Board of Gas and Electric Light 1 Iowa, El. Cent. : 99-104. * Bozell : 7-15. a Christie : 808-309, 32S". 4 Just as this book is going to press the writer has discovered one more attempted contribution to the field of municipal electric lighting, in the form of a little book by Carl D. Thompson, entitled Municipal Electric Light and Power Plants in the United States and Canada, gotten but under the auspices of the Municipal Ownership League of America. In this book are collected a number of interesting facts, practically all of which are out of date. The substance of most of the superficial studies already referred to in the present chapter, has been incorporated in Mr. Thompson's book as sound doctrine. There is some detailed account of a few of the mora successful publicly owned plants, while others are touched but lightly. It is a frankly propagandist piece of work, and barely skims the surface of the problem. Yet it is referred to by a recent reviewer as "apart from the Census Reports the most complete and ex- haustive survey of publicly owned electric generating plants ever made in this country"! (Quoted from Evans Clark in Ulil. Mag., February, 1918, p. 14.) 84 MUNICIPAL ELECTRIC LIGHTING Commissioners, of the Wisconsin Railroad Commission (Part in), and of the New York Public Service Commission of the Second District (vol. in), are particularly helpful. For a comparative study of the legal aspects of the problem of municipal electric lighting, the 1913 Report of the Na- tional Civic Federation on the "Commission Regulation of Public Utilities," an analysis of the laws of 43 States, is useful. Mention should also be made of "Public Utility Reports Annotated," a bi-monthly publication; "Rate Research," published weekly by the National Electric Light Association; and "Public Service Regulation and Federal Trade Reporter," issued monthly. Much useful financial and physical data on individual plants can be secured from the "McGraw Central Station List," ap- pearing biennially, as well as from the "Public Utility Sections" of Poor's and Moody's "Manuals." The two latter, however, include only private plants. In conclusion, while it was long ago admitted that infer- ences drawn from foreign experience in municipalization will not apply in this country.^et in view of the fact that Great Britain has more public than private electric light- ing plants (325 vs. 269 in 1916), some reference should be made to the best sources for the study of this problem in that country. Among these may be noted the "Returns to the Local Government Board, of Reproductive Under- takings Carried on by Municipal Boroughs," the "Munic- ipal Year Book," Garcke's "Manual of Electrical Under- takings" (an annual publication, of which volumes vn and X contain particularly useful data), and the "Electrical Times Table of Electric Supply Costs and Records." As municipal plants in Great Britain operate under practically the same conditions as private plants, it should be easier to make comparisons there than here. T£et rather diverse conclusions have been reached by investigators. Of American students of the question, Everett W. Bur- ' L. S. Eowe, Am. Jour. Soc, xn: 241-253. IN MASSACHUSETTS 35 dett l and Robert P. Porter 2 have attempted to make out a strong case for the opposition, not merely on the grounds that the tax rate has been increased, as they allege, in spite of the fact that the "profits" made in the business are supposed to help relieve the "rates," but also on the general grounds that the extension of service and develop- ment have been retarded by public ownership, and that the political effects are bad. Even Frederic C. Howe, who favors British municipalization, admits that municipal electric lighting has been no startling success in England. 8 Milo R. Maltbie, in the National Civic Federation Report, is decidedly cautious in his conclusions. 4 Among English writers on the subject, the views of Major Darwin and Lord Avebury on the one hand and of Bernard Shaw and Emil Davies on the other, are too well known to need comment. So far as the writer is aware, no champion of public ownership in England has really made a scientific comparative study of the electric-lighting problem, and unfortunately most of the opponents have approached the problem with a prejudiced mind. 5 Note: — For a general study of the problem of municipal ownership, Mr. Douglass Enoop, of England, in his "Principles and Methods of Municipal Trading," has probably done the most scientific work. Incidentally he discusses in an admirable way some of the problems of electric lighting. 1 Jour. Pol. Econ., xrv: 313. 8 Porter: rx-xi, and 261-286, "Strangling the Electrical Industry." 8 Bureau of Labor, Bull. 62: 58-63. Cf. also Howe, Brit. City: 111- 118; and, for opposite conclusions, Meyer: chs. xn-xvin, passim. 1 N. C. F., 1 : 230-261; and m: 248-382. 6 It is unnecessary to refer to Germany in this connection. There has been a strong tendency toward municipalization of the electric-light- ing industry in that country, and, so far as the writer is informed, the experiment seems to have been attended by reasonable success. Appar- ent results, however, must be accepted with a good deal of caution, while in attempting comparisons the political system and the national traits of Germany must be fully weighed. (See Dawson : 216, 226-229; and Brooks, in Q. J. E., xxx: 188-194, on "Municipalization of Berlin Electric Works." Also cf. various numbers of the Kommunales Jahrbuch.) CHAPTER II THE MASSACHUSETTS LAWS AND THE WORK OP THE MASSACHUSETTS BOARD OF GAS AND ELECTRIC LIGHT COMMISSIONERS From the preceding criticisms it should be' sufficiently evident that, aside from the personal prejudices, the un- scientific methods, or the superficial interpretations' which have in some measure characterized practically all studies of the subject, one of the chief difficulties confronting every student of the problem of municipal electric lighting in the United States has been the hopeless lack of compar- able data. Too much guessing has been necessary. As previously suggested, Massachusetts is the only State which for a long period of time has even attempted to keep definite records of both municipal and private electric lighting, 1 Hence the writer has chosen this State for the purpose of his investigation. But before explaining the specific methods of treatment that are to be followed, it will be well to review briefly the main provisions of the Massachusetts laws, in so far as they relate to the problem under consideration. 2 Some mention will also be made of the accomplishments of the Board of Gas and Electric Light Commissioners in their execution and interpretation of the Law. 1. The Massachusetts Laws Relating to the Electric Light and Power Business The Massachusetts Board of Gas Commissioners, com- posed of three members, appointed one each year by the 1 Cf. Central, 1902: 85, and Gray, in Q. J. E., xv: 270-271. ! Most references are made to the laws as compiled in 1914 by the Board of Gas and Electric Light Commissioners, '"General Laws Relating to the Manufacture and Sale of Gas and Electricity," Chapter 742 of the Acts of 1914, and to the laws as published from year to year in the Reports of the Board. MUNICIPAL ELECTKIC LIGHTING 87 Governor lor a term of three years, was created in 1885. 1 The act provided for .a general supervision of the accounts of gas companies, 2 for regulation of the quality and price of gas upon complaint, 3 and for some restriction of com- petition. 4 The annual expenses of the Commissioners were to be assessed upon the several companies in pro- portion to their gross earnings. 5 The Attorney-General was empowered to deal with companies violating the law or failing to comply with the orders of the Board. 6 By an act of the next year a system of uniform accounts was prescribed, 7 and the Board was given authority, upon petition, to eompel the supply of gas under "legal and reasonable" conditions. 3 No bonds were to be issued for less than the par value nor in excess of the paid-up capital. 9 In 1887 the Board was made a " Board of Gas and Electric Light Commissioners," 10 and practically all laws appli- cable to gas companies were extended so as to include all companies and individuals engaged in the electric-lighting business, It was further made possible for gas companies, upon application to the Board, to engage in the manufac- ture and sale of electric current for light and power. 11 In 1888 the town of Danvers constructed an electric plant for the purpose of lighting its.streets^ 2 The follow^ ing year theJDanvers Gas Light-Company petitioned to be allowed to manufacture and sell electric light to the people of the community. Whereupon the town, supported by an almost unanimous vote of the citizens, asked the Legisla- ture to grant them the privilege of doing a commercial 1 Mass., 1885, ch. 814. 3 Ibid., sect. 7. » Ibid., sect. 9. * Ibid., sects. 10, 16. 5 Ibid., sect. 6. But cf . Mass. 1917, ch. 205, sect. 3, which provides that municipal plants also shall share the expenses in proportion to their own annual expenses. 6 Ibid., sect. 13. ' Mass., 1886, ch. 346, sects. 1, 2; also Mass. G. & E., m: 126-132; and iv: 176-186. 8 Ibid., sect. 5. » Ibid., sect. 3. » Mass., 1887, ch. 882. » Ibid., ch. 385. » Mass. G. & E., v: 89. 88 MUNICIPAL ELECTRIC LIGHTING lighting business. The request was not at this time granted, but finally, in 1891, an act was passed "to legalize the ac- tion of the town of Danvers in establishing an electric light plant, and to authorize said town to generate and distrib- ute electric light and power." 1 The Danvers case was the beginning of a long discussion regarding the propriety of municipalities' engaging in a street and commercial lighting business, which culminated in the passing of the famous "Municipal Ownership Act" of 1891. Among other provisions, cities and towns were given the right to construct their own plants or were re- quired to purchase already existing plants. 2 A uniform system of accounting was prescribed, similar to that im- posed upon the companies, 3 and all the general laws re- lating to the manufacture and sale of electricity were extended to municipalities whenever applicable.* Though this act was somewhat modified in 1893, 8 no radical changes in any of the laws have been made since that time. Ac- cordingly it will be sufficient for our purposes to call atten- tion to the main features of the laws regarding electric lighting as they stand at present. A town or city may "construct, purchase, or lease" an electric plant for the manufacture or distribution of elec- tricity, either for its own use or for the use of its inhabit- ants (qualified until 1917 by the clause, "except for the operation of electric cars"). 6 Nothing in this section of the law, however, prevents a municipality from extending its service to another town which is not already supplied with electric light, 7 though a special act of the Legislature must * Mass., 1891, ch. 878, Special Laws. 2 Ibid., ch. 370, sects. 1, 12-14. 8 Ibid., ch. 379, sect. 9; also Mass. G. & E., vm: 263-285. * Ibid., sect. 17. 6 Mass., 1893, ch. 454. 6 Mass., 1914, ch. 732, sect. 92. This portion of the law was repealed by Mass., 1917, ch. 205, sect. 2. 7 Cf. Mass., 1915, ch. 191; also the following Special Acts: Mass., 1898, ch. 143; 1901, ch. 97; 1904, ch. 324; 1908, ch. 369; 1910, ch. 581; 1911, ch. 108; 1914, ch. 737; and 1915, ch. 140. IN MASSACHUSETTS 39 precede such extension, or from selling in bulk to a private company or to another municipal plant. In order to acquire its plant, a city must be so authorized by a two thirds vote of each branch of its council, or by a majority vote of whatever sort of governing body it chances to have, passed in each of two successive municipal years, and ratified by a majority of the voters at an annual or special election. 1 A town must be authorized by a two thirds majority of the voters at each of two town meetings specially called and "held at intervals of not less than two nor more than thir- teen months." 2 If the vote of a city is not ratified, no sim- ilar vote can be submitted for a period of one year, and if one or both votes of a town are unfavorable, no similar vote can be passed within a period of two years thereafter. Also, provision is made for a speedy certification of all votes to the Board. 3 Finally, by a law recently enacted, it is provided that a town or city having once acquired a lighting plant shall not sell the same unless such sale shall have been authorized by votes in the same manner as required for the original acquisition of the plant. 4 If, when the first vote is passed, there is a private plant already operating in the city or town, and the owners of the same shall elect to sell, the municipality shall be re- quired to buy. 8 Moreover, if a private gas and electric plant in the said place be operated under a single control, the purchase shall include both. If the central station be located outside the city or town, the purchase shall include only those portions of the system within the municipal limits, and the city or town shall be allowed to buy its current from another municipality or from a private plant, 6 or, with certain restrictions, from a street railway company. 7 1 Mass., 1914, ch. 742, sects. 95-97. ! Ibid., sect. 94. * Ibid. : sects. 95-97. When "Board" is used, it will be understood to mean "Board of Gas and Electric Light Commissioners." * Mass., 1917, ch. 205, sect. 1. J Mass., 1914, ch. 742, sect. 100. • Ibid., sects. 108-111. 7 Ibid. While public plants, as the law originally stood, were not 40 MUNICIPAL ELECTRIC LIGHTING furthermore,, the municipality may,, if it so chooses, pur- chase additional property of , the private plant situated in an adjoining city or town where there is no private lighting plant established, and may thereafter supply cur- rent to the said municipality or to the inhabitants thereof, subject to "the same limitations and obligations" as if it were a private business, 1 The purchase price of such plant as defined by the stat- ute is to be "its fair market value for the purposes of its use, taking into account any depreciation or obsolescence thereof or of any part thereof." But "no portion of such plant shall be estimated at less than its fair market value for any other purpose, including, as an element of value, the damages, if any, caused by the severance of any portion of such plant lying outside such city or town limits, if they [sic] are not purchased by the city or town, and excluding any mortgage or other encumbrance or lien to which such plant or any part thereof may be subject at the time of said purchase." J^urthermore, "such value shall be esti- mated without enhancement on account of future earning capacity, or good will, or of exclusive privileges derived from rights in the public streets." And, finally, "no city or town shall be required to buy any property unnecessarily added to a plant after the passage of its first vote, . . . nor any property except such as would be suitable for the ordinary business of the vendor." 2 If the city or town do not agree with the owner as to the price or the property to be conveyed, it may, within a specified time, apply to the Supreme Judicial Court of the allowed to sell current to the street railways, for fear of some sinister influence, they have always been permitted to purchase from them at rates approved by the Board. 1 Mass., 1914, ch. 742, sects. 103, 104, 106. 2 Ibid., sect. 100. The present earning capacity of the plant was in- cluded as an element of value in the original Act of 1891, ch. 370, sect. 12. Two years later this was omitted by section 5 of chapter 454 of the Acts of 1893. IN MASSACHUSETTS 41 county, which shall refer the application to the Board of Gas and Electric Light Commissioners. The Board, in turn, shall review the entire case, and their decision as to the value or amount of the property to be conveyed, when accepted by the court, shall be final. 1 If any expenses qf litigation are incurred under this section, "they may be reckoned as part of the indebtedness for which bonds may be issued" by the municipality. Subject to a two thirds vote of the voters present in case of a town or a "two thirds vote of all the members of a city council or other governing body," a municipality may contract debt outside the .statutory .'debt limit, but payable within a.period of twenty years, for the purpose of "establishing, purchasing, extending or enlarging a gas or electric light plant within its limits." 2 The indebtedness so incurred, however, .shall not .exceed in towns five per cent and in cities two and one half per cent "of the last preceding assessed valuation." Bonds, notes, or certifi- cates of indebtedness may be issuedfor the above purposes, 8 but all future bond issues after 1913 are to be on a serial and not a sinking fund basis, 4 Since 1905 it ihas been un- lawful for municipalities to borrow in order to meet any of the annual expenses of their plants; 6 6 1 Mass., 1914, ch. 742, sect. 1P1- Before this date (1914) special com- missioners appointed by the court arbitrated the case instead of the Board. Cf. Mass., 1891, ch. 370, sect. 13 and 1905, ch. 401, sect. 1. 2 Mass., 1913, ch. 719, sects. 6, 12. The statutory debt limit is for a city two and one half per cent of the average valuation of estates for the three preceding years, and for a town three per cent, with a few quali- fications. 8 Mass., 1914, ch. 742, sect. 98. 4 Mass., 1913, ch. 719, sects. 13-15. Prior to this time both forms of issue were common. Cf. Mass., 1891, ch. 370, sect. 4, in which the issue of 30 years bond bearing not more than 5 per cent interest was stipu- lated. 6 Cf. Mass., 1891, ch. 370, sect. 4, 1905, ch. ,410, sect. 4, and 1914, ch. 742, sect. 114. 6 All notes are to be certified by the Director of the Bureau of Statis- tics. Cf . Mass., 1910, ch. 616, sect. 2. 42 MUNICIPAL ELECTRIC LIGHTING A town undertaking the gas or electric-lighting business may elect a municipal light board consisting of three mem- bers, chosen one each year for a period of three years. 1 A "manager of municipal lighting," to be appointed by the mayor of a city or the selectmen, or municipal light board, if any, of a town, at a salary and for a term of office to be fixed by those appointing him, 2 and under their "direction and control," shall have "full charge of the operation and management of the plant, the manufacture and distribu- tion of gas or electricity, the purchase of supplies, the employment of agents and servants, the method, time, price, quantity and quality of the supply, the collection of bills, and the keeping of accounts." He shall, before entering upon his office, give satisfactory bond. All money shall be turned over to the town or city treasurer, and all bills shall be paid by the treasurer at the order of the man- ager. Finally, he shall render to the Board of Gas and Electric Light Commissioners, and to the mayor, select- men, or municipal light board, if any, such reports as they may from time to time require. 8 Before the beginning of each fiscal year the manager is required to submit to the mayor, selectmen, or municipal light board, an estimate of the income from sales to private consumers during the following year and of the total ex- penses of the plant for the same period. 4 The statute de- fines "expenses" as the "gross expenses of operation, main- tenance and repair, the interest on the bonds, notes, or certificates of indebtedness issued to pay for the plant, an amount for depreciation equal to three per cent of the cost of the plant exclusive of land and any water power appur- tenant thereto, or such smaller or larger amount as the Board of Gas and Electric Light Commissioners may ap- 1 Mass., 1914, ch. 748, sect. 112. Cf. also p. 825, infra. 2 The term of office has usually been one year, though re-elections are common. See ch. xm, infra. » Mass., 1914, ch. 742, sect. 113. * Ibid., sect. 114; cf. also Mass., 1913, ch. 692, sect. 1. IN MASSACHUSETTS 43 prove, the requirements of the sinking fund or debt in- curred for the plant, and the loss, if any, in the operation of the plant during the preceding year." The excess of such "expense" over the estimated commercial income, is to be included in the "annual appropriations for main- tenance and in the tax levy." The "cost" of the plant, for this purpose, is the "total amount expended on the plant to the beginning of the fiscal year for any purpose for which bonds, notes, or certificates of indebtedness may be issued." "Loss in operation" simply means the differ- ence between the amount received from private customers plus the sum appropriated for maintenance during the preceding year, and the total expenses as above denned. Depreciation was not included as an item in the annual expenses until 1905, though from 1891 it had been reck- oned at five per cent as part of the cost of producing cur- rent. 1 In this year an amount equal to five per cent of the total cost of the plant, or more or less as the Board might approve, was to be included as part of the expense and to be provided for, if necessary, in the annual appropriations for maintenance or from the tax levy. 2 No part of the sum allowed for depreciation was to be spent for any purpose other than "renewals, in excess of ordinary repairs, exten- sions, reconstruction, enlargements, and additions." The act further provides that any surplus left, after the above payments are made, "shall be kept as a separate fund and used for renewals, other than ordinary repairs, extensions, reconstruction, enlargements, and additions in succeeding years," and that "no debt shall be incurred for any exten- sion, reconstruction, or enlargements of the plant in excess of the amount needed for the purpose in addition to the amount then on hand in said depreciation fund." The fund is to be kept by the city or town treasurer as a separate fund. In the following year, after the Board had refused to > Mass., 1891, ch. 370, sect. 10 2 Mass., 1905, ch. 410, sect. 4. 44 MUNICIPAL ELECTEIC LIGHTING allow the city of Holyoke to make an allowance for depre- ciation of less than five per cent, 1 the law was amended so as to make the required depreciation allowance "three per cent of the cost of the plant, exclusive of land and any water power appurtenant thereto." 2 Finally, in 1908, in addition to the above uses of the fund, it was provided that such portion as the Board may approve "may be used to pay notes, bonds, or scrip issued to pay for the cost of recon- struction or renewals in excess of ordinary repairs." 3 Since this date there has been no change in the law regarding depreciation. Private plants, it should be noted, 'have never been re- quired to write off depreciation. This difference in require- ments is probably accounted for by the following reasons. In the first place, there has been a general feeling, largely justified by facts, that municipal plants, subjected to con- stant public pressure for low rates, without regard to the future, and with the tax levy to fall back upon in case of need, should be carefully safeguarded by law in this impor- tant matter, even though therate of depreciation fixed may at times be wholly arbitrary. On the other hand, since the law gives a highly effective .regulatory power to the (Board, which can thoroughly review the methods of private finan- cing whenever a rate case or a petition for new stock or bond issues comes up, it is supposed that self-interest will restrain the companies from declaring dividends out of capital and so impairing their resources, particularly in view of the fact that it would be practically impossible to capitalize losses incurred in this manner. (See ch. vm, infra.) When a municipality fixes or changes the price of gas or electricity, which change shall not he oftener than once in three months, 4 and shall take effect on the first day of a month, the manager shall at once notify the Board of » Mass. G. & E., xxi : 45-49. s Mass., 1906, ch. 411. ' Mass., 1908, ch. 486. « Mass., 1914, ch. 742, sect. 116. IN MASSACHUSETTS 45 Gas and Electric Light Commissioners, failing to do which he shall forfeit not more than twenty-five dollars. 1 The price shall not be fixed at less than cost except with the written consent of the Board. In "cost" shall be included "all operating expenses, interest on the investment in the plant, less assessments (for extensions), at the rate paid upon the bonds and serial notes, . . . the requirements of the serial debt or the sinking fund, . . . and also deprecia- tion of the plant to be reckoned at not less than three per cent per annum of its cost, and losses." 2 Above cost as thus computed the municipality shall not be allowed to charge such a price as will yield a profit of more than eight per cent upon its investment, but gas or electricity used by a city or town " shall be charged to it at cost." The enforce- ment of these provisions rests with the Supreme Judicial Court of the county, which may, upon the petition of the Board or of twenty taxpayers, compel prices to be fixed by^ the municipality in accordance with the rules laid down.* As to the price charged by the companies, that is subject to the review of the Board. If the mayor of a city or the selectmen of a town, or twenty customers, submit a com- plaint in writing to the Board regarding the price or qual- ity of gas or electricity sold, the latter shall, after formal notice, give a public hearing to both the petitioners and the company, after which it may order a reduction in price or an improvement in quality, and may fix a maximum rate. 4 Such action is subject to future revision by the Board. 5 Differential rates are neither authorized nor pro- hibited for municipalities or for private companies, 6 while the principle of a minimum monthly charge, though not directly covered by any law, is recognized and endorsed by the Board. 7 * Mass., 1914, ch. 742, sect. 116. s Ibid., sect. 115. » Ibid., sect. 125. * Ibid., sect. 162. 6 Ibid., sect. 163. • Ibid., sects. 190, 198. Cf. also Mass. G. & E., xxvm: 27. 7 Mass. G. & E., xxv : 37-42. The practice began as a meter rental charge. 46 MUNICIPAL ELECTRIC LIGHTING A municipal plant may require an advance deposit from customers sufficient to pay for three months' use of gas or electricity, and is allowed to shut off the supply when pay- ment is in arrears. 1 Similar provisions apply to the com- panies. 2 In the matter of compulsory supply, however, the law is different in the two cases. No city or town shall be compelled to furnish gas or electricity "except upon the order of the Board." 8 Moreover, a municipality owning its plant is permitted to assess upon "the owner or occu- pant of any premises" part or all of the cost of "laying and maintaining pipes, conduits, conductors, or other appli- ances thereon." 4 While payment of such assessments is not compulsory, it is a "condition precedent to the supply- ing of gas or electricity to the occupants of such premises." B A company, on the other hand, upon a written petition from an aggrieved party to the Board, followed by a hearing, can be compelled "to supply the petitioner with gas or electricity, upon such terms and conditions as are legal and reasonable." 6 Both municipal and private plants are required to keep their books and accounts in the form prescribed by the Board, 7 and to hold them, together with all papers, at all times open to the inspection of the Board or of its duly authorized agents. 8 Annual returns in a uniformly pre- scribed form are to be made to tie Board by both groups of plants on or before the second Wednesday in September, for the year ending on June 30th. 9 These returns, practi- cally the same in both cases, are, for companies, to state, among other things, the amount of. authorized capital, the indebtedness and financial condition, the dividends paid 1 Mass., 1914, ch. 742, sect. 115. 2 Ibid., sects. 68, 194. * Ibid., sect. 117. * Ibid., sect. 118. 5 Ibid. One of the Commissioners states that there has never been a petition for extension under this law. 6 Ibid., sect. 161. Such petitions and orders have been very frequent. 7 Ibid., sects. 120, 144, 146. 8 Ibid., sect. 120, 143. 9 Ibid., sects. 120, 146. IN MASSACHUSETTS 47 or declared, a list of the salaried officers with their salaries, the income and expenses of the preceding year, and the balance sheet of their accounts. 1 With respect to the records to be kept and the annual returns to be made, no active legal compulsion is exercised over municipal plants. 2 In the case of the companies, however, a very considerable fine is imposed for late returns or for failure to make re- turns, as well as a heavy penalty for false reports. 8 The law also grants the Board almost equally strict supervision over the books of voluntary associations. 4 In addition to the foregoing laws a city or town owning its plant is subject to the general laws relating to the " man- ufacture, use, or distribution of gas or electricity, in so far as they may be applicable," B as well as to the laws pecu- liarly applicable to public employees, regarding hours of labor, vacations, pensions, etc. 8 Mention should be made, however, of a few additional laws which particularly affect companies and which deal for the most part with ques- tions of franchise, competition and combination, and capitalization. Practically all electric light and power companies are now organized under the general law of the State, 7 in accordance with which three or more persons may associate for the purpose of forming a gas or electric company. 8 The certificate of organization must be submitted to the Com- missioner of Corporations, who, if he finds that the law has been complied with, shall signify his approval by his endorsement thereon and shall file it with the Secretary of State, who, in turn, shall issue a charter 9 which is subject 1 Mass., 1914, oh. 742, sect. 146. 2 Ibid., sect. 120. In 1915, 30 per cent of the public plants made late returns, and very few made correct returns. 8 Ibid., sects. 147, 149. In 1915 about five per cent of the companies made late returns. With few exceptions, their returns needed no corrections. 4 Ibid., sects. 148, 150-153. 5 Ibid., sect. 123. « Mass., 1911, ch. 494; 1912, ch. 503; ,1914, ch. 217; 1914, ch. 688. ' Mass. G. & E., xxiv : ccxcvii. 8 Mass., 1914, ch. 742, sect. 3. 9 Ibid., sect. 10. 48 MUNICIPAL ELECTKIC LIGHTING to amendment, alteration, or repeal by the General "Court. 1 Nor can the company begin doing business until all of its capital stock, or such part as may have been approved by the Board of Gas and Electric Light Commissioners, is paid in. 2 And, finally, it is necessary to secure from the mayor and aldermen of a city, or the selectmen of a town, permission to use the public ways for the location of lines and other appliances, 3 which permission they may after notice and a hearing, grant, subject to the conditions which they may see fit to impose. Though there seems to be no specific law on the matter, it is generally understood that franchises are "indeterminate and revocable." 4 The law seems to encourage both horizontal combina- tions and integration in the industry. With the approval of the Board, a company may extend its business into an adjoining city or town. 8 Also, after a two thirds vote of the stock, an electric company may, if the Board deem it consistent with the public interest, purchase the property of another company situated in the same or contiguous municipalities, or of a gas and electric company of which the gross receipts from the sale of electricity during the preceding year were at least three times the receipts from the sale of gas, or may consolidate with such company. 6 Additional provision is made for the consolidation of elec- tric and hydro-electric companies, under certain condi- tions. 7 But the aggregate amount of capital stock and of the debts shall not by such consolidation or purchase be increased. 8 Furthermore, the entry of a second electric company into a city or town is prohibited, except upon the consent of the mayor and aldermen or selectmen, granted after a public hearing. 9 Any party aggrieved by 1 Mass., 1914, ch. 742, sect. 12. * Ibid., sect. 48. 3 Ibid., sect. 127; 1911, ch. 509, sect. 2; cf. also 1908, ch. 617, sect. 1. * Cf. Mass. G. & E., xxvii:50, and 321a; Mass., 1914, ch. 741, sect. 124. 6 Mass., 1914, ch. 742, sect. 61. « Ibid., sect. 165. 7 Ibid., sect. 166. 8 IUd., sect. 168. » Ibid., sect. 156. IN MASSACHUSETTS 49 such decision may appeal within thirty days to the Board, which, after a hearing, shall render the final decision. 1 In view of this fostering of monopoly in the electric- lighting business, the State has considered it highly neces- sary to prevent any form of stock watering. Hence, in addition to the provisions already mentioned, stock divi- dends are prohibited, 2 and impaired capital is to be made good when such impairment is discovered by the Board. 3 Companies can issue only such amount of stock and bond as the Board may approve as "reasonably necessary" for the purpose for which they are authorized. 4 New shares are to be issued at not less than par, at a price to be fixed by the directors, unless the Board considers such price too low, in which case the latter may determine the price. 5 Nor shall the bonded indebtedness exceed the capital actually paid in. 6 Finally, holding companies are done away with by the law of 1913 which forbids one corpora- tion to hold more than ten per cent of the stock of a gas or electric light, heat, or power company. 7 2. The Work of the Massachusetts Board of Gas and Electric Light Commissioners Massachusetts led the other States by about twenty years in commission regulation of private and municipal electric lighting. 8 There were no precedents to follow. 9 Experience and the judgment of the Commissioners them- selves have helped to make the law from year to year. The authority lodged in the hands of these three men has been gradually increased, and only once (the Fall River case) 1 Mass., 1914, ch. 742, sect. 157. s Ibid., sects. 36-87. s Ibid., sect. 40. * Ibid., sect. 89. s Ibid., sect. 43. « Ibid., sect. 38. ' Mass., 1913, ch. 597. 8 No other commissions for the regulation of electric lighting compan- ies were created before 1907, and only five before 1910. Since that date about twenty more have been established. Not half of these have juris- diction over municipal lighting. » Mass. G. &E., i:6. 50 MUNICIPAL ELECTRIC LIGHTING has the action of the Board been reviewed or reversed by the superior court. 1 It has constantly been a moulder of public opinion with respect to public utilities, not only in the State, but throughout the Nation. In dealing with the problem of municipal ownership the Board has, with few exceptions, been untiring in its in- sistence that public business should conform to the best practice of private business. The task has been enormous. It was many years before any satisfactory accounts could be secured from municipal managers. 2 Constant visiting, advice, and correspondence have been and still are neces- sary. Much expert assistance is rendered from time to time. In the face of numerous petitions for the lowering of rates, the Board has sometimes abided by the letter of the law, refusing to let current be sold for less than cost as denned by the statute. It has always maintained that taxpayers should not be burdened for the benefit of private consumers. Yet, when there seemed a good prospect of de- veloping business thereby, it has not hesitated to use its discretionary power by granting provisionally a rate lower than cost. 3 At all times the aim has been, not merely to insist upon the principles of sound public finance, but also to inculcate high civic ideals. Whatever may have been the purpose of the framers of the law, and it seems to have been rather hostile to public ownership, the outcome has been that, due to the very restrictions of the law and due still more to the fostering care of the Board, the experi- ment of municipalization has been carried out under more favorable conditions in Massachusetts than in any other 1 For an interesting case see Mass. G. & E. xxix: 12-18, and 386a- 895a; cf. Mass., 1915, ch. 21, which extends the supervision of the Board to water companies. Cf. also Mass., 1908, ch. 617; 1914, ch. 742, sects. 1 and 166; 1916, ch. 64, — whereby the authority of the Board has been extended to purely power companies as well as to hydro-electric com- panies. 2 Mass. G. &E., xm:54. « See Mass. G. & E., x: 33-84; xw: 10-18; xv: 18, 14; and xxx: 95, 96, 104-108, 110-119. IN MASSACHUSETTS 51 state in the Union, and, perhaps, than in any other place that we know about, not excepting England or Germany. As the law for companies has been more complicated and less specific than that for the public plants, the Board has by its decisions and recommendations influenced legis- lation and established important precedents. If the original purpose of the law was to restrain competition and foster monopoly, 1 it is certainly true that the Commissioners, while abiding by the formal letter, have infused into it the real spirit which should pervade all public utility laws — strict regulation for the highest good of all. At an early date the Board called attention to the evils which might result from competition due to failures or future consolidations, as well as to the annoyances which would arise from undue interference with the public highways. 2 The policy has been never to admit a competing company unless it should have been clearly demonstrated that it would in the long run render better and cheaper service than the existing company. 8 Very frequently it has been necessary to re- verse permissions granted by municipalities, even after contracts have been entered into. 4 Private individuals have usually been restrained from erecting their wires in the public streets. 6 The Board has always favored one large plant on the ground of efficiency and economy, rather than several small ones, 6 and has by its decisions encour- aged the large companies to generate the current for the smaller ones as well as for both private and public consum- ers in other localities. 7 This policy, combined with con- i Gray, Q.J. E., xv : 254. 2 Mass. G. & E., v: 3, 4, 93-98. • Ibid., Jan: 11; xnc: 22-25; xxm: 28. * Ibid., v: 104-108. 6 Ibid., v: 97, 98, and xxvn : 32-39. 6 Ibid., xxiv: cccii. 1 Ibid., xxvii: 316a. A recent order of the Board (1918) is meant to encourage consolidation of resources during the war, with a view par- ticularly to economy in generation of current. This order, with some amplifications, has just been enacted into law by chapter 152 of the General Acts of 1918. 52 MUNICIPAL ELECTRIC LIGHTING stant regulation of rates, has served to keep those in the business always on the alert. In public service regulation control of capitalization and rate-making are different aspects of the same problem. When the question of the reasonableness of rates arises, the Board usually reviews the financial history of a com- pany before making its decision. As a result of many years of supervision of stock and bond issues, it considers a physical valuation of the plants in the State unnecessary. 1 In fact, no definite theory of valuation has ever been laid down, but every effort has been made to keep the "fair structural value" of the plant equal to the outstanding stock and bonds. 2 While many years ago it was suggested that a natural increase in the value of real estate might in some cases offset the failure to charge off depreciation, 3 the Board is in general opposed to allowing a return on the unearned increment of land. 4 "Working capital" is rarely mentioned, intangibles are not allowed in the valuation, and the capitalization of high earnings against the public is vigorously Opposed. 5 The legal restrictions placed upon the issue Of new capital have led to the policy, on the part of the companies, of creating a large proportion of floating indebtedness, most of which at present probably repre- sents lawful expenditures for extensions, improvements, and new plant, but some of which has been occasioned by past losses in operation. This issue of notes undoubtedly complicates the work of the Commissioners, yet they have always stood for the principle that depreciation of all kinds should be paid out of earnings and that losses cannot be capitalized. 6 1 Mass. G. & E., xxrs: 874a. i Ibid., xxrv : 48; also Mass., 1896, : In 1907 the companies bought 3.6 per cent of their total output, while in 1915 the amount had increased to ap- proximately 10 per cent, either excluding or including the hydro-electric companies which also purchase a consider- able quantity of current. The proportion purchased by municipal plants has also increased at an equal rate from 6.6 per cent to 18.4 per cent. Upon analysis it appears that the private plants in 1915 purchased a total of 50,000,- 000 kilowatt hours, of which more than 12,000,000 were 1 Wakefield ceased generating current during the fiscal year 1914-15, and Hull, at the end of 1915, voted to purchase her current in the future. During the next two years five other plants followed suit. 2 Only round numbers are given, and, in places, estimates had to be used. The computations are based on data which can be found in very unsatisfactory shape in the following sources; Central, 1907: 153, 165; Mass. G. & E., xxm : 167, and xxxi : 332a-336a, 360a. MUNICIPAL ELECTRIC LIGHTING Table 7. Number of Kilowatt Hours generated and pubchabed (1907 and 1915) 1907 1911 output Companies Municipal Companies Municipal Generated. . . . Purchased 198,500,000 7,500,000 12,200,000 800,000 596,000,000 (457,000,000)* 66,000,000 (50,000,000)' 31,000,000 7,000,000 Total.. 206,000,000 13,000,000 662,000,000 (507,000,000)! 38,000,000 > Hydro-electric companies excluded. secured from each other, about 8,000,000 from various manufacturing concerns and street railways, and 30,000,- 000 from the hydro-electric companies. If the hydro- electric companies are included, the total becomes about 66,000,000, and it is found that in addition to the above purchases the latter bought more than 10,000,000 kilowatt hours from the electric companies and 6,000,000 from each (other. Of the 7,000*000 hours purchased by municipal plants, 340,000 were secured from each other, 1,350,000 from hydro-electric companies, and 5,300,000 from Various electric companies. If we compare the data here given with the number of plants which generate no current, it is obvious that for the most part only the smaller plants are buying their current. A study of Table 8 will disclose the fact that 22 per cent of all private plants serve a population under 3,000, 15 per cent a population between 5,000 and 10,000, and 56 per cent a population greater than 10,000. On the other hand, 44 per cent of the municipal plants serve dis- tricts with less than 3,000 inhabitants, 33 per cent a popu- lation ranging from 5,000 to 10,000, and only 21 per cent a population greater than 10,000. Absolutely, the largest to a 3 08 §s- I §5 os o» o £ ■a 05 o> IS- «l » "JI 8 g I 00 I e3 I ■s 5 "& m 5 .» eg 60 § S .9 & § & | o m I 3 S .a 1 1 o 66 MUNICIPAL ELECTRIC LIGHTING number of central stations is found in the population groups under 3i00d and between 20,660 and 50,600 for the companies, and in the groups wider 3,000 and between 5,000 and 10,000 for the municipalities. Of the private plants generating their current, 80 per cent serve popula- tion groups in excess of 10,000* while less than 40 per cent of the public plants serve such groups. Private generating plants arfe found to be most numerous in the population group between 20,000 and 50,000, amounting to 33 per cent of the total. The largest number of public generating stations, 56 per cent of the total, is met with in the 5,000 to 16,000 group. There is a similar inverse correspondence in the case of plants buying all of their current. Of the companies 38 per cent serve population groups under 3*000, and 53 per cent serve groups of more than 5,600. But 70 per cent of the municipal distributing plants are found in places with less than 3,000 inhabitants, and ofaly 26 per cent serve groups larger than 5,000. The highest absolute numbers in each case are found in the population groups under 3,000 and between 5,000 and 10,000. Finally, it is interesting to note that, early in 1916, 10 of the private as well as l6 of thfe public generating stations served districts with less than 10,000 population, and that 24 private and 21 public distributing plants (75 and 90 per cent of the respective totals) are found in the same groups; This fact would suggest the possibility of making some useful com- parisons between municipal plants and the snialler com- panies, if other conditions are found to be approximately equal; though there is not. necessarily any quantitative relation between the population of the district served and th^ output of a central station. From these preliminary surveys it is evident that the public plants, situated for the most part in the smaller municipalities, constitute more than 30 per cent of the total number of central stations in Massachusetts, represent about 5 per cent of the total assets, and put out about 7 EST MASSACHUSETTS 67 per cent of the current (4.3 per cent of the assets and 5.4 per cent of the output, if the hydro-electric companies be in- cluded). Though the casual student might be induced by these figures to draw the conclusion that the public plants are doing a proportionately greater business with a smaller capital outlay than the private concerns, the data are, for numerous reasons, scarcely comparable except in the most general sort of way. In the first place, the Holyoke plant alone accounts for one fourth of the assets and more than one third of the output of current for the municipal plants. This fact tends to make any general averages practically worthless, for what is true of Holyoke is by no means true of the remain- ing plants. Its effect upon the averages is too great. Sim- ilarly it may be argued that the Boston Edison, with 50 per cent of the assets of all private plants (hydro-electric companies excluded) and producing two fifths of the cur- rent supplied, distorts the averages for the other group. Again, many of the private plants, having ceased either Wholly or in part to generate current, are burdened with a large investment in useless generating equipment — dead assets. This was true of only two or three of the municipal plants, at the time under consideration. Furthermore, many of the public plants, particularly those buying cur- rent, carry no account for real estate which has been taken over from the municipality or which is owned by another "department," and when they do carry this account it is usually placed low. Also they have very frequently exer- cised their franchise right of attaching their lines to foreign poles, whereas the companies generally own their own poles. All of these facts would naturally tend to make the plant accounts of municipal stations relatively less than the company accounts. Practically no underground construction has been in- stalled by the public plants, whereas, even in 1911, 50 per cent of the value of the distributing systems of the private 68 MUNICIPAL ELECTRIC LIGHTING plants was accounted for by the underground lines and conduits. 1 At the same time 40 per cent of the total invest- ment of the companies was in their distributing systems. Hence, as there has been a rapid growth of underground construction during the past few years, a conservative estimate would put the aggregate value of the under- ground systems at about 25 per cent of the total invest- ment. And, since this item, in the majority of cases, prob- ably represents by so much an absolute addition to the investment, due to the cost of changing from the old overhead system, this alone would be almost sufficient to reverse the relation which above appeared to exist between the proportionate assets of the municipal plants and their proportionate output of current. Finally, the plant accounts as carried by the municipali- ties have been constantly written off each year for depre- ciation, at the rate of 5 per cent until 1907, and at the rate of 3 per cent in most cases since that date. The policy of the private plants has been very irregular in this regard. Accordingly their plant accounts, when compared with those of the public plants, will appear unduly large. This is a mere suggestion of some of the more obvious conditions and considerations which totally invalidate the conclusions of one who attempts to make comparisons of this kind en masse. Other plausible comparisons would be subject to similar criticisms. A more careful study of the countless determining factors is demanded, and in the end our conclusions, if really scientific, will doubtless be rela- tive rather than absolute. Hence, with this general out- line of conditions to serve as a crude sort of guide to our future study, no further attempt will be made to establish any general comparisons between municipal and private electric lighting. A point has at last been reached where we can get our bearings, and attempt to apply those methods of investigation which may prove most fruitful. 1 Mass. G. & E., xxvii : 326a. IN MASSACHUSETTS 69 Before this task is begun, however, a brief additional reference must be made to the history of municipal elec- tric lighting in the State. At an earlier date opinions were divided as to the effect which the Massachusetts laws have had upon the growth of municipal electric lighting. Some ardent champions of public ownership at any price have contended that the provision in the law making it possible for an already existing plant to force the sale of its property, both gas and electric, upon a municipality wishing to begin business for itself, is decidedly unreasonable, and that it should at least be permissible for a city or town to install its own street lighting system without such a restriction. Others have maintained that public ownership has been directly fostered. 1 The truth of the matter seems to be that many municipalities have been deterred from taking the decisive step because of the caution and deliberate action which the law induces. It is equally true that when public plants have been started, they have, for the most part, been enabled to make a fair success of the undertaking, by rea- son of the restrictions imposed by the law, the aid rendered by the Board, and the active interest taken by the com- munity. Of the 39 publicly owned plants in the State, 16, or 41 per cent, have been transferred from private ownership. Half of this number were generating plants, 4 of which did solely an electric business 2 and 4 a combined gas and elec- tric business. 3 The remaining 8 plants never generated current, and in three cases a local plant was taken over, 4 while in five cases only the distributing system of an out- 1 For some expressions of opinion on either side of the question, cf. Matthews, Rept. Brook. : 16, 27-29; Adams, in Pol. So. Quart., xvii: 247- 255; Central, 1902: 84; and Parsons, Commons, and Bemis, in op. cit. * Hull (1894), Chicopee (1896), Hudson (1897), and Taunton (1897). 8 Middleborough (1893), Wakefield (1894), Westfield (1899), and Holyoke (1902). * Ashburnham (1908), Middleton (1913), South Hadley (1914). 70 MUNICIPAL ELECTRIC LIGHTING side company was bought. 1 Seven of the generating plants were bought before 1900 and the other one shortly after- ward. Only two of the distributing plants were acquired during this time. Table 9. Private Plants changing to Municipal Ownership Character of plant Before 1895 1896 to 1900 1901 to 1905 imto 1910 1911 to 1915 Total Distributing systems (or 3 1 4 1 1 s 3 8 8 Total ; 4 5 1 3 i 3 16 In every instance in which a municipality has decided to do its own lighting, the local company, if there was one, has expressed its willingness to sell, and in accordance with the law the sale has been made, with the single ex- ception of North Attleborough, which disregarded the law, built its own plant, and forced the existing company to move elsewhere. 2 These transactions, however, were usu- ally accompanied by a good deal of litigation. An amicable .agreement as to the price of the property to be conveyed was made in but seven cases — all very small plants and only two with a generating system. 3 In the nine remaining cases, six of which were generating plants, the courts and specially appointed commissioners had to deeide upon the terms of transfer. 4 As might have been expected, the owners fought for a higher price than the municipalities wished to pay, while 1 Hingham (1895), Belmont (1898), Wellesley (commercial lighting system, 1906), Groveland (1907), and Lunenburg (1914). 2 Mass. G. & E., ec: 50; Adams, Pol. 8c. Quart., xvii: 249. 8 Middleborough, Hull, Hingham, Wellesley, Ashburnham, Middle- ton, Lunenburg. 4 Chieopee, Wakefield, Westfield, Hudson, Taunton, Holyoke, Bel- mont, Groveland, South Hadley. IN MASSACHUSETTS ?1 the latter stood out frequently for a ridiculously low figure. Though the awards seem to have been perfectly fair to both parties, since no intangibles could legally be included in the valuation, yet it has frequently been asserted that in most of the ten instances of purchase before 19,02 the municipalities paid too much for their plants, as shown by higher fixed charges, higher commercial lighting rates, and a higher cost of street lighting than in the other plants. 1 It is probably true that the municipalities building their own generating plants had an advantage over those com- pejled to buy, as they could utilize all the latest develop- ments in the industry and could profit by the lower cos,t of equipment. None of these (10 in ah 1 ) were equipped for both commercial and street lighting ,until after 1893, and 4 of them after 1900.? Of the generating plants acquired from private owners, on the other hand, 7 out of 8 began operation before 1889, 3 at a time when the electric busi- ness was in a highly experimental stage. Countless mis- takes and miscalculations were constantly being made, pa- tent rights and machinery were secured at exorbitant prices, and depreciation from obsolescence and from inadequacy was exceedingly rapid. The business was not seasoned, early losses were great, and dividends were very uncertain. 1 Cf. Adams: Mun. Eng., xxv: 232-240; also Mun. Monop. : 154-155, 223-228, where an attempt is made to prove that in spite of these handi- caps municipal rates were lower than private rates. For a discussion of the bitterly contested Holyoke case see Adams in Q. J. E., xvii : 643- 668, and vol. xvi of the Holyoke Case (Nathan Matthews' Brief). Adams maintained that Holyoke paid about twice as much as the plant was worth, while Mr. Matthews has informed the writer that beyond a doubt the city secured its plant at half price I So much for expert opinions on valuation. The later history of the plant indicates that the city made no bad bargain, considering the nature of the territory. 2 Danvers {street lighting, 1889, commercial lighting, 1896), Braintree (streets, 1892, commercial, 1894), Peabody (street, 1892, commercial, 1893), North Attleborough (1894), Marblehead, and. Reading (1895), Concord (1900), Ipswich (1908), Merrimac and Mansfield (1904). • » Taunton (1882), Hudson (1886), Chioopee and Westfield (1887), Wakefield and Holyoke (1888), Middleborough (1889), Hull (1893). 72 MUNICIPAL ELECTRIC LIGHTING Hence, even disregarding the intangible items, it is easy enough to see that, in order to recoup the owners for their bona fide investment, municipalities were in some instances obliged to pay more for their old plants than would have been sufficient to construct new ones of a better type, and frequently a part of the equipment was rapidly junked. However, the question is largely one of speculative interest. Municipalities, even though they may in one or two cases have acquired antiquated plants, have not fared half so badly in this regard as have practically all the companies. Early in 1915 some kind of action on the question of municipal ownership had been taken by 105 cities and towns, or 30 per cent of all municipalities in the common- Tablb 10. Action taken by Massachusetts Cities and Towns regarding Municipal Ownership of Electric Lighting (1895-1915) l ClatiifictUion Before 1895 1896 to 1900 1901 to 1906 1906 to 1910 1911 to 1915 Total! 1. Municipalities taking 45 12 26.7 IS 6 33.3 9 5 55.5 20 7 35.0 IS 11 84.6 105 2. Municipalities begin- Ratio of 2 to 1 (per cent). 41 (39)' 39.0 (37.1) ! l It is not always the case that a municipality taking action at a certain time has be- gun to operate its plant during the same period. The table, however, shows what has actually taken place. • Actually in operation in 1915. wealth. Of this number, 77 had brought the matter to a vote, — 69 in popular elections and 8 in the city councils, — 26 had simply appointed investigating committees, and 2, Danvers and Miller's Falls, had acquired their plants under special acts of the Legislature. Nearly 60 per cent of the municipalities which have submitted the matter to a popular vote have adopted public ownership, while nearly 40 per cent of all those which have taken any action IN MASSACHUSETTS 73 whatever, or 11 per cent of the 353 towns and cities in the State, are at present operating their plants. It appears from Table 10 that a good deal of enthu- siasm on the subject of municipal ownership was aroused before 1895. This was probably due largely to ignorance of the real issues involved, as well as to a desire to make use of the privilege newly created by law with a view to securing lower rates. That so little, comparatively, was accomplished, can doubtless be explained by the fact that almost no current was sold by one station to another at that date. Hence, a municipality was confronted by the proposition of building or buying its entire generating and distributing plant at a high cost. As time has gone on, however, the agitation has become less and the effective action relatively greater, until in the latest period prac- tically every town considering the question has acquired a plant. Upon comparing this table with the others it is evident that the comparative ease and inexpensiveness of installing a distributing system in small towns whose business is not particularly desired by the companies, and the possibility of buying cheap current from large central stations, have acted as a stimulus to this "small scale" public industry. The accompanying table presents this phase of the development clearly. Table 11. Municipal Plants beginning Opebation at Certain Dates Character Before 1890 1891 to 1895 1896 to 1900 1901 to 1905 1906 to 1910 1911 to 1916 TotaU Plants generating 1 8 3 5 1 4 1 7 1 ll 1 18 Plants buying 23 Total 1 11 6 5 7 11 41 1 One ceased operation at each of these dates. Hence 2 should be deducted to show the net increase. 74 MUNICIPAL ELECTRIC LIGHTING Since 1904 not a single generating plant has been pur- chased or built. Two plants formerly producing their cur- rent, Wakefield and Hull, have within the last year or two ceased to do so and are doing only a distributing business. Two others, Chicopee and North Attleborough, will doubt- less soon follow the same policy. 1 Oply two municipal plants have become defunct, 2 Meedham. which did a street lighting business from 1893 to 1908, and Miller's Falls, which operated from 1903 to 1912. Both bought their current, and both sold their distributing system to private companies when they ceased operation. Since 1907, 18 distributing plants have been launched, almost ,50 per cent of the total number of public plants, and 11 of these are accounted for in the three-year period 1911-1914. This fact would seem to indicate that the smaller towns expect a very considerable saving as a result of municipal .ownership, Though it is perhaps too early to say whether this expectation will be realized, the question wijl later be fully discussed. 2. Methods or Comparison to be followed The relative status of municipal electric lighting in the State has been sufficiently indicated. If the student of this problem wishes to draw any definite or even reasonable conclusions^ he must conduct his investigation in an orderly, specific manner. Things fairly comparable must be compared. If the survey be too extensive, many of the vital issues will tend to be obscured by a mass pf compli- cated and conflicting data, On the other hand, if the study 1 Within a few months after the above was written, not only these plants but three others as well had stopped the generation of current (Mansfield, Merrimac, and Middleborough). 2 After this had been written the writer discovered that the town of West Springfield owned a distributing system ,for about sixteen years. Becoming greatly dissatisfied, however, it sold its lines to the United Electric Company of Springfield, in 1914. No returns were ever made to the Board, which seemed to be unaware of its existence. IN MASSACHUSETTS 75 be narrowed to a comparison of only one or two public plants with the same number of private ones, while the work would be greatly simplified, the conclusions reached would have to be revised for ever^ new case which might arise. A sufficient number of observations must be made to enable the investigator to establish some norm and to eliminate the extremes. The object of the present study is to determine as nearly as may be the results of municipal electric lighting in Massachusetts, viewed not merely from one or two angles, but from all angles. No absolute standard of measure- ment can be set. Though balance sheets, operating ac- counts, and rates have been usually zealously invoked in researches on this subject, they alone can indicate but a limited portion of the real issues involved, for they are relative rather than fundamental considerations. They are the results of other factors not so easily discoverable, but in many cases far more significant. ' The question is still further complicated by the fact that public and private business are being carried on side by side, with the latter greatly predominating. The tests which, in themselves, it might seem reasonable to apply to publicly owned plants, might prove, on the one hand, hopelessly inadequate, or, on the other hand, highly unfair, if we endeavor to apply them to private business. Hence, in order to direct our investigations along fruitful lines and to verify our conclusions, it is absolutely necessary to make comparisons at every turn, to study private indus- try just as carefully as public industry, and to measure the latter by the same standards which the industrial world applies to the former. T)\ie weight will be given, as occasion may arise, to any peculiar or unusual conditions which frequently characterize certain phases of municipal ownership, and like allowance will be made for abnormal conditions, if such there be, in the private plants under consideration. Above all, an attitude of mental neutrality 76 MUNICIPAL ELECTRIC LIGHTING will be maintained throughout. Though the writer will, whenever possible, point out what seem to be the correct conclusions and inferences to draw from the data under con- sideration, he is not only willing, but highly desirous, that the case shall be decided solely upon its own merits. His aim will be simply to present the truth in a clear way, without reading into his interpretations any personal prejudices. Probably no two electric lighting plants are in all re- spects fully comparable. A multitude of technical factors, external as well as internal, tend to disturb any nice theo- retical balance which may be established. Though very similar physical conditions be found, yet the intangible items of management and coordination of effort on the part of employees may produce totally unexpected results. Our problem is slightly simplified, however, by confining the study to one small State, thereby eliminating numerous legal, psychological, and climatic differences. Certain gen- eral grounds of comparison, under the circumstances, are reasonably well defined, and, while any individual plant may vary greatly from the norm, the averages derived from the study of a sufficiently large group of similar plants will probably disclose the true conditions with sufficient accu- racy for our purposes. Central electric stations naturally fall into two groups, those producing current and those purchasing. Regarding the first class we wish to know further whether they gen- erate all of their current or only part of it, and whether they do a composite business, gas, water, heating, or manu- facturing, as well as an electric lighting and power business. Then we must consider the source of primary power, whether it be coal, fuel oil, water, or gas. Next the output of current is highly significant, as well as the load factor and the diversity factor, 1 which indicate pretty clearly the nature and extent of the business done as well as the 1 For an explanation of these terms and their significance the reader is referred to the following chapter, pp. 97-98, 117. 72'30' 41 . 30 GEOGRAPHICAL DISTRIBUTION OF 72 ELECTRIC LIGHT PLANTS IN MASSACHUSETTS (1914-1915) •k Municipal Generating Plants (18) O Municipal Purchasing Plants (2 1) * Company Generating Plants (17) o Company Purchasing Plants (1 6) 73" 72 30 Longitude 72 71' 30' 7l"30' Greenwich 71° 70*30' IN MASSACHUSETTS 77 amount of necessary investment in station equipment. Finally, it is highly desirable to know the extent of the territory and the number of inhabitants served, the age of the plants compared, and whether or not there is com- petition of any kind. Without referring in this connection to the many com- plicated engineering features of the business, there are numerous simple but very important considerations which should further be borne in mind if we wish the comparison to be complete. We should consider the proximity of the generating plant to navigable waterways and to sources of fuel supply. We should note whether equipment is all owned or partially leased. We should know the topography of the district served, the location of the central station, and the nature of the business which is carried on in the municipality. The traits and traditions of the inhabitants, the prevailing character of the local government and its requirements regarding the placing of lines underground, labor legislation and the unionization of labor, are all deter- mining factors. Even more important are the nature of the management, — and "control" in the case of private plants, — the policy followed in the matter of repairs, improvements, extensions, and the securing of new busi- ness. These considerations, however, will be reserved till later in the discussion. Groups of plants approximately equal in the six or seven fundamental respects must first of all be secured. The municipal plants are the fixed quantity in the problem, as all of them are to be studied. Hence it has been by no means a simple task to select private plants which will in most ways conform to the conditions outlined. Since the public generating stations are for the most part small, it has been rather difficult to find plants comparable in size. The result is that, with the exception of two or three very small plants the character of whose business and whose method of generating current and keeping accounts are o 5«o S 8 8 5So5 8 8 ShJh pH ><>i2;>i PH JH "M *l Pi CO 00 O* HCO pH «ff p-l GO pH pH o 1 I o 1 I i "5 2 5 a ail OO O OOUO O £ ill WHO »H !-* ou'9 O'O o "^ www S"S OS '"*' Bot>o' 3 Swho"«>w w 1 a) • i-H * •CO : © : .«5 OJ ""• " t I 00 61.8 is in *ii III sa| Is ssAsas 8 « s-ts 8 8 ■y fi* is rtl -y *5 £1 a a a a a I fill "13 ^ BO «5 00 Oi OS OQ op 00 CO do oo oo 00 CO CO 00 00 00 CO CO CO Ci 00 00 00 00 00 00 00 00 i s >? 8-.S S 5? « o , lit I s>»3.a a I ■8 .a ss 2Sa> £ Is I U SI I * 31 1 1 I I ! H a "3.3 Jl B "8 s •S 3 ■§ "Sid's ufl J5 1 -§- a HI"!" o = s s a s fi» o 6 £ s| :i si n oo oo oi w o I I £ S3 § o o o SHE o o o O II t) w www ^S H 3 S SSS 3» S3 BS a a i ! i I o I 1 1 1 1 • CO CO 00 hisiisa iiSuliiitlii S3 S S S H 3 I I II I 1 * s a S3 3 s a n o on www ■S a ■a I i 388 8 8 & 388 8 3-5 888 8 (MfHj^jH k* " ¥*i»l* >< [>i ^ fn >h >h Jh 5 I P-I g 1 I 1 I! V 0) Jill I S 8 9 3 8 8 8 a a a a ■* s s &H ™"B ™"S c 2 *' •-too tiJs e. £> ■* Js o o li- * e * & ! ■* ^« •"* ■* fc- ^ W)l I p-l l-H l-t iH © I— 1 t, 4 ] OS OS OS 03 OS OS a? ( 1 *H rl rH i-f fH r-i > I 5' 2m CO o CO CO aocoH o CO CO CO OS OS CO CO 00 MOh CO OS OS OS O CO ©CO © OS CO OS CO OS CO OS 5 Jg STL ftKcncocnt IS o 8 9 9 8 8 3 8 9 8 9 398988 353 a * B E; is * *£:£;*% ^^^^^^ ££>« a O n 00 o OS ■« i-c O - *"• * H OS COtMMffit-iOMQKiHSto^MOQOQO 3 "- , t- O* ,-H ^ ftHHOOOJHHrtH OHHHO00 .HOtt * 1^1 coososososcocsososos rcsososososco rososco is a a o I o 1 13 Is fflO IS 8 2.9-32 93 3 ^.Ha Ill-Ms ^0,3 ! pa £ IN MASSACHUSETTS 81 Table 15. Comparative Averages op the Two Groups of Plants Companies Municipal I. Generating plants: w°vo Capacity (K.W.) of dynamos 1,366 951 Output (K.W.H.) 1,764,719 1,168,110 Disposal of current (percentage) : Co m mercial and domestic lighting . SO . 6 81 . Street lighting 14.8 24.8 'Power 42.7 43.8 Other companies 12.4 0.9 T H f f arithmetical average .. . (14) 27.7 (18) 26.5 r I weighted average (29.2) (23.5) Customers * 1,377 1,063 (1,205)* (1,030)* Population of district served 16,817 12,1 18 (14,854)* (11,768)* Area of district served (sq . m.) 58 . 94 24 . 81 (30.67) 1 (21.39)1 Density of population 285.3 488.2 (468.1)» (550.2)* Age of plants (years) 25.2 (18) 22.2 t ' (18.8)> Companies Municipal TT _ , . , (WortoooiJ out) II. Purchasing plants: Output (K.W.H.) 266,715 157,173 Disposal of current (percentage): Commercial and domestic lighting . 45 . 2 54 . 6 Street lighting 21.0 31.3 Power 31.3 13.9 Other companies 2.5 0.3 Customers 376 289 Population of district served ....... 5,467 2,679 ' Area of district served (sq. m.) ...... 25 . 06 19.60 '" (19.88)* Density of population "" 218.2 136.7 Age of plants (years) " 15.4 8.0 (6.5)2 1 Excluding foreign districts served. ' Age under public ownership. 82 MUNICIPAL ELECTRIC LIGHTING such that comparison is out of the. questjpn, it-has bepome necessary to choose the smallest and, in many cases the more poorly managed companies. Accordingly, 17 of these are compared with the 18 municipal plants which generated all or a portion, of their current during the year ending June 30, 1915. No private plant so large as Holyoke has been included, a^ it is by nq means typical of public plants in the State. Tjhe averages are usually computed both with and without Holyqke, Two public plants bought the greater part of their cur- rent during the yedr, one bought about half, and; another one third of its total output. To compare with these^four CQmpanies have, b^en found whose proportion of purchased current is practically the same. One municipal plant uses only oil; for fuel, and two use considerable water power. Among the private plants selected there are two very small ones using solely water power, two using some water power, and one using a little gasoline. The two generating current only by watejr power have been included merely, because they are small. For this reason, and inasmuch as they buy most of their current, they will not distort the averages for the group. For comparison with the four public plants do- ing both a gas and an electric business, five similar com- panies have been taken, the additional. one simply because it is. very smalL Seven municipal plants and four, private ones, sell some steam for. sundry. purposes- While the output of the 17 generating companies aver- ages somewhat higher than that of the public stations (Hol- yoke being excluded), this difference is probably not great enough to hayeany marked effect upon our comparisons. Whenever this, fact may become significant due allowance will be made therefor. So far as the load factors are con- cerned, they average about the same for the two groups, though in several cases, no. data. are returned which enable them to be computed. With a very few exceptions, it is impossible to find the diversity factor. IN MASSACHUSETTS 8? Some difficulty was encountered in loakifig for suffi- ciently small population groups in the case of, private plants. This matter in itself is not highly important; but when other conditions seemed equal the plant serving the, smaller population was selected. The question of competi- tion of other central stations can hardly arise under the Massachusetts law. It is interesting to note, however, that- all but 4 of the companies and all but 3 qf the publia plants have a competing gas business in their territory., The 17 companies do business in 38 different cities and towns, 9 of them supplying a total of 30 municipalities, and the 18 public plants in only 22. Geographically, the relative distribution of the two groups of plants is about the same. Upon examination of the ages of the two groups, it ap- pears that 16 of the companies and 15 of the municipal plantsbegan operation before 1900, and 14 companies and 7 municipal plants (at that time all privately owned but one) before 1889. The average age of the two groups ia thus not far apart, but the average length of time under municipal ownership, 18.3 years, is nearly 30 per cent less than the average age of the companies, 25,2 years. Ac- cording to the census of 191 0, 1 10 of the cities and towns in which the companies are located, having a population greater than 10,000, did a considerable amount of manur f acturing. Though only 6 of the municipalities, having their own plants were five years ago in this population group, they all did a large manufacturing business, 4 of them ranking much higher than the places served by private plants. At least 3 more munieipajities should be added, for 19I5. 2 The total for the two groups thus becomes practically the same. Finally, voluntary associations or groups of investors control 1»4 of the companies. 3 1 Abstract, U.S. Census, 1910 (with Supplement for Massachusetts): 648; also Mass. Stat. Mfg., 1914: 1&-47. 2 Mass. Stat. Mfg., 1914 : 1&-47, * Cf . Mass. G. & E., xxxi : 12-13. 84 MUNICIPAL ELECTRIC LIGHTING As several of the 21 municipal plants purchasing their current do so minute a business, it was scarcely possible to find a sufficient number of very small companies to compare with them. However, 16 were selected, although two or three of the smallest companies had to be eliminated because of the fact that the records which they keep are unsatisfactory. Otherwise, as in the case of the gener- ating plants, the least and most inefficient private business has been compared with public business as it is. When only a distributing system is operated, the prob- lem of comparison is much simplified. The average output, very small in either group, is nearly enough the same to make comparisons valid. Load factors cannot be com- pared, because with two or three exceptions public plants return no data on this point; but all in each group except one give both day and night service. The 16 companies do business in 22 different towns, while the municipalities confine their business to their own limits. It is rather sur- prising to find 10 of the municipal and 5 of the private plants in Worcester County. Also, 14 of the companies are controlled by voluntary associations. 1 The average population served by the private plants is approximately double that served by the municipalities. There is gas competition in the case of 10 of the companies and 8 of the municipalities. Three of the former, Black- stone, Spencer, and Williamstown, do a little gas business themselves. The average age of the municipal purchasing plants is considerably less than that of the companies. Of the latter, 12 began operation before 1905, while only 5 of the public plants, 2 of which were then under pri- vate ownership, were operating before this date. It must also be noted that 11 of the companies, nearly 70 per cent, formerly generated current, 6 ceasing to do so in 1914. Only 2 of the 21 municipal plants ever produced current, and that was when they were privately owned. Finally, 1 Cf. Mass. G. & E., xxxi : lfc-13, and 8a-S2a. IN MASSACHUSETTS 85 since Norwood occupies the same relation with respect to this group of public plants that Holyoke occupies with respect to the other group, — doing one third of the aggre- gate business, • — it has been kept separate in computing the averages, and for the reasons already given no corre- spondingly large company has been selected. The fiscal year 1914-15 has been taken for the more intensive study of the subject because, when the work was begun, no later returns were available. As this is a census year in Massachusetts, it is convenient for our purposes. On the other hand, due to certain abnormal market con- ditions resulting from the European war as well as to un- expected contingencies, some of the records for this date may not be fairly representative. In most instances any individual differences will be minimized in the averages, and group differences would tend to be the same in the two cases. Yet, in order to present the subject with as much accuracy as may be attained, single items are, in doubtful cases, traced back over a period of years. Furthermore, so that the investigation may be still more conclusive, the year 1909-10 has also been selected for careful study of all plants generating current. Accordingly, the relative changes which have taken place in the five-year period will, whenever possible, be pointed out. Before this date, par- ticularly for the public plants, a good deal of the data re- turned are of such a nature that they can only with the greatest difficulty be utilized. This five-year comparison is not at present attempted in dealing with the purchasing plants, for almost half of the companies chosen were still generating current in 1910, and only 9 of the 21 municipal plants were then in operation, most of them not yet "sea- soned." Under these circumstances, such a comparison would lead to no definite results. An attempt will be made to study the subject in its physical, financial, and developmental aspects. Attention will be given to as many of the engineering features as seem SB MUNICIPAL ELECTRIC LIGHTING necessary for our purpose, to the technical, statistical, and historical aspects of the problem, as well as to certain ques- tions of accounting. But theoretical questions will fre- quently be raised, practical considerations will be con- stantly stressed, and matters of public policy will not be overlooked. As nearly as may be, only really comparable data will be compared. Disturbing differences will if pos- sible be eliminated, or, in lieu of this, reasonable allowances will be niade. While eschewing the futile quibbles fre- quently indulged hi by narrowly trained accountants and by over-specialized engineers, the writer hopes to avoid the even more serious dangers of ill-considered and super- ficial generalization whidh have characterized most studies of the problem of -municipal ownership. The reader will have to be the judge of the fairness of the methods followed. Finally, due weight will be given to the numerous "in- tangible items" which no returns can show, but which are highly significant in any investigation of the problem of public ownership. Of much greater importance, how- ever, the local background will be carefully studied, so that the conclusions reached by means of an impartial analysis of all available statistical material, will be checked and supplemented and dothed with some degree of life, as a result of a reasonably thorough first-hand knowledge of the situation, secured through a local, personal survey of the plants under consideration. The results arrived at by these different methods should at least enable us to form some satisfactory judgments on certain aspects of the prob- lem of municipal ownership, and may, perchance, furnish us with some clue to the possibilities of public industry on a more extensive scale. In conclusion, attention should again be called to the fact that existing circumstances have made it necessary to compare public business as we find it with private busi- ness in many cases at its worst in the State. Consequently, IN MASSACHUSETTS 87 if municipal ownership shall appear to hold its own, the reader can rest assured that it has been given the benefit of any doubt which might arise; and if the results are found to be unfavorable, the case against municipalization as a general policy will be thereby the stronger, ' CHAPTER IV TpHTSICAli STATISTICS, ANALYSES, AND COMPARISONS While it is not the purpose of the writer, in this study, to deal with the many intricacies of electrical engineering, yet it is necessary to know generally how the selected groups of public and private plants compare with respect to their physical equipment, development, and operation, before we can be in a position to interpret correctly the numerous financial data which must be considered in an investigation of this kind. Accordingly, we shall begin with the stations themselves, studying, at this stage, only the generating plants. 1 1 The present chapter, for the most part, naturally deals with the gen- erating plants. Unless necessary for the sake of clearness, data given at length in the appendix will not be tabulated in brief in the text. The plants doing both a gas and electric light business have been kept sep- arate from the purely electric plants, and whenever occasion seems to demand, attention will be called to any abnormalities which they may present. Except when so indicated, Holyoke is not included with the public plants when totals are given and comparisons made; the reasons for this omission are self-evident. Finally the reader must be mindful of the fact that all of the data herein presented have been worked over by the writer from many angles before they have reached their present form. The returns themselves give no totals, make no analyses, work out no relations, and much highly important information is conspicuous by reason of its absence. In many instances it has been necessary to ferret out valuable material from various state bureaus. The work has further been very much com- plicated by including the year 1910 in the study, and the labor of com- putation and presentation has thereby been increased many fold. Fre- quently, also, when the returns of 1910 proved unsatisfactory in certain points, it has been necessary to use the data given in the succeeding re- turns instead. These irregularities call for the utmost care in computing the averages so that the case will be truly presented. In view of these difficulties, it would indeed be surprising if many errors have not crept into the calculations herewith appended. The writer is confident, how- ever, that these errors are not of such a character that they will in any respect invalidate the general reasoning developed in this study. ; MUNICIPAL ELECTRIC LIGHTING 89 1. Station Equipment ' At the present time (1915) the total number of boilers in the 15 reporting municipal plants (47) is about 72 per cent of the total for the 16 private plants reporting this item (65), while the total horse power of their boilers (8,353) is about 60 per cent of that of the latter (13,874). Hence the average size of boilers is 20 per cent greater in the companies than in the public plants (213 H.P. vs. 178 H.P.) 2 The average number of boilers per public plant is three fourths of the average number found in the private plants (3.1 vs. 4.1). It is significant to note that the rela- tive average capacity of boilers has remained almost con- stant during the past five years, the rate of increase having been practically equal in the two cases, so that the absor lute difference has been left the same. However, though the absolute figures are ridiculously small, 9 and 2 respec- tively, the number of units has increased much more rap- idly for the private plants, leading to a correspondingly more rapid growth of boiler capacity per plant for the period, until now the average capacity of the municipal plants is only 64 per cent of the average for the companies whereas in 1910 it was 71 per cent. One public plant, Mansfield, uses oil engines, and another, Merrimac, rents its steam station from the town water- works and reports no boilers. A third plant, Middlebor- ough, does practically all of its generating by gas engines and by water wheels, and consequently reports an abnor- mally low boiler capacity (25 H.P.). One company, Win- chendon, has never used any motive power but water, and two others, Great Barrington and Lee, have always gen- erated largely by means of water wheels. For some time they have all bought a large portion of their current. Hence these plants report a disproportionately small amount of 1 Appendix, pp. 894-395. 2 Unless other explanation is given, the averages used throughout are fully weighted arithmetical or "group" averages. Cf . Appendix, p. 391. SO MUNICIPAL ELECTfilC LIGHTING horse power. The conditions for the two groups are rela- tively the same in this regard. Upon further analysis, it appears that the total rated horse power of one of the companies has decreased very slightly, and three have remained unchanged during tbe five-year period. Hence 75 per cent of this group have gained in boiler capacity during the period. On the other hand, 3 of the municipal plants show a clearly marked decrease in Tated horse power, while 5 remain unchanged. Of these 8 plants, £ bought neafly all of their current during the year. Expressed in Other words, more than 53 per cent of the public plants have remained stationary or have gone back so far as their total boiler capacity is concerned. Furthermore, exactly 60 per cent of the total increase in rated horse power for all of the municipal plants (1100 H.P. out of 1841 H.P.) is accounted for by the one large plant of Taunton. If Holyoke is included, the averages for the two groups become practically identical. The total horse power of prime movers for the public plants is equal to 70 per Cent of that for the companies, though the actual number of their units is nearly 90 per ttent of the latter. The average horse power of the primary power machines is more than one fifth less in the case of the public plants than in the private plants. The rate of increase, both in numbers and in total horse power, has been almost identical in the two groups. However, 6 of the municipal plants have shown no growth in this regard during the five-year period, and one has shown an actual decrease in horse power. Of the Companies, 3 have re- mained stationary and 2 have decreased slightly. Table 16 indicates clearly the relation which the differ- ent kinds of prime movers bear to each other. It appears that the number of steam turbines is considerably greater in the private plants and that their average horse power is less. If, however, the two large turbines of the municipal plant of Taunton (2,300 H.P. each) be omitted, the aver- EST mSSACHUSETTS 91 Table 16. Characteb op Prime Movers Companies Municipalities Average H.P. Type Number Horse power Number Horse 'power . Gom- panics Munici- palities All others 1 . ..,.», « 37 16 11 17,958 11,750 1.2G9 38 10 9 10,459 10,008 935 485 734 115 275 1,001 (676) « 104 Total 64 30,977 57 *. 21,402 484 376 1 This includes, for the companies, 8 water wheels and 3 gasoline engines; and, for the municipalities, 3 water turbines, 4 oil engines, and 3 gas engines. 9 Wakefield omitted; ceased making current. ' Taunton omitted. ages are not far apart. The average horse power of steam engines of the companies is about 75 per cent greater than that of the public plants. For the general student of the problem, the kilowatt capacity of dynamos is of more significance than the horse power of boilers and prime movers. In 1915 the total rated kilowatt capacity of generators of the 17 municipal plants was 30 per cent less than that of the corresponding number of companies, the number of dynamos was 20 per Cent less, and the average capacity per dynamo was nearly 15 per cent less. 1 Practically all of the generators were of the alternating current type, less than 2 per cent in either case being represented by direct current units. 2 1 The accuracy of the returns in the master of rated kilowatt capacity of dynamos is frequently open to question. Upon careful examination of the data, when available, the writer has found that the capacity is sometimes returned in kilovolt-amperes instead of kilowatts, as called for in the returns. But, Unless the power factor should be unity — - a con- dition not found in the smaller plants — • the former rating would be too high, depending upon individual conditions. As the data are by no means satisfactory on this point, and as the errors would probably be about equally divided between the two groups, the writer has adhered to the rating as given in the returns. 2 It is interesting to note that alternating current generation has constantly been displacing the earlier direct current generation. This is due largely to the greater economy and convenience in distribution which 92 MUNICIPAL ELECTRIC LIGHTING The development between 1910 and 1915 presents some interesting contrasts. In the first place, the total number of dynamos decreased nearly 8 per cent in the public plants and 24 per cent in the companies. The total kilo- watt capacity increased 43 per cent in the former and 52 per cent in the latter; while the average kilowatt capacity , per dynamo increased nearly 55 per cent in the municipal plants and 100 per cent in the group of private plants. These figures indicate that the companies have increased their absolute capacity more rapidly than have the muni- cipalities, and that, while they had a disproportionately large number of very small D.C. generators in 1910, these have been almost wholly displaced by the installation of a small number of large A.C. dynamos. For both of these reasons we would expect a considerable increase in station investment for the companies during this period. The number of small arc light and power generators was, in 1910, almost negligible in the case of the municipal plants, probably due to the fact that, in most instances, their equipment was of more recent installation than that of the companies. On this point it will be recalled that all of the older public plants were taken over from private ownership, and when the transfer was effected a good deal of the old equipment was scrapped. The large number of these out-of-date generators returned by the companies at this date reduces their average capacity per dynamo to only 158 kilowatts, or about 9 per cent less than that of the public plants. In 1915, the public plants returned 4 D.C. generators with a total capacity of 298 kilowatts, and the private plants report 10 of these, having a total characterizes the alternating current, since it can be transmitted over long distances at a high voltage and a low amperage, thus occasioning the minimum line losses. Furthermore, this current can be "stepped down" or "up," if need be, by means of transformers, so that it becomes avail- able for practically every kind of light and power service. Direct current, on the other hand, cannot be "transformed," and is subject to great loss in distribution. IN MASSACHUSETTS 93 capacity of 436 kilowatts. Were these small generators omitted in both groups, the average capacity per A.C. dynamo would be 21 per cent less for the municipal plants than for the companies (283 K.W. vs. 356 K.W.). Finally, 4 of the public plants report no increase in capacity dur- ing the period and 2 have had a decrease, while 3 com- panies show a decrease and one has remained unchanged. As Holyoke increased its capacity by more than 50 per cent during the year, the inclusion of its figures would be misleading. In this connection attention should be called to the correspondence which exists between the relative average capacities of boilers, prime movers, and generators in the two groups. Reducing kilowatts to horse power when necessary, we find that the relations are as follows: — Table 17. Relations existing between the Station Units Item Boilers I Prime movers Dynamos Average capacity of units (H.P.). . . Companies. Municipalities Ratio Companies Municipalities . 867 595 * 1.0 1.0 1,822 1,274 2.10 2.14 1,830 1,274 2.11 2.14 i Mlddleborough omitted. These data suggest that the engineering conditions for the two groups of plants, so far as can be ascertained from the returns, are almost identical. Having examined the date of installation of the various units, however, the writer finds that their average age is 7.6 years for the companies and 9.1, or 20 per cent greater, for the municipalities. Ten- tatively, then, we may conclude that the private plants have been kept in better repair than the municipal plants. On the other hand, some may argue that the equipment of public 94 MUNICIPAL ELECTRIC LIGHTING plants has been so well maintained that it has not nee*ded> as frequent replacement as that of the companies. This view seems hardly consistent with the facts as we know them, and the local survey has amply proved the truth of our tentative conclusion. Further analysis reveals the fact that the per capita ratt- ing of the stations has increased with equal rapidity in the two groups during the past five years, from 63 watts to 83 watts, for the public and from 61 watts to 81 watts for the private plants. The rating per customer, on the other hand, has decreased in a fairly equal ratio, 26 per cent in the case of the public plants and less than 23 per cent for the companies. Hence, it is apparent that, while the two sets of' plants have outstripped the population in their growth, of generating capacity, they have by no means kept pace with the increase in number of customers. This fact probably indicates, for the most part, an improved diversity factor, and incidentally a better load factor, so that a gjven amount of generating equipment can render proportionately greater service. This, again, suggests that a number of small "off peak" customers, using current for power, cooking, heating, etc-, have been secured. And, finally, the fact that the per customer rating of municipal plants has decreased" somewhat more rapidly than that of the companies, may indicate that the former have avoided the poorer business, and have endeavored to extend their service only to the more desirable class of customers. In other words, municipal plants have doubtless been less active in going after new business than have the private plants. In many cases they have probably waited for the trade to develop instead of aiding in that development. On the other hand, the difference can largely be accounted for by the growth in power business of the public plants. Though these figures in themselves are far from conclusive, there will be occasion later to refer to this matter in other connections. IN MASSACHUSETTS 95 & Fuel Consumption * While 15 of the municipal plants using only coal for generation consume on the average 4.69 pounds of coal per kilowatt hour generated, 12 of the companies use exactly 4 pounds per kilowatt. A small amount of coke and screen- ings is used by both groups, and the quality and price in individual cases vary widely. With so large a number, however, the average conditions are about the same. The advantage which the companies seem to have is due par- tially to the economies arising from the generation of a larger amount of current per plant (1,650,091 kilowatt; hours as compared with 1,024,023 kilowatt hours gene- rated by the public plants), and partially to the somewhat better load factor. How much of the difference is due to other causes, such as more efficient engineering and better quality of coal, can only be guessed at. The writer should state, however, that the local survey has disclosed the fact that the companies, as one might expect, are in the main better supplied with the various economic devices, automatic stokers, carbon dioxide recorders, economizers, etc., which help to conserve the fuel supply. Expressed in other words, the number of watt hours generated per pound of coal averages 213 in the public plants and 250 in the companies, a difference of 87, or 17.5 per cent. A study of the accompanying chart, however, persuades the writer that the difference is not much greater than might normally be expected as a result of disparity in the quantity of current generated. While the graph of the public plants shows a surprising irregularity for plants, between 600,000 and 1,000,000, this is caused almost wholly by two exceptional cases, and after the 1,000,000 mark is reached, we have a delightfully smooth curve, slowly ascending to the right. On the other hand, the graph of the companies appears very even up to 1,000,000, due to 1 Appendix, pp. 440-441. 06 MUNICIPAL ELECTRIC LIGHTING the fatet that the number of plants in this class is Very small, only 3 as contrasted with 10 of the public plants. After the 1,000,000 point, it zigzags about the first graph, constantly approaching it as a norm. For plants generat- ing slightly more than 1,000,000 kilowatt hours, the lines meet at a point indicating that not much more than 200 watt hours are produced per pound of coal. They again come close together near the 2,000,000 mark, at a point somewhat under 250. When the extremes of the private plants are averaged, they approach surprisingly near the more even graph of the public plants. It is scarcely neces- sary for our purposes to attempt to explain the several individual irregularities when the averages so closely approximate each other. In a number of cases, however, they are caused by a difference in the fuel value of the coal used. Hence, this chart should be studied in connection with a later one showing the unit costs of coal. It is worth noting that the same group of private plants, while increasing their average output more than 50 per cent during the five-year period (from less than 1,300,000 to almost 2,000,000 K.W.H.), reduced the amount of coal consumed per kilowatt hour by about 10 per cent (from 4.434 pounds to 4 pounds). The municipal plants like- wise increased their output almost 50 per cent (from 686,- 000 to more than 1,000,000 K.W.H.), and decreased the quantity of coal used from 6.356 to 4.69 pounds per kilo- watt hour generated, or about 26 per cent. The relative size of the two groups of plants accounts largely for the greater decrease in coal consumption in the case of the municipal plants, though it seems probable that the gener- ating efficiency of the latter was unnecessarily low in 1910* 3. Output and Disposal of Current l In 1915, the average output of the 17 municipal plants, including current purchased as well as generated, was v. 1 Appendix, pp. 396-403, 406-407, 422. ■ ooos °GJ¥r 000* •«»€ oo_re £ o - i - o - o- o Q, -3- -o- \ ' " 1 V \ v A 1 \ 4 \ \ ) \ < A -u 5 - \ --. -. / ' 7^ / \ 1 \ \ \ 0001 fig osl 00j- sLe OJZ -— / v ' ^ > > v ^ * [S k 1 1 1 1 1 1 1 L , l ( X r 3 I > .' J I, o > > i o "X 7 C ) I 5 C 3 l -> ? J ' 1 3 i 3 m MASSACHUSETTS 97 1,163*110 kilowatt hours. The average output of the com- panies was about 52 per cent greater, or 1,764,719 kilowatt hours. In 1910, however, the companies led by 67.5 per cent, the averages being respectively 658,488 and 1,103,075 kilowatt hours. The public plants purchased 12 percent of their current, and the other group 6.5 per cent, while in 1910 the respective amounts purchased were 1.3 per cent and 4.1 per eent. Due to the way in which the records are kept, it has been difficult to get the load factors of the plants studied. Only two or three of the plants return a load curve, and none of them work out their load factors, as this is not required by the Board. Hence, the data with which one has to deal are very irregular. Three companies and three public plants report only the maximum day's output in kilowatt hours. One company and three public plants report the maximum demand in amperes instead of in kilowatts, giving no station voltage; while one public plant gives no data whatever bearing on this point. Accordingly, three of the companies and four of the municipalities must be disregarded in this portion of the study. However, the voltage of the plants reporting in amperes was ascertained and the load factors roughly computed accordingly. 1 The arithmetical average of the load factors of the 14 plants in each group is, for the companies^ 27.2, and for the muni- cipalities, 25.9. 2 If, however, Holyoke be omitted, the lat- 1 These voltages are, for the public plants, Hudson, 1,100, Reading, 2,300. Middleborough, 1,100, and for the one company, Vineyard Lighting Co., 2,300. As the power factor is unknown, these load factors are little more than estimates. 2 The load factor here used is the standard one, being simply the ratio of average to maximum demand for the year. The formula for computation is yearly output load factor = peak load X 8760 (no. hours in yr.) The returns do not show the length of the peak load, but it is doubt* less approximately the same for the two groups. 98 MUNICIPAL ELECTRIC LIGHTING ter becomes 25.5. The weighted averages, which probably more nearly indicate the true relation, are 29.2 for the companies and only 23.5 for the municipalities. This, of course, shows that, other conditions being equal, the com- panies are being operated more efficiently than the public plants, in that their investment is working for them a cor- respondingly greater portion of the time. The maximum demand factors are, for the companies, 49.4, and for the public plants, 62.9. 1 These figures may show that the latter are following a more conservative policy than the former with respect to the enlargement of their generating capacity. This disparity is somewhat in- creased by the fact that the public plants are buying pro- portionately more of their current than the companies, and hence actually need a correspondingly smaller amount of dynamo capacity; but this is sufficient to account for only a small part of the difference. 2 The average daily amount of current generated by the group of municipal plants in 1910 was 30,269 kilowatt hours, and 47,700 hours in 1915. At the same dates the daily averages for the companies were 49,245 and 76,854 kilowatt hours. Also, the total kilowatt capacity of gen- erators was, for the municipal plants, 11,297 and 16,166 in the respective years, and for the companies 15,281 and 23,221. Studying these data, we find that in 1910 the public plants actually produced only 11.1 per cent of the total current which with their equipment they could have produced. In other words, their output (purchased cur- rent deducted) was on the basis of about two and two 1 Tie maximum demand factor used by the writer is the ratio of the peak load for the year to the total rated capacity of the generators. In this case, of course, arithmetical averages are used. 2 Unfortunately we know nothing definite about the diversity factor — the ratio between the sum of the individual maxima and the maximum of the system — for these small plants. It may be observed in passing, however, that the more the diversity factor exceeds unity, the greater is die number of customers which can be served by means of a given gen- erating capacity. IN MASSACHUSETTS 99 thirds hours' use per day of the maximum capacity. The companies showed only a slightly better figure, 13.4 per cent, or three and one fifth hours' use per day of their maxi- mum generating capacity. In 1915 conditions had changed but slightly. The municipalities had increased their per- centage of possible output to 12.3, or three hours' use of their maximum, and the companies had crept along to 13.8 per cent, equivalent to three and one third hours' use. This analysis indicates a rather excessive amount of idle invest- ment in generating plants, but the conditions are very similar in the two groups. The average output per day for each plant stands at 4,835 kilowatt hours for the companies and 3,187 for the municipalities. The ratios of the average load, purchased current being deducted, to the average rated station capac- ity, are respectively 30.2 per cent and 33.9 per cent. The yearly amount of current generated per kilowatt capacity of dynamos is 1,207 kilowatt hours for the companies and 1,077 for the other group, while in 1910 it was 1,176 and 978 respectively. With a better load factor on the part of the former and with some dynamos practically out of use in the latter, these figures are to be expected. Finally, the ratio of the maximum load on the day of least output to the maximum station load, is, for the public plants, 27 per cent, and for the companies, 26. This is an unusually close correspondence, which in turn suggests that the condi- tions of business in the two groups are very similar. These figures, however, as well as most of the other data dealing with the load, should be taken with a good deal of caution, for it is by no means certain that the returns are correct in this regard. This is particularly true of the smaller public plants, whose station meters have sometimes not been tested for years. 1 One public plant, Ipswich, and one company, Buzzard's Bay, note in the returns that they have for the most part estimated their output of current. » Cf. eh. xi, pp. 301-302. 100 MUNICIPAL EUECTRK3 LIGHTING Probably some others, have done a good deal of estimating without mentioning the fact. Prima* jofiie the writer wouldj expect these conditions to be worse in the case of the public plants, since they include a larger number of small, stations. Even here, however, the errors might about bal- ance each other, and it is safe to assume that the figures given are a fairly dose approximation to the truth. The percentage of the total output used at the station for light and auxiliaries* and unaccounted for, 1 was 18.5 fop the companies and 2A2 or comparatively 31 per cent, higher, for the public plants. As the amount used at the station by the former is 4.9 per- cent of the total, the actual current unaccounted for is 13.fi per cent, whereas, the public plants report 3.6, per cent used at stajtion and 20.6 per cent unaccounted for. This is. a rather noticeable dis*. crepancy, particularly in view of the fact that in 191ft these, items amounted to only 21,5 per cent for the pujblie plants, and were somewhat higher, 22>2 per cent, foj? the com- panies. In five years the total, unaccounted for and used at station has increased only 31.6 per cent in the com-. panies and 98.0, or more than three times as rapjidly, in the municipalities. '■■ From an examination of the table in the appendix 2 ijt appears, that the municipal plant of Chicopee reports an abnormally large amount of unaccounted for, 44 per cent, and Mansfield 41 per cent. Hence, if we deduct these high extremes in computing the average, the.tojtal unaccounted for becomes only 21.1 per cent for the public plants, or about the same as in 1910, which is still far ahead of the Y x As called for in the returns, the expression "unaccounted for" means the difference between the total amount of current generated and pur- chased and the total amount delivered to all consumers together with that used at the station. Sometimes, however, particularly in 1910, the. quantity of current "used at; station" has not been given, and is accord- ingly included in the "unaccounted for." This leads to a difficulty which there seems to be no means of avoiding. 2 P. 396. IN MASSACHUSETTS Ml companies. But, on more careful scrutiny, We fend that the municipal plant of Westfield returns an incredibly loW quantity of unaccounted for, 4 per cent, — surely the result of mistaken metering. If this low extreme be omit- ted, the average mounts to 23 per eerit. But if We mate these adjustments for the municipal plants, We must also apply the same corrections to the companies, two of which report a very much higher amdiint of unaccounted for than any of the others, Amesbury 32.4 per cent, and 'Great Barrington 33.8 per cent. Eliminating these plants, we get an average of only 17.4 per cent of unaccounted for in the case of the private plants. Upon 'comparing this aver- age with the corrected average of the publie plants, 23 per cent, We find the relative difference against the latter to be more than 32 per cent, slightly greater than before any^ corrections were made! Or, if Westfield be retained in the" municipal plant averages, as it surely should not be, th& difference is reduced to something more than 21 per cent. More significant than any of these averages* however, is the fact that only 4 of the companies report ah amount of current used at station and unaccounted fbr m excess of 20 per cent, and in 6 this item is 15 per cent or less. Of the public plants* on the other hand, 12 have losses higher than 20 per cent, and only 2 report under 15 per cent; To be sure, there is always a shrinkage of current be- tween bus-bars and consumers' meters. These losses may be occasioned by numberless causes. There are line losses due to defective insulation, resistance of circuits, foliage" contacts, and atmospheric conditions^ Then there are meter and transformer losses, perhaps due to inaccuracy in the former and to overloading in the latter. Sometimes the lines are tapped and current is actually stolen. Station meters, as well as customers' meters may fail to register properly, 1 and there may be clerical errors in the records. 1 On this point see ch. xi, pp. 308-309. The station meters of the public plants are sometimes very undependable. In some instances, also.- 102 MUNICIPAL ELECTRIC LIGHTING The nature of the load is also very significant. Yet, as external conditions seem to have remained about the same and in many cases markedly to have improved for the public plants, this greater leakage of current is probably caused largely by bad engineering. It would appear that the distributing system had not been properly maintained and improved during the past few years. Though the quantity of current sold by an electric lighting plant can never be equal to the amount generated, yet the aim should always be to keep the "efficiency of distribution factor" as near unity as possible. In the two groups, however, this factor is 81.5 for the companies, which operate by far the more extensive distribution system, and only 75.8 for the municipalities. While Holyoke makes a better absolute showing than most of the other plants, its current unac- counted for has doubled within the past five years, though its output has increased only 50 per cent, and this in spite of the fact that its territory and business are the most desirable of all. While engaged in the local survey of the plants herein discussed, the writer was constantly told by managers of the companies that probably the greater losses of current reported by the municipal plants might be occa- sioned by the fact that smaller line transformers are used by them than by the companies. In order to test the truth of this supposition the average size of transformer used by each group of plants was computed, as well as the relative proportions which the numbers of certain sizes bear to the total. These data are set forth in Table 18. It appears that in 1915 the average size of transformer was 6 kilowatts for the municipal plants, Holyoke excluded, and 6.45 kilowatts for the companies — a remarkably slight difference, which in itself could scarcely explain the difference in current unaccounted for. It is true, however, there is a strong presumption that customers' meters have been tampered with for the purpose of causing them to register a smaller quantity of current than was actually delivered. IN MASSACHUSETTS 103 Table 18. Transformer Data (Generating Plants, 1915) ClaaaaJ plant Municipal. Company. . Average size IK.W.) 6.00 6.45 Percentage distribution of the different sizes of line transformers 1K.W. or less 27.0 24.1 1+toi K.W. 30.0 33.0 8+ to 5 K.W. 15.8 18.5 6+ to 10 ,k.w. 14.1 12.2 Over 10 K.W. 13.3 12.1 that the individual cases vary greatly, and that the smaller transformers are frequently accompanied by the larger losses. But it might be argued that, even though the aver- ages are close together, this is because the numerous small transformers of the public plants are counterbalanced by a few very large ones. Now, it is shown that the percentages of the various sizes correspond with reasonable closeness in the two groups. Yet there may be a little truth in the assumption just made, for the percentage of the smallest size in the municipal plants exceeds that of the companies by 12 per cent, and the percentage of the largest size ex- ceeds that of the companies by 10 per cent. While it may be that the proportionately greater number of transformers under 1 kilowatt accounts for part of the higher losses, it is probable that these losses are due more to the older and inferior types of instruments frequently used by the public plants. This, in turn, is often a result of a short-sighted financial policy which leads to the reten- tion of old equipment, even at a loss in current, in order to avoid the investment in newer apparatus which will cause the construction accounts to be written up. In many instances the public have themselves willed a false economy in this regard. 1 1 So far as the average price of transformers is concerned, that does not seem to throw much light upon this aspect of the case. It is $60 for the companies, and $60 for the municipal plants — or $68, if we use the gross cost account instead of the plant account (depreciated). 104 MUNICIPAL ELECTRIC LIGHTING Finally, two additional possibilities remain. In the first place, many transformers may be operated at "light load" for a longer period of time in the public plants. While many companies follow the policy of "cutting out" as many as possible of their transformers at certain seasons of the year, thus greatly reducing their "light load losses," it is very probable that the other group, not so much con- cerned about the amount of current lost, since there are no stockholders to placate, do not take this precaution. 1 In the second place, the latter may overload their trans- formers, and consequently overheat them, to such an ex- tent that the core losses are greatly increased. 2 As a matter el fact the writer has found that both of these difficulties were formerly very common among the municipal plants. From 1910 to 1915, as previously indicated, the output of current in the public plants increased 76.5 per cent, or only 65 per cent if Holyoke is included. The output of the companies increased only 60 per cent, or 57 per cent if we omit Buzzard's Bay, which was just beginning operations in 1910. The current delivered to consumers, on the other hand, increased 70.1 per cent in the case of the public plants (58 per cent, including Holyoke), and 68.2 per cent in the private plants (65.2 per cent with Buzzard's Bay out). Hence the relative total increase in current supplied has been practically the same. The evident disparity be- tween increase of output and increase of sales results from the decided reversal of position between the two groups in the matter of current used at station and unaccounted for. • Table 19 presents some interesting data of develop- ment. In the first place, the relative character of [the busi- ness done by the companies has changed but little during the past five years. The municipalities, however, if we omit Holyoke, have increased their power business more than twice as rapidly as have the companies, until at present their relative disposal of current corresponds very 1 Cf. Am. Hand. Eke. Eng., p. 1625. * Ibid., p. 1026. IN MASSACHUSETTS 105 Table 19. Relative Amounts of Current Delivered Percentage dis- Companies Munici- palities Percentage increase in the different kinds of business 1910-1915 posal of current 1910 1916 1910 1915 Com- panies Munici- palities Street lighting.... Commercial 18.2 30.5 41.3 10.0 14.3; 39.6 42.7 12.4 35.1 36.1 .27.9 0.9 24.3 31.0 43.8 0.9 Street lighting...... 'Commercial 32.2 60.0 , 74.6 .109.0 16.8 (17.2)« 168.3 Bales to other Sales to other companies.... .... (72.8)« 5Q.0 , <3.32)« 100. 100. 100. 100. 68.2 (65.2) i " 70.1 (58.0) l Buzzard's Bay omitted. a Holyoke Included. elosely to that of the latter, except in the items of street lighting and sales to other companies. The inclusion of Holyoke seems to make the development almost identical in the two groups for commercial lighting 1 and power. Otherwise, it is rather surprising to note that the private plants have increased the absolute amount of current sold for all lighting purposes far more rapidly than have the municipalities. These figures certainly refute the common statement that municipal plants do not get the power business. It is probably true, on the other hand, that these public plants are working largely for "paying" loads, while the companies are forced, by public pressure, to take on a good deal of poor business. It is a rather difficult matter to coerce a municipality. Yet it is not safe to make this conclusion absolute until the local conditions have been carefully studied. 2 The quantity of current actually sold per kilowatt capacity of generators ("delivered" is a more accurate 1 By "commercial" lighting is meant all lighting except street lighting. The returns for Massachusetts make no separation of what is sometimes termed "domestic" lighting. . J Cf. ch. XI, pp. 309-310. 106 MUNICIPAL ELECTRIC LIGHTING expression so far as the public plants are concerned, since their street lighting is not on a commercial basis) averaged for each municipal plant 778 kilowatt hours in 1910 and 907 in 1915, and for the private plants 947 and 1,052 at the same dates. The gains were respectively 17.6 and 11.1 per cent. However, to secure figures which show the true con- ditions, purchased current should be deducted in either case, whereupon we find the averages to be 765 and 761 kilowatt hours for the municipalities, and 896 and 968 hours for the companies, — an absolute decrease of 0.5 per cent for the former and an increase of 8 per cent for the latter during the five-year period. The better showing made by the companies was probably due largely to a better load factor in 1910, as their power business was at that time much more highly developed, and in 1915 to the smaller losses of current as well as to a somewhat more favorable load factor. The per capita consumption data are useful only in a rough sort of way, as showing the general tendencies in the two groups of plants. It is significant to note, however, that while the total number of kilowatt hours consumed per capita (sales to other companies being deducted) has increased somewhat more rapidly for the municipal plants than for the companies, from 48.4 to 72.2, or 49.2 per cent for the former, and from 52.9 to 74.9, or 41.5 per cent for the latter, the figures are remarkably close together. Evi- dently the municipalities were slightly behind in their development in 1910. But, in 1915, since the growth in number of inhabitants in the districts served has been almost identical in the two cases, 14.6 and 14.7 per cent respectively, we can with some assurance draw the con- clusion that the population is being served about equally well in both groups, provided, of course, that the ratio of consumers to inhabitants is approximately the same. This we shall later find to be the case. 1 1 See p. 110, infra. IN MASSACHUSETTS 107 Upon analysis of the various classes of consumption, it appears that the per capita use of current for commercial lighting purposes has increased much more rapidly in the case of the companies, while the sale of current for power has increased much faster for the municipalities since this feature of their business was underdeveloped in 1910. Absolutely, the per capita consumption of current for com- mercial lighting is somewhat higher for the companies, 26.2 kilowatt hours as compared with 22.9 kilowatt hours, a difference of 14.4 percent. This might be due to a num- ber of local causes which it would be difficult to discover, even after a personal visit to the various localities. Per- haps it is the result of more advertising and pushing of business by the companies, particularly as regards the use of electric fans, irons, toasters, and other fixtures which are on the lighting circuits. Perhaps, also, as the per capita valuation of property is higher in the cities and towns served by the companies, there may be a proportionately larger number of wealthy residents in these places, who use more current for lighting purposes. The power consumption is also 14.4 per cent more per capita for the companies (36.5 K.W.H.) than for the mu- nicipalities (31.9 K.W.H.) — a condition which we might naturally expect in larger population centers, and with more effort made to get new business on the part of the companies. Finally, it is interesting to observe that the absolute per capita consumption of current for street lighting is about 50 per cent greater for the municipal plants (18.1 K.W.H.) than for the private plants (12.2 K.W.H.). Whether or not this means better public lighting in the case of the former, is a question which cannot be definitely answered, though no information secured in the local sur- vey would warrant such a conclusion. Some aspects of this matter will be discussed later in the present chapter. 1 But it is a reasonably safe general assumption that municipali- ' « Pp. 125-128. 108 MUNICIPAL ELECTRIC LIGHTING ties owning their own plants would not feel the need of economizing sp carefully in the use of the current which they themselves produce as would those whose streets are lighted by contract with private concerns. 4. Customers and Per Customer Analyses * The total number of customers, eliminating double counting, has increased somewhat more rapidly in the group of companies than in the municipal plants, the rates being respectively 103 and 90.2 per centi Due to this fact, the difference between the average number ©f customers per plant is greater in 1915 than in 19lO. At the latter date the private plants averaged 29.5 per cent more customers than the public plants, whereas in 1910 the difference was only 21 .5 per cent. The increase in the number of customers using current for light has been correspondingly greater for the companies. As the municipal plant returns in 1910 were not made out in such a way that the total number of power customers could be separated from the light cus- tomers, the year 1911 has been chosen instead for the study of this aspect of the business in both groups of plants. Be- tween these dates, the increase in number of power cus- tomers was almost twice as rapid in the municipal plants — a growth largely accounted for by the fact that their power business was only partially developed in 1911. On the other hand, the more rapid increase in number of light customers in the case of the companies, suggests a rather strong probability that the municipalities may be avoiding this sort of business on the ground that much of it does not "pay." They are evidently conservative in their policy of extending service. The difference here found is doubtless in large measure the result of the discrimination made by the law regarding Compulsory service by companies and by municipal plants. This aspect of the case will later merit further attention though there is some evidence V 1 Apptendix, pp. 404H.07. IN MASSACHUSETTS 109 which suggests that the public plants are at present serv- ing a larger proportion of all possible customers than are the companies. 1 Finally, the number of customers, per 100 inhabitants of the district served has increased just 30 per cent faster in the companies than in the municipal plants, though the absolute figures are slightly less in the case of the former. The higher ratio shown by the latter (8.8 as compared with 8.2) is more than explained by the fact that, with only four exceptions,, municipalities have not extended their service beyond their own boundaries. Furthermore, if the comparison be limited simply to- the number of customers and inhabitants of the cities or towns in which the several plants are located, we find that the ratio becomes 8.4 per hundred fbr the companies, remaining practically the same as before for the municipalities. Since the density of popu- lation of the districts served by the private plants, even after all outside localities are eliminated, is much less than that of the municipalities owning their plants, we might naturally expect a much greater difference between these ratios. In conclusion, the public plants doing both a gas and electric business show a ratio of consumers to popula- tion somewhat under the average ratio for the group, while the corresponding companies apparently have a ratio con- siderably above the average. This fact probably indicates merely that the latter have pushed their electric business more actively than have the former. In this connection it is interesting to attempt, from a different angle, a comparison of the proportion of popula- tion served in each case. This can be done in a rather crude fashion by finding the relation which exists between the total number of light customers and the number of assessed dwellings as returned to the Tax Commissioner. To be sure, this does not make allowance for the fact that many of these customers are stores, offices, halls, churches, etc. 1 Cf. next page. 110 MUNICIPAL ELECTRIC LIGHTING The errors thus arising, however, would probably be about the same for the two groups. Accordingly, taking only the number of dwellings in the municipalities in which the plants are located, and not including any of the customers, in outside districts, we find that the relations are as set forth in the following table: l j Table 20. Relation between Actual and Possible Light Customers (1915) Character of plant Na. of light customers * No. of assessed dwellings * Per cent of dwellings. served I. Generating plants Municipal 1 , 17,230 19,923 5,718 4,654 35,895 48,201 12,107 12,907 48.0 Company 41.5 II. Purchasing plants 49.0 36.0 1 Holyoke out. 8 Franklin omitted because dwellings are not returned. 8 Norwood out. * Foreign districts excluded. From the figures given it would appear that in both groups the municipal plants are serving a larger proportion of the possible customers than are the companies; and this advantage is particularly marked in the case of the pur- chasing plants, as we are led to expect from the analyses presently to be made. It must be borne in mind, however, that the public generating plants have by far the more compact territory, and the dwellings served are for the most part more closely grouped, as shown by the analyses of lines and streets with overhead lines as well as by the population statistics. 2 The statistics of current consumption per customer, no 1 The number of customers is found by deducting from the total num- ber of light customers the number of customers of all kinds in foreign territory. The result is very nearly accurate, for probably few of those in outside districts are power customers. ! Pp. 130-131, 147 infra. IN MASSACHUSETTS ill customer being counted twice, show the total average for both light and power to be 623.6 kilowatt hours for the municipalities, an increase of 5.5 per cent over the average amount in 1910. Upon inspection, however, it appears that 11 out of the 17 plants showed a decrease in this regard, and hence it is clear that the general trend was toward a less consumption of current per consumer. If Holyoke is included, the tendency becomes particularly marked, 16.8 per cent. The companies on the average show a definite decrease from 881 kilowatt hours in 1910 to 765 hours at the end of five years, or 13.2 per cent less. This decrease, as well as the increase for the public plants, was highly irregular. Evidently the companies have more large cus- tomers than the municipalities, since the absolute figures are greater. But owing to the nature of this particular average, it is hardly safe to draw definite conclusions. 1 The quantity of current consumed per lighting customer decreased 22 per cent in the public plants during the five- year period, and almost 14 per cent in the companies. This decrease is probably in large measure the result of an in- creased utilization of Tungsten lights, which require far less electrical energy than the old carbon filament lamps. As the Tungstens seem to have been more widely used by the companies than by the municipalities in 1910, the decrease in their per customer consumption of current from this cause would be proportionately less, as indicated. The more rapid decrease in the number of arc lights used might also have had a slight effect in making the decline greater for the public plants. And, thirdly, it is certain 1 It must be explained that the earlier total averages in this case are based on the returns of current sold in 1910. However, the average power consumed per customer is based on data given for 1911, due to the fact that, as noted above, the power customers could not in 1910 be separated from the total customers in the municipal plants. For this reason, and because there is no double counting of those customers using both light and power, the average consumption given will be by no means compar- able with the individual items. 112 MUNICIPAL ELECTRIC LIGHTING that both private and public plants have a larger propor- tion of small lighting customers than in 1910. The higher absolute figures for the companies (327 kilo* watt hours as contrasted with 264 kilowatt hours, for the municipalities) are no doubt occasioned by a compara- tively small number of very large customers; — a condition which we might expect to find in the larger centers of pop- ulation and in places where there are numerous hotels, etc. The inclusion of Holyoke, bringing the average up. to 333 kilowatt hours, slightly, higher than that of the companies, helps to confirm this point of view. Again, the companies have, as suggested above, probably pushed the use of those numerous fixtures which are ordinarily attached to lighting circuits much more energetically than have the other group. Thus, more current would appear to be used on the average by each lighting customer. The writer's reason for giving some weight to this argument is based on a study of the returns from the various plants, which show considerable sums spent for advertising, soliciting, and new business on the part of the private plants, and v«ry little on this, account spent by the municipalities. Previous analyses prevent the assumption in this connec- tion that the companies are not developing the small lighting business. It is rather interesting to find an identical rate of increase duping the period in the average amount used for power per customer •*-= a little over 24 per cent in. each case. Nor is it surprising that the absolute figures are still somewhat higher for the companies (6782 K.W.H. vs. 627S K.W.H.). 5. Connected Load and Peb Connected Load Analyses* Few of the records kept by electric lighting plants are less satisfactory than the connected load data, though, for rate-making purposes, few are more significant. From the very nature of the business it could not well be otherwise, 1 Appendix, pp. 408-41-5. IN MASSACHUSETTS 113 for, even with the most skillful management and careful engineering, it is practically impossible to keep track of the constant changes which take place in the various kinds of business. Obviously the power load can be much more nearly approximated than the lighting load. Yet, if reason- ably careful estimates have been made, the average con- nected loads for two .fairly large groups of plants, provided we can get them, should be of some general use in our com? parative study. Unfortunately nearly 50 per cent of the municipal plants have not seen fit to give complete data on this point, though all of the companies have returned the information required by the Board. As so small a proportion of the former have made this return, the figures submitted by the remaining ones are probably open to even more question than the figures of the companies. However that may be, we have the total connected load of 9 municipal plants, Holyoke excluded, to compare with that of the 17 private plants. While the lighting load data are totally lacking in so many cases, with one or two exceptions the municipalities have returned some kind of a connected load for power, and the street lighting data seem to be complete. Aside from carelessness in estimat- ing, the figures are frequently wrongly reported, as, for example, when the horse power of motors is returned as if it were kilowatts, and when an incorrect wattage is given for lamps even though the number may be correct. Some of these inaccuracies can be found and rectified, while others cannot. Whenever possible the writer Jias checked the returns of preceding or following years. Thus, it has often been possible to correct rather serious errors which have escaped the attention of the Board's accountants. Finally, as no definite connected load data were worked out by the municipal plants before 1911, in order to reduce the inaccuracies to a minimum that year instead of 1910 has usually been selected for comparison with 1915. No connected load occasioned by service to other companies 114 MUNICIPAL ELECTRIC LIGHTING is included. Bearing in mind these cautions and restric- tions, we are in a position to make a few analyses of the connected load figures. 1 It is necessary, however, to know something about the physical character of the connected load, the kind of lamps, size of motors, etc., and to study the changes which have been taking place, before we can intelligently discuss the load itself. We find the commercial lamp data of the public plants so unsatisfactory that they hardly merit study. Though all of them attempted to give the number of lamps in 1910, only 10 did so in 1915. Excluding Holyoke, the 9 plants reporting at both dates show an increase of 53.3 per cent during the five-year period, while the companies report twice as great an increase, or 103.8 per cent. If Holyoke be included, the first group has an increase of 121 per cent instead of 53.3. No doubt many of the pub- lic plants have greatly underestimated their commercial lamps, for several report practically no increase during the period, though their customers have almost doubled in number. Hence, we find in this group an actual decrease in the number of lamps per customer from 22.2 to 19.3, or 13.1 per cent. This is a possibility, but scarcely a prob- ability in view of the lower cost of lamps in 1915. The com- panies, on the contrary, absolutely higher in the beginning, show an increase of 2.9 per cent, from 24.4 to 25.1 lamps per customer. When Holyoke is included, the proportions become nearly equal. In the per capita statistics, though both groups were close together in 1910, the municipalities were somewhat ahead at the end of the period (2.22 to 1.9) having gained 91 per cent as opposed to a 72.7 per cent gain for the companies. This difference can be readily understood when we remember the wider area served by the latter. 1 As the Board specially requested the total load data in kilowatts from the municipal plants in 1911, there is a strong presumption that more care may have been exercised in getting this information then than at any other date. IN MASSACHUSETTS 115 The commercial arc lamp data are probably correct in both cases, as it is not difficult to keep track of them. It appears that the 9 municipalities giving full reports in 1915 had only 20 commercial arcs, a decrease of 60 per cent from the number, 49, in 1910, and, for all of this group excluding Holyoke, the number dropped from 223 to 29. Holyoke reported about 70 per cent of the total number in 1910 and 85 per cent in 1915. The companies returned 667 arcs at the former date and 201 at the latter, a decrease of 70 per cent. So far as the incandescent lamps are con- cerned, little can be made out of the records regarding carbons and tungstens, except that the definitely specified proportion of the latter is much higher in the company plants. A study of the connected power load reveals the fact that the number of motors has increased much more rap- idly in the public plants, 153 per cent during five years. The companies reporting at both dates show an increase of only 52 per cent. All but one of the first group did a power business at both dates. In two of the companies the number of motors could not be ascertained either in 1910 or in 1911, while in two other cases there was no motor service. Only one did not supply power in 1915. The average capacity of motors has been computed for the year 1911 instead of 1910, as the returns at this date seem more trustworthy. When sufficient data could not be secured for this year, the preceding one was chosen. It appears, therefore, that the average kilowatt capacity of motors was higher at both dates for the municipal plants (5.18 and 6.47 K.W. as contrasted with 4.34 and 5.95 K.W. for the companies). Though the rate of increase has been 50 per cent more rapid in the case of the private plants (37 vs. 25 per cent), yet the average capacity is still 9 per cent greater for the municipalities. This difference might be in some measure due to the fact that the latter have sometimes reported horse power for kilowatts or have 116 MUNICIPAL ELECTRIC LIGHTING failed to return the correct number of motors, as seemed to be the case with respect to their commercial lamps. Some weight may also be given to the argument that throughout the period the companies have been consciously attracting the smaller customers. And, finally, it is prob- ably in large measure the result of differences in local conditions, for the municipalities owning their plants are, in proportion to. population, the greater manufacturing centers. In the municipal group the large plants of Taun- ton, Chicopee, Peabody, and Danvers seem to be for the most part responsible for the higher average capacity of motors. Of the companies, on the other hand, Amesbury, Plymouth, and Quincy also have a large number of motors of more than average size. 1 The rate of increase in the total connected load of the municipal plants reporting, 57.4 per cent, or 66.6 per cent including Holyoke, is practically the same as that in the companies, 63.8 per cent. These rates coincide closely with the rate of increase in the amount of current sold for all purposes in the two groups, 70,1 and 68.2 per cent re- spectively. The wider spread in the case of the municipal plants between the rate of increase of connected load and the rate of increase in current delivered, in spite of the fact that they sell a very small quantity of current to other companies, is occasioned partially by the fact that the character of their load, much worse in 1911, has been im- proving more rapidly than that of the companies. The figures are further influenced by the fact that only 9 out of 17 public plants are represented, and these among the smaller ones. It is also probable that in many cases not all of the load was reported, and that the little consumers with large loads have not been encouraged by the muni- cipalities. On the other hand, the private plants, be- cause of the important commercial considerations involved, 1 A discussion of the street lighting data will be reserved till the con- nected load has been studied in its varied aspects. IN MASSACHUSETTS 117 would probably overestimate rather than underestimate their connected load. Holyoke, the most efficient of the municipal plants, shows an increase in connected load considerably more rapid than the increase in amount of business. The connected load of the companies averages 80.4 per cent greater than the average generating capacity per plant, while that of the 9 municipalities averages 93.2 per cent greater. The higher ratio of the latter, since the pro- portionate amount of current bought is about the same in either case, may be accounted for in some measure by the fact that the public plants still have the larger proportion of inactive load. It is also even more probable that they are not anticipating future needs by enlarging their gen- erating capacity, to the extent that the companies are doing so. 1 The difference between the two ratios, however, not much over 16 per cent, is not in itself very significant. In the 7 public plants which furnish sufficient data for computation, the ratio of the maximum station load to the connected load is 29.4 per cent, and, by a surprising coincidence, the ratio of the 14 companies is also 29.4 per cent. Expressed in better terms, the total connected load in both cases is 3.4 times the total maximum load upon the stations. This would seem to indicate a similar "poten- tial" diversity factor for the two groups, if we may coin a new expression. These figures furnish us no clue, however, to the true diversity factor, which is the ratio of the maximum demand of the system upon the station to the sum of the sepa- rate or individual maxima. If allowance is made for the fact that a considerable portion of the companies' maximum demand, probably not less than 10 per cent, is occasioned by sales to other companies or to municipalities, whereas this influence is practically nil in the case of the municipal plants, we can readily see that the "potential" diversity factor would be by so much the greater for the public 1 Cf. pp. S0S-S04, supra. 118 MUNICIPAL ELECTRIC LIGHTING plants, since the connected load data do not include these foreign loads. On these grounds it would probably be safe to assume that the companies really have a more favorable diversity factor than the public plants, in so far as their individual customers are concerned. The writer feels that this deduction is reasonably correct, though because of the lack of more adequate data, the comparison attempted is interesting rather than conclusive. Upon examination it appears that the proportionate distribution of the total connected load among the various classes of service, commercial lighting, street lighting, anch power, is practically the same in the two groups. The public plants are a very little in the lead for both of the lighting loads, while the private plants have a slightly higher percentage of power load. In both cases, however, the power load is close to 50 per cent of the combined light loads. The very noticeable difference between the muni- cipal power load of the public plants and that of the pri- vate plants, an average of 20.26 kilowatts per plant in the former and of only 6.47 in the latter, is for the most part accounted for by the fact that a number of the muni- cipalities operate pumping stations or sewage disposal plants in connection with their electric light stations. Also it is but natural that localities serving themselves should be generous with that service. During the past four years there has been almost no change in the percentage distribution of the various con- nected loads of the companies, excepting a small decrease in the lighting loads. The municipalities, on the contrary, have been subject to a very marked percentage decrease (from 79 to 64.6 per cent) in the commercial lighting load, and the absolute increase has been comparatively slight, only 28.6 per cent as contrasted with 61.9 per cent for the companies. Their gain has been largely in the power load, which has increased absolutely 179.4 per cent, so that its proportion of the entire load has doubled in four years, IN MASSACHUSETTS 119 now standing at 32.3 per cent whereas it was only 16.1 per cent of the total in 1911. The rate of increase in the power and commercial light- ing loads of the companies corresponds with remarkable closeness to the rate of increase in the current sold for these purposes — 61.9 to 60 per cent for lighting and 74.3 to 74 per cent for power. For the public plants the rate of increase of the power load roughly approximates the rate of increase of current delivered to power consumers (179.4 to 168.3). But there is not the same close connec- tion in the case of the commercial lighting loads and sales of current for lighting. The increase in commercial lighting sales (48.2 per cent) seems to have been much more rapid in the municipal plants than the increase in lighting load (28.6 per cent). While this might mean an improvement in the already existing lighting load, it probably signifies that the estimate of the number of lamps connected is too low. Holyoke shows a closely parallel increase in both items. The absolute increase in the street lighting loads, which are probably as accurate as could be wished for, has been negligible in both cases, though slightly more rapid for the companies. Hence the absolute increase in the amount of current delivered for street lights and the rela- tively greater increase in the case of the companies, are occasioned by longer hours' use of lamps per night and by a larger number of nights' use per month. Finally, in all of these comparisons we must bear in mind the fact that we are contrasting the increase in connected load since 1911 with the increase in current sold or delivered since 1910. Owing to the unsatisfactory character of both the popu- lation and the connected load data, it is scarcely worth while to deduce any relations between the two. In passing, however, it may be noted that the increase of the per capita connected load has been somewhat more rapid for the companies (from 103 to 147 watts, or 52.7 per cent) 120 MUNICIPAL ELECTRIC LIGHTING than for the municipalities (from 129 to i69 watts, or 31 per cent). This may show an increasing effort to develop the territory served by the companies; while the higher absolute figures for the municipalities are probably a re- sult of the more restricted area served and the denser pop- ulation. The aggregate light and power connected load per cus- tomer Seems to have increased very slightly, from 1.36 to 1.40 kilowatts, or Si per cent, in the group of 9 municipal plants, and to have decreased an inconsiderable amount, from 1.83 to 1.75 kilowatts, or 4.4 per cent, in the other group. 1 The average lighting load of the former, 0.950 kilowatts, is 17.4 per cent less than in 1911, while that of the private plants has decreased only 6.6 per cent td 1.13 kilowatts. This difference in rate of decrease corresponds roughly to the rate of decrease in the amount of current consumed per customer for lighting purposes. The fact that the absolute figures are higher for the companies and that their rate of decrease has been less, should be inter- preted in the light of what has already been said regarding the total load data and the consumption of lighting current per customer. If the number of lamps reported by the municipalities is too low, as is probable, the connected lighting load per customer Would naturally appear less than it should be. The average power load per customer, as might be ex- pected, has almost doubled in the 14 municipal plants re- porting at both dates, and has increased only 25.5 per cent in the companies, so that the absolute figures are now very close together, 9.46 (9.22) kilowatts for the former, and 9.74 1 In the averages computed in this connection, the municipal power load is included, since it is impossible in most cases to separate this item from the total power load in 1911. In 1915 the municipal power load of the public plants amounted to only 3.7 per cent of the total power load, and to less than 2 per cent of the total light and power load. In the com- panies the percentage of municipal power load reported is so small as to be negligible. Hence the averages will be little affected by this inclusion. IN MASSACHUSETTS 121 for the latter. The rate of increase for the private plants coincides with the rate of increase in current consumed per power customer (24 per cent), and we can probably assume that the company returns are reasonably accurate in this connection. On the other hand, the fact that the public plants show an increase of only 24.1 per cent in the con- sumption of current per power customer and 95.1 per cent increase in each power customer's connected load, is, to say the least, rather puzzling. Even when we eliminate the large plants of Danvers and Westfield, which show an abnormally large increase in this particular, the rate still does not fall below 70 per cent. This discrepancy cannot be accounted for by any un- usual increase in connected power load late in the year 1914-15. It may mean that some of the public plants are still reporting their power load in horse - power as they formerly did, instead of in kilowatts as called for in the returns. This would make their reported load considerably higher than the actual load, since a horse power is only three fourths of a kilowatt. As the writer has discovered and corrected a number of such cases, it is probable that there are others. Yet, as we shall find the current con- sumed per kilowatt connected power load almost identical in the two groups, this assumption does not seem exactly to fit the case, for, if the kilowatts be reduced to horse power, it would tend to make the consumption per kilo- watt hour considerably higher for the public plants. This would indicate a large number of power customers with very favorable loads, and it would not make allowance for the fact that the companies also might have reported wrongly. On the other hand, if We assume that the returns are approximately correct on this point, it evidently means that the public plants, with so rapid an increase in con- nected power load, must have taken on a large proportion of small power customers. However, since the average size of the connected motors is greater in the case of the 122 MUNICIPAL ELECTRIC LIGHTING municipal plants, this view of the matter can hardly be accurate. Nor does it seem probable that those customers occasioning a marked increase in the load would consume a relatively small quantity of current. Knowing that the consumption of current per power customer has increased at an equal rate for both groups of plants and that the consumption per kilowatt connected load seems to have decreased at about the same rate in both cases, we will not attempt further to discover why the rate of increase in connected power load per customer in the municipal plants is four times as great as that of the companies, and four times as great as the rate of increase of current used per power customer in either' case. It is also reassuring to know that Holyoke, the paragon of public plants in the State, shows only a slight increase in connected load per power customer. Having deducted the sales to other companies, we find that the yearly consumption of current per kilowatt con- nected load has decreased 10.8 per cent (from 573 to 511 K.W.H.) for the companies since 1911. For the munici- palities there is an apparent increase of 18.5 per cent (from 443 to 525 K.W.H.). This decrease on the part of the former is probably accounted for by the fact that their service has been extended more rapidly to the poorer cus- tomers. But, if Holyoke be included with the public plants, the decrease is about the same in the two groups. Upon analysis of the different classes of business, it appears that the amount of current consumed per kilowatt connected lighting load in the company plants has de- creased 5.6 per cent during the period, whereas there has been an increase of 10 per cent in the municipalities, so that the relative amounts consumed are now respectively 289 and 252 kilowatt hours. For reasons which are fairly obvious from what has already been said, we would expect the higher absolute figures in the case of the companies. The effect of seaside resorts on the use of maximum demand IN MASSACHUSETTS 123 can be clearly seen. Though the increase of this item for the public plants might indicate that their business is being rapidly pushed, it is probably due still more to the fact that unsatisfactory customers are discouraged by the pro- vision in the law to the effect that the cost of extensions and connections on the customer's property can be assessed wholly or in part upon him as well as by the fact that no city or town can be compelled to furnish electricity without an express order of the Board of Gas and Electric Light Commissioners. 1 There will be occasion later to revert to this aspect of the case. Finally, the failure to report a sufficient number of lamps would also make the increase appear greater. There is a close correspondence between the increase in the number of kilowatt hours consumed per street lighting load in the two cases, 10 per cent for the municipalities and 12.3 per cent for the companies. This simply means that the lamps are being used a greater number of hours per year than formerly. The power consumption, per con- nected load, on the other hand, has decreased in both groups, but with greater rapidity in the municipalities. The figures are now close together, being 699 kilowatt hours for the companies and 674 for the public plants. This . decrease doubtless signifies that new uses for power have been found, while the seemingly more rapid decrease in the municipal plants, which were slightly in the lead in 1911, may or may not be the result of inaccuracy in report- ing the connected load. Table 21 presents in a convenient form some compari- sons between the connected load and the consumption of current in the two groups of plants. As we have found the number of kilowatt hours' consumption per kilowatt con- nected load for the various classes of service, and since the maximum use would necessarily be 8,760 hours, the num- ber of hours in a year, it is a comparatively simple matter 1 Mass. 1914, ch. 742, sects. 117. 118. m MUNICIPAL ELECTRIC LIGHTING Tasle '41. Utilization op Maximum Demand Connected load er. W.H. Con- sumed per K.W. connected load Number of days 1 use per year Number of Rows' 1 use per day Per eenl of possible use Com- panies Munici- palities Com" ponies Munici- palities Coin* ponies Munici- palities Com- panies Munici- palities 611 289 6B9 3437 525 252 674 3783 21.2 12.0 29.1 143.2 21.9 10.5' 28.0 1B7.6 1.39 0.80 1.90 9.40 1.44 0.70 1.80 10.40 5.8 3.3 8.0 39.2 6.0 Commercial lighting . . . Street light- 2.9 7.7 43.2 to find the number of days' tise'of the maximum demand, the number of hours' use per day, and the ratio which the actual use bears to the possible use. As the connected load used is that found at the end of the year, and not the aver- age iov the year, the "use" factor in each case will be some- what too small. The remarkably close coincidence between the two sets of plants would lead us to infer that the local conditions are similar. But full allowance must be made for the numerous possibilities of error already mentioned. 6. Street Lighting Data and Analyses * Before leaving the subject of connected load, attention must be paid to the character and development of the street lighting load, which, for our purposes, stands in a class by itself, since this is the portion of the business of municipal plants that is not carried on as a commercial undertaking. The data in this case are fairly trustworthy, for the returns call for great accuracy. As the street lamps of other municipalities supplied by the public plants con- stitute only 5.5 per cent of the total for this group, they have been omitted in the computations so that we can better study the conditions of street lighting in the cities and towns which have their own lighting plants. These foreign street lights are really a part of their commercial •. * Appendix, pp. 416-419. IN MASSACHUSETTS 125 lighting business. When there is a possibility that their inclusion would have a noticeable effect upon the averages, mention will be made of the fact. The percentage of arc lights was higher at both dates for the companies, and the decrease in numbers has been just twice as rapid in the municipal plants. At present the arcs are equal to 7.9 per cent of the total number of street lamps in the latter group (11 per cent if Holyoke be in- cluded) and 10.6 per cent of the total in the former. There does not seem to be any marked difference in the kind of arcs used in the two cases. Of the incandescent lamps the carbons amounted to 28 per cent of the total for municipal plants in 1910 and to 5 per cent in 1915. For the companies, however, the carbons formed only 18 per cent of all incandes- eents at the earlier date, and in 1915 less than 1 per cent. The increase in the total number of street lights has been far more rapid for the companies than for the mu- nicipalities. Though five years ago the number of lamps per plant was 25 per cent higher in the public plants, the figures are now approximately the same. This means that, as the average population of the districts served is greater in the former group, the number of lamps V er capita will be somewhat less. Yet the companies have extended their service continuously until one lamp now serves 24.8 per- sons, while in the other group there is one lamp to 18.1 inhabitants. Obviously the more scattering population of the former, as well as the somewhat greater number of arc lights will help to account for the difference, in spite of the fact that the average wattage of lamps is now equal. Also, it is to be expected that municipalities would keep them- selves generously supplied with lights, the real cost of which is not disclosed by the accounts kept, and which in some cases may be partially paid for out of the profits made in the commercial lighting business. The number of feet of street lines per lamp is 511 in the municipal plants and 617 in the companies, though the 126 MUNICIPAL ELECTRIC LIGHTING length per commercial customer is about the same (329 and 303 feet respectively). The greater length of " over- head" per lamp in the latter (436 vs. 299) is accounted for largely by the fact that they serve a more sparsely settled territory, of which more anon. There is one lamp to 1.6 commercial customers in the public plants and to 2.1 cus- tomers in the other group. Probably geographical condi- tions go far to explain the difference, as well as the fact that the companies are located for the most part in places which are residential rather than manufacturing. After a tedious computation it appears that the "rated" candle power of illumination per capita has decreased at an equal rate in both groups, now standing at 8 candle power for the public plants (or only 7 candle power if Holyoke be in- cluded), and 6.4 for the private plants. 1 This decrease in per capita candle power is doubtless largely accounted for by the increased use of smaller lamps more effectively placed than formerly. As might be expected, due to the advance in the art of lighting, the decrease in the per capita wattage of lamps has been more rapid than the decrease in candle power — a fact which shows the in- creasing lamp efficiency. This decrease in wattage has been more marked in the case of the companies. Though the differences in all of these relations are surprisingly constant, we are scarcely justified in attempting to draw definite conclusions therefrom. 1 It is an almost hopeless task to endeavor to discover the real candle power of the street lights. The municipalities have usually reported the supposed candle power of certain classes of lamps, and their estimates have, with interpretation, been accepted by the writer. Then, in com- puting the candle power for the companies, which make no return of these data, the same kind of lamps are assumed to have the same candle power as in the municipal plants. Hence any errors will be about evenly distributed between the two groups. Needless to say, the real candle power depends upon a number of conditions which it is, under the circum- stances, impossible for us to evaluate. So far as the incandescents are concerned, the figures are a close approximation; but arc lamps are prob- ably much overrated. It is, therefore, safe to say that the per capita candle power here given is somewhat too high. IN MASSACHUSETTS 127 In which of these groups of plants the inhabitants are the better served by their street lights could probably be decided only after a period of residence in each locality. It may be that, as a result of more skillful engineering, the companies are really serving the people more adequately with fewer lamps. And it may very probably be true that in the closely populated portion of the cities and towns the per capita service is identical. This supposition could be verified only by finding the relations between the number of inhabitants, extent of territory, and number of street lamps, in the business and residential sections of the places under consideration. And, furthermore, Condition and width of streets, color of pavements and sidewalks, arrange- ment, height and color of buildings, amount of foliage, local topography, and character of the business engaged in, all play an important part in determining the needful number of street lights, even if we grant that the engineer- ing skill is the same in either group of plants. However, the local survey made has convinced the writer that the companies, by virtue of their contracts, are forced to give far more careful attention to the problem of street lighting, than do the public plants. Waiving the engineering aspects of the case, the records are for the most part definite regarding the quantity of service rendered by the street lamps in both groups. The average daily number of lamps in use, as would be expected, varies little from the actual number. The average number of nights' use per month is practically the same in both cases, being 30 nights for the municipalities and 29.7 for the companies. The increase has naturally been more rapid for the latter as they showed a relatively lower figure five years earlier. However, numerically weighted, the average number of hours' use of lamps per night is consid- erably lower for the companies (7.8 hours) than for the municipalities (9.1 hours), though the rate of increase during the period has been much more rapid for the former 128 MUNICIPAL ELECTRIC LIGHTING (16.9 per cent) than for the latter (5.8 per cent). 1 If we should eliminate from the companies the lights which are operated in foreign localities, constituting about one eighth of the total and burning for the most part on short schedules, their average number of hours' use per night would be somewhat increased. But it would be foreign to our purposes to discuss at greater length the more technical aspects of the problem. The accompanying table (Table 22) sums up some inter- esting computations regarding the street lamps in the two groups of plants (Holyoke being excluded). TABiiE 22. Street Lighting Data (Generating Plants, 1915) Companies Municipalttiet Total number of lamps 11,511 11,621 (Lamps in other places) (1,407) : (633) Total number of lamps actually in use 10,783 11,341 (Lamps in other places) (1,281) (614) Average wattage of lamps 88 87 Ayerage C.P. of lamps 170 (?) 147 (?) Per capita wattage 8.6 4.7 Per capita C.P 6.4 8.0 Current consumed per lamp (K.W.H.) 324. 318.0 Current consumed per capita (K.W.H.) 12.2 18. 1 Number of nights in use per month 29.7 30.0 Number of hours in use per night 7.6 9.1 Number of inhabitants served by one lamp 24 . 8 18.1 Number of commercial customers to one lamp. 2. 1 1.6 Length of street'lines per capita (ft.) 25 29 Length of street lines per lamp (ft.) 617 fill Length of street lines per customer 303 329 Length of streets with overhead lines (commer- cial and street) 1 per lamp 436 299. i Commercial and street lighting cannot be separated. 1 The lack of correspondence between the average number of hours' use per night, as here computed from the annual returns of the various plants, and the number of hours' daily use of the connected street lighting load, as computed in the preceding table (10.4 hours for the public plants and 9.4 for the other group), must not mislead the reader. This considerable difference, amounting to 1.3 hours for the former and 1.8 hours for the latter, can be accounted for in several ways. First, in the present calculation the lamps are not weighted according to then- wattage, but according to their number. As most of the higher wattage IN MASSACHUSETTS 129 7. Lines, Poles, and Transformers * The companies in 1910 served only 14 foreign localities, while by 1915 they had extended their service to 7 addi- tional places. Likewise the municipalities extended their service to 4 other municipalities during the same period. Yet, even if from the list of companies we omit Buzzard's Bay, which was just beginning operation at the earlier date, and which has since then taken 4 other towns into its district served, we still find that the increase shown by the latter in length of lines and number of poles is aston- ishingly greater than that of the former. Even more strik- ing is the rate of increase of streets with overhead lines in the case of the companies. The commercial lines for both light and power service — and they are usually not separated, as practically no direct current is used — compose 69 per cent of the total in the companies and 62 per cent in the municipalities. 2 The total increase of lines during the period was for the former 87.3 per cent (73 if Buzzard's Bay be omitted), and for the latter 60 per cent. In the separate classes of service, the increase in length of commercial lines was 115.2 per cent for the companies and only 76.4 per cent for the municipalities, in spite of the fact that even at the earlier date their commercial lines per customer were 11 per cent lamps were in operation for the longer interval, this would be almost sufficient to account for the difference. Again, there are certain losses between the place where the current is metered and the lamp terminal, which, since they could not be eliminated in computing the table, would make the kilowatt hours' consumption per kilowatt connected load some- what higher than in reality it is. This, in turn, would make the number of hours' use per day too high. Finally, there are doubtless numerous errors in the returns regarding the number of hours' use of lamps per night, and we know nothing definite about the "outages." i ' Appendix, pp. 420-422. 2 Needless to say the line data are probably far from accurate in both groups of plants, doubtless being less accurate for the municipalities; but there is no reason for supposing that the group averages will fail to show the true relations between the two. 130 MUNICIPAL ELECTRIC LIGHTING longer than those of the public plants. The street fighting lines, also, have increased 47.4 and 38.7 per cent respec- tively. Omitting Buzzard's Bay, we find that the rate of increase of street lines has been practically the same in both cases, while that for the commercial lines is still more than 25 per cent ahead of the company rate. But there seems to be no good reason for leaving out this plant, for it merely presents a case of unusually rapid growth from small beginnings. The length of streets with overhead lines has increased almost twice as rapidly for the companies, 65.3 per cent as opposed to 37.4 per cent in the public plants. Also it appears that there are 4.6 miles of line to one mile of over- head in the companies, and 4.1 to each mile in the public plants. In 1910 the ratios were respectively 4 and 3.6. These and the foregoing data serve to show that the companies have not only been extending their f acuities far more liberally than have the other group, but also that they have probably developed their territory some- what bptter. This development becomes still more clear when we com- pare the relations between length of lines, number of cus- tomers, and inhabitants of districts served. So far as the street lines are concerned, there has been a considerable per capita growth in both cases, but more marked for the municipalities. Absolutely, the latter are still in the lead, with 29 feet per capita as compared with 24 feet in the companies. Evidently the public plants have been devel- oping their street lighting with greater zeal than their commercial business. It is, however, the commercial lines that most concern us, and here we find that the length per customer has de- creased 7.3 per cent for the municipalities, and has in- creased 6 per cent for the other group, or has remained almost stationary if Buzzard's Bay be omitted. Accord- ingly, the length of lines per customer is 26.5 per cent IN MASSACHUSETTS 131 greater in the companies (678 feet) than in the public plants (536 feet, or 471 including Holyoke). In other words, the number of customers per mile of line has been increasing for the latter group, from 9.13 to 9.85, or 7.9 per cent, and decreasing for the former, from 8.25 to 7.80, or 5.5 per cent. Had we no other data at our command, these figures might seem to make a bad showing for the companies, since they would appear to indicate that the territory served is not being so well developed. But, when we know that the area served by them is much greater, that their lines have been extended more rapidly, and that the rate of increase of their customers has also been faster than in the other group, it becomes evident that such is not the case. In fact, the opposite would seem to be true. Yet the condition indicates that there has been a much larger investment in lines per customer in the companies, which, other things being equal, would be reflected in higher charges for service. This aspect of the subject will be dealt with in the following chapter. Again, it is instructive, though not conclusive, to note that the number of inhabitants per mile of overhead lines (both commercial and street) has decreased only 17.6 per cent for the municipalities, from 322 to 267, while the decrease for the other group has been from 433 to 301, or 30.5 per cent. Also, the number of customers per mile of overhead is 24.8 in the public plants and 24.7 in the com- panies. The first set of figures indicates an extension of lines more rapid than the growth of population, particu- larly on the part of the private plants, which are now evi- dently as well equipped to serve their far more extensive territory as are the municipal plants. The small per capita advantage in favor of the latter is to be expected in view of the more restricted area served. It may be argued by some that the greater relative length of lines in the companies is due to the fact that they have failed to write off their "dead" wire. The data studied ior 132 MUNICIPAL ELECTRIC LIGHTING only one year might seem to confirm this supposition. But, having found so marked a growth during the five-year period, both in lines and in streets with overhead lines, the writer puts little credence in this theory. The facts, so far as discoverable, all refute this contention. Finally, before leaving the subject of lines, attention must be directed to another striking development found in the companies and not met with in the municipal plants, namely, the increasing utilization of underground construc- tion. In 1910 our group of private plants returned a total of 3.5 miles of conduits, with 4.2 miles of cable, which in 1915 had increased to 21.1 miles of conduit, with 123.3 miles of cable therein. By far the greater portion of this underground construction is accounted for by the two companies of Beverly and Gloucester. The municipal return forms do not even provide a place for recording the length of conduits, and, so far as the writer is informed, none of these plants, with the exception of Holyoke, which boasts several thousand feet, have any underground con- struction whatever. Owing to the high cost of such con- struction we would naturally expect an investment in lines relatively much greater for the companies. We find the same interesting development in the number of poles, the increase for the companies being 76.2 per cent and for the public plants only 28.7 per cent, commensurate with their increase in overhead. If Buzzard's Bay be de- ducted, the former increase becomes 61.6 per cent. Further- more, there are a few poles "jointly owned" reported by the private plants and a few "rights of attaching," which are customarily charged against the capital account and may in a very literal sense be regarded as part of their property. Even when all of these are deducted, we still find that the increase in number is more than twice as rapid for the companies as for the municipalities. At present twice as many poles per plant are owned by the former as by the latter. Also, the reported number of poles IN MASSACHUSETTS 133 per mile of line is found to be 10.4 for the private plants and 7.8 for the others, while the number of poles per mile of overhead is 47.5 and 35 respectively. 1 What is the meaning of this marked discrepancy? It is, to be sure, partially a result of the more conservative extension policy of the public plants. However, it is more largely accounted for by the fact that they are attaching their wires to every support available, to telephone and telegraph poles, to street railway poles, and to trees, — and, by the way, the latter fact may account in some mea- sure for their greater loss of current in distribution. While three companies report a comparatively small number of jointly owned poles, and two plead guilty of using a few hitches on trees, 13 out of 17 municipalities report the use of foreign poles, not to mention trees. Of this number, 5 give definite figures, and 8 simply state that they use for- eign supports whenever possible or that they do not know the number. And, furthermore, they neither pay rental for the privilege of attaching, with the one exception of Concord, nor, so far as the writer can discover, have they ever entered any charge against their capital account. It is pure gain for the municipalities, resulting from the pro- visions of the franchises which they have granted. In a test case the Supreme Court of the State has upheld the practice as being within the "police power " of the muni- cipalities. 2 But, while they can secure this free service ad libitum and so save a large capital investment, they are at perfect liberty to rent their own poles, and four of them report a goodly income from this source during the year. On the other hand, while the mayor and aldermen or the 1 The returns are probably inaccurate on this point, in many cases, and it may be that some of the companies have claimed as their own, poles which do not really belong to them. There is, however, not much reason for thinking the errors are greater for the private plants than for the public. 2 Postal Telegraph Cable Company of Massachusetts vs. City of Cbico- pee, 207 Mass. 341. Cf. also Mass. R.L., xxv: 52. 134 MUNICIPAL ELECTRIC LIGHTING selectmen may grant a private concern the privilege of attaching wires to the poles of other private concerns or to the municipal poles, it is understood that a reasonable compensation shall be paid therefor. 1 Finally, the rate of increase in number of line trans- formers has been practically the same for both, 44.8 per cent in the public plants and 41.2 per cent in the companies, while the number of customers per transformer is also the same, 6.4 and 6.S respectively, — a condition which obvi- ously may suggest similar line engineering. Aside from the mere mention of the fact that practically all of the service is now metered, even the contract service, it is not worth while to study the subject of meters, which may or may not coincide with the number of customers. (On the subject of transformers the reader is referred to the above discus- sion of current unaccounted for.) 8. Physical Statistics of Purchasing Plants 2 The more important physical features of our group of purchasing plants will be reviewed but briefly, since, for reasons which have already been considered, it does not seem worth our while to attempt any comparisons with the year 1910. So far as the output of current is concerned, practically the same relations are found in this group as in the group of generating plants. The companies purchase on the average 266,715 kilowatt hours, about 70 per cent more than the average public plant (157,173 K.W.H.). Norwood is omitted from the general comparison for the same reason that Holyoke was omitted from the other group. No load factor analysis has been attempted be- cause, as has previously been stated, the municipal plants, with only two or three exceptions, return no data which would enable the computation to be made. For the 8 companies which give some meager information regarding 1 Mass. R. L., xxv: 52; and 1911, ch. 509, sect. 2. See ch. an, p. 306. 2 Appendix, pp. 460-465. IN MASSACHUSETTS 135 their peak load, it appears that the average load factor is probably about 20. It will naturally run somewhat lower for the municipal plants, as their power business is propor- tionally smaller. In the matter of distribution efficiency the public plants have some advantage, inasmuch as their current used at station and unaccounted for is only 22.7 per cent of the total output, while that of the companies is 24.5 or pro- portionately 8 per cent higher. This, however, is not in itself a very significant difference, and can probably, be largely accounted for by the fact that the public plants have in general a much newer distributing system. Upon an examination of the average size of transformers and the distribution of the different sizes, it appears that the municipal plants have an average of only 3 K.W., which is far below the companies' average of 5.60 K.W. Also, slightly more than half of the transformers of the former (51.9 per cent) are of the 1 K.W. size or under, while less than one fourth (22.5 per cent) of the total number of the latter are so small. The table shows these relations: Table 23. Transformer Data (Purchasing Plants, 1915) Clait of plant Average size {K.W.) Percentage distribution of the different sizes a/line transformers 1K.W. or lees 1+ to SK.W. 8+ to 5 K.W. B+to 10 K.W. Oner 10 K.W. 3.00 5.60 51.9 22.5 24.1 28.4 12.2 24.0 7.8 14.0 4.3 11.3 Other things being equal, we would accordingly expect to find a considerably smaller amount of current unac- counted for in the companies. But it must be remembered that, inasmuch as these plants are much older than the other group, their transformers may be in many cases antiquated. 136 MUNICIPAL ELECTRIC LIGHTING As might be expected under the circumstances, the private plants have a marked advantage in the extent of their power business. They sell more than twice as great a percentage for this purpose (31.3 per cent of the total sales) as do the other group (13.9 per cent). It is absolutely certain, however, that the municipal returns are hopelessly inaccurate on this point. Four report power customers and no motors, one reports customers and no sales, and one (Shrewsbury) returns 60 customers, 60 motors, and sales to the extent of 2,113 kilowatt hours! With the exception of the Norwood plant, which is in a manufacturing center, and Wellesley, which sells a considerable quantity of cur- rent to its water department, most of the public plants seem to have a comparatively small opportunity to develop a good power business. The chief function of the majority of this group seems to be to light the streets and supply the residences. It is somewhat surprising to find that the number of kilowatt hours supplied per capita is 36.8 in the companies and 45.5, or 24 per cent higher, in the municipal plants. This is an unusually good showing fof the latter, since the density of population in the territory served by them (136.7 per square mile) is conspicuously less than that of the territory served by the other group (218.2). There seems to be no denying the fact that they have developed their trade in a remarkable manner, considering how recently they have entered the field. It is also interesting to note that the per capita consumption of current for street lighting is nearly twice as great in the public plants (14.2 K.W.H.) as in the private plants (7.8 K.W.H.), while their per capita power sales (6.3 K.W.H.) are little more than half those of the latter. But, as intimated, these last figures are probably somewhat too low for the municipal plants. Though the companies do a two thirds larger business than the other group, they have only 30 per cent more IN MASSACHUSETTS 137 customers (376 as compared with 289). This of course suggests larger sales per customer, which we find to be 410 kilowatt hours, or about 50 per cent higher than the sales of the municipal plants (280 K.W.H.), including, of course, only the light and power sales. It appears that in each group the ratio of power customers to light customers is practically the same — 5.4 per cent in the public plants and 5.2 per cent in the companies. The quantity of current used for light per customer is 224 hours in the former and 250 in the latter, while the average power sold per customer is respectively 1087 (only 724 if the Wellesley waterworks, which accounts for one third of the total, be omitted) and 3,306 kilowatt hours. Probably the figure for the former would be somewhat higher than here given, were it not for the fact that a portion of the current sold for power is not separated from the commercial lighting sales. Also the municipalities seem to have reported as power customers some who have no motors and are using only those appli- ances which would ordinarily be classed with the lighting load. Finally, the ratio of customers to inhabitants of the district served is only 6.9 per cent in the companies and about 60 per cent higher, 10.8 per cent, in the public plants. This is surely an excellent showing for the latter, in view of the fact that their population is more scattering than that of the other group, even though their area is not quite so extensive (19.6 square miles as opposed to 25.8 for the companies). The accompanying table explains the more significant relations which exist between the connected loads of the two groups, though, to be sure, with the exception of the street lighting data, the figures must be taken with cau- tion. Probably the inaccuracies are about as great in one case as in the other. At any rate the per capita showing seems to be markedly better for the municipal plants. This, together with the fact that their sales per customer are 138 MUNICIPAL ELECTRIC LIGHTING much lower than in the private plants, indicates that their entire territory is more adequately supplied. It might also lead us to expect higher charges for service, because of the greater expense involved. The power load of the public plants, so far as developed, seems to be about as satisfac- tory as that of the other group. Table 24. Connected Load Data (Purchasing Plants, 1915) Companies Municipal Average per plant (K.W.) 520.0 390.5 Per capita (watts) 89 122 Street lighting load per capita (watts) 2.3 5.5 Per customer (K.W.) Light 0.914 1.000 Power 7.600 2.470 Average number of motors per plant 38 19 Average size of motors per plant (K.W.) 3 . 830 2 . 260 Consumption of current (K.W.H.) per kilowatt connected load Total 416 357 Commercial lighting 273 237 Power, 434 400 Street lighting 3491 2615 It is further interesting to observe that, while the con- nected street lighting load per capita is almost two and one half times as great for the municipal plants as for the companies, the consumption of current per connected load (2,615 K.W.H.) is only about three fourths as high as in the other group (3,491 K.W.H.). This simply indicates that while the former are better supplied with lamps, they are not using them on the average so many hours per night. The data here computed would indicate an average of 7.2 hours use per night for every night in the year, in the public plants, and 9.6 hours per night in the private plants. A study of the distributing system of the two groups is particularly instructive. The average length of lines per public plant is 72.9 miles, slightly higher than that of the other group, 68.7, 1 but the length, per plant, of streets 1 If Manchester be omitted, since all of its construction is under- ground, the length becomes 71.6 miles. IN MASSACHUSETTS 139 with overhead lines is almost 50 per cent greater in the former (21.4 miles) than in the latter (14.8 miles). It natu- rally follows that the miles of line per mile of overhead are less in the former (3.6) than in the latter (4.6). The num- ber of people per mile of streets with overhead is 139 in the municipal plants and 370 in the companies. Obviously the former have made a much more effective attempt to serve their territory than have the other group. Upon separating the street lighting lines from the com- mercial lines, we find that these constitute 31.4 per cent of the total length in the companies and 34.3 per cent in the municipal plants, or, on the average, 23 and 29.4 miles per plant respectively. This indicates that the latter are showing just as much zeal in the development of their commercial business as are the private plants. But, while the length of the street fighting lines per capita is in the companies only 21 feet, it is in the other group 52 feet! Obviously the little municipalities are intending to light themselves at any cost! Furthermore, the length of com- mercial lines per customer is in the case of the companies 660 feet, and in the public plants 880 feet. In other words, there are 8 customers per mile of line in the one and only 6 in the other. The number of poles is 794 per plant for the municipali- ties and 792 for the companies. The number per mile of overhead, however, is only 37 in the former and 54 in the latter. 1 But the number per mile of line is exactly the same, 11, in each case. Hence it would appear that the com- panies are building a more substantial line construction and probably own a larger proportion of their poles. Practically all of these data indicate that the actual investment in physical equipment for the sake of serving the customeKS would, other things being equal, be much greater in the municipal plants than in the companies, — a fact which under private management would lead us to 1 Manchester omitted. 140 MUNICIPAL ELECTRIC LIGHTING expect higher rates, since their load factor is apparently poorer. From the statistical point of view, at any rate, it appears to be demonstrated beyond a doubt that the public plants have had a more difficult territory to serve — a territory which did not attract private enterprise — and have developed that territory remarkably well. They appear to have made a far better showing with less oppor- tunity than have the corresponding group of companies. Here, apparently, is a complete reversal of the situation which was found in the group of generating plants, of which more mention will be made presently. While little reference has been made to the municipal plant of Norwood, it may be stated briefly that, so far as our study has gone, it has done unusually well. This good record can be attributed to three causes: (1) As in the case of Holyoke, it serves a compact and densely populated territory (10.47 square miles), to which its business has been confined. (2) It is in an active manufacturing center, — more than half of its current is sold for power purposes. And (3) due to the influence of certain public spirited citi- zens, the electric plant, as well as all of the municipal affairs, has recently been managed remarkably well. 9. Extent of Territory, Roads, and Pofuiation 1 In a study of this sort it would be highly instructive to know the exact area of the territory actually served by each group of plants, as well as the density of population of that area, and the length of roads. Certain significant relations could thus be worked out regarding the develop- ment of the district served. Some attempt has already been made in this investigation to deduce such relations, based on the total number of inhabitants in each city and town and the total inhabitable areas. The results are val- uable as showing certain general tendencies. They must, however, be taken with a good deal of caution. 1 Appendix, pp. 404-405, 423. IN MASSACHUSETTS 141 It is absolutely impossible to secure exact data on these points. Only within the last year has the actual area of the State of Massachusetts been known, and not until a short time ago (in 1916) was it possible to find out the net land areas of the various municipalities. Nor are these figures at present published or in process of being published. The writer has ferreted them out of the archives of the Massa- chusetts Waterways and Public Lands Commission (for- merly the Board of Harbor and Land Commissioners), and has made his own computations therefrom. A city or town in Massachusetts may extend over a very considerable territory, while its population may be con- centrated in one small portion of that area. On the other hand, notably in the smaller towns, the inhabitants may be more evenly distributed throughout the entire district. We should have some means of distinguishing business and residential sections from purely rural districts, as to area, population, and length of roads. If the acreage of all "agricultural" lands had been correctly reported in the State Census of 1905, if there had been little change in this acreage since then, and if the total assessed acreage of each municipality, as at present reported to the Tax Commis- sioner, were accurate, it would be possible, by subtracting the one from the other, to find the urban areas with suffi- cient accuracy for our purposes, particularly in the case of the plants which do no business in foreign localities. Upon comparison, however, the discrepancies have been found to be so great that this method is out of the question. The statistics of agriculture in Massachusetts, compiled by the Federal Census Bureau as of April 15, 1910, would, if correct, give us the areas desired. The farm acreage reported, however, is in many cases merely an estimate, 1 and, besides, only totals for counties are given. To find 1 Abstract, U.S. Census, 1910 (with Supplement for Massachusetts): 618, 628-631. 142 MUNICIPAL ELECTEIC LIGHTING the data for our particular groups of municipalities would necessitate the enormous and probably fruitless task of working over all of the raw material on which the census was based. Probably the only satisfactory way to secure these data is to visit the localities studied, and from the plans kept by the municipal authorities, when there are such, com- pute the areas in question, and determine the length of roads. Nor, in the case of the smaller towns, would even these figures be worth much, for electrical service is fre- quently extended far into the rural districts. The Massa- chusetts State Forester is at present engaged upon just such a survey as would be useful on this matter, and has, to date, .covered Worcester County and is working on Plymouth County. But it will be many years before the State is covered. Again, the Massachusetts State Highway Commission, for the year 1914, collected data regarding the length of roads in the separate cities and towns. As these figures were based largely on returns made by the local authorities they were at first, in some cases, distressingly inaccurate. The Commission, however, by carefully checking up the returns with the United States Geological Survey maps and with other data at their command, as well as by per- sonal verification in many instances, managed to correct the more serious mistakes, so that the percentage of error, according to the chief engineer is certainly not greater than 10 per cent. Yet, except toj*ive the estimated length of improved and unimproved roads for the entire munici- pality, no data are worked out which can be of much serv- ice to us. A crude approximation of the length of roads in the thickly settled districts could be reached by going over the large Geological Survey maps and making com- putations by means of tedious measurements. As the Director of the Survey has informed the writer that these maps are twenty years old, and hence probably very far IN MASSACHUSETTS 143 from accurate at the present date, doubtless the results thus secured would still be unsatisfactory. Taking the totals as we find them, it is instructive to note that the average land area of the districts served by the generating companies is 58.94 square miles, or 136 per cent greater than that served by the public generating plants (24.81 square miles). If, however, the foreign locali- ties be eliminated in each case, the averages become respec- tively 30.67 and 21.39 square miles, the companies still being 43.4 per cent in the lead. In the purchasing plants there is not so marked a difference, as the area per public plant is 19.60 square miles and per private plant, 25.06. The greater area in the latter is wholly accounted for by the fact that six foreign localities are served. The average length of roads of all kinds for the municipal generating plants is 83 miles and for the corresponding companies, 172 miles. The population per mile of road is in the former 146 and in the latter pnly 98. For the pur" chasing plants, on the contrary, the tables are turned. While the average length of roads is 66 miles in the com- panies and 58 in the municipalities, the number of inhabit- ants per mile of road is 83 in the former and only 45 in the latter, if Norwood be omitted. Under the circumstances it is probably not worth our while to work out any relar tions between amount of business done afid length of lines on the one hand, and areas of districts served and length of roads on the other hand, for we know too little about the distribution of service in the individual plants. Regarding the separation of rural and urban population similar difficulties as above outlined present themselves. As the United States Census classes all places with less than 2,500 population as rural, 1 the data there found are of absolutely no use in the study of our towns and cities, owing to the peculiar meaning attached to those terms in Massachusetts. Country dwellers are not here separated 1 Abstract, U.S. Census, 1910: 54. 144 MUNICIPAL ELECTRIC LIGHTING from those in the thickly settled districts. However, by finding the number of "farms" in each municipality (in- cluding "general" farms, dairy farms, egg and poultry farms, and sometimes market gardens), as given in the Massachusetts State Census of 1905, checking this number up with the number of farm dwellings then reported, and assuming that there are on the average about 4,5 persons to each inhabited farm, 1 we can by a process of simple mul- tiplication arrive at a rough approximation of the number of the rural population in each case. Of course, some of the farms will be inhabited only in the summer, and so our figures will be to that extent misleading. It might be safer to take only the "geiieral" farms, as many of the others may be practically part of the "residential district," and to assume only 4 dwellers to each farm; but this would not have any marked effect on our averages. There are numerous methods of verifying the number of persons per farm, if we could only be certain of the number of the latter which are actually inhabited throughout the year. Yet the errors are probably pretty evenly distributed be- tween the two groups, though only by a first-hand study of each locality can the exact conditions be determined. 2 Having made the computations referred to, however, assuming 4.5 persons per farm, the writer finds that the total population of the cities and towns served by the municipal generating plants (Holyoke omitted) is reduced by 11,709, so that the average per plant becomes 11,424, or 5.7 per cent less than the former figure of 12,113. For the private generating plants we would have to deduct 21,852 or 7.7 per cent, which makes the average 15,532, instead of 16,817. We would naturally expect this larger 1 Abstract, U.S. Census, 1910: 260; and Mass. Census, 1905, iv: 313- 323, 407-484. 2 It would be of some value to go carefully over the charts of the differ- ent enumerators' districts as outlined by the State Census Bureau. In the case of the smaller towns, however, even this would not give us the necessary groupings of population. IN MASSACHUSETTS 145 proportion of rural dwellers in the latter because of the much wider extent of territory served. Eliminating the foreign localities, which are, as a rule, not densely popu- lated, we find the number of rural inhabitants to be about equal in the two groups. By similar computations it appears that from the total number of inhabitants of the districts served by the pur- chasing companies we must deduct 10,233, or 11.7 per cent, so that the average per plant is reduced from 5,467 to 4,827. The population of the other group, however, is decreased by 12,037, or 22.5 per cent, until the average per plant falls to 2,077, whereas it was 2,679. Though the absolute decrease in number is practically the same in either case, it is interesting to observe that the percentage of coun- try dwellers is twice as great in the districts served by the public purchasing plants as in the districts served by the other group. In making all of his computations, however, the writer has used the total population in each case. If the explanations just given are borne in mind, it hardly seems necessary to change the figures, certainly not in the case of the two groups of generating plants. In spite of the individual differences which will naturally exist, it is rather surprising to find the growth of population during the five-year period as nearly as may be equal, 14.6 per cent in the municipalities with generating plants, or 11.8 per cent including Holyoke, and 14.7 per cent in the corresponding companies. Having deducted the increase in population due to the extension of service to neighboring towns, of which there are 7 in the private plants and 4 in the public, we find the rate of growth still to remain prac- tically the same in each case, though lowered to about 11 per cent, or to 9.4 per cent for the public plants if Holyoke be included. Other things being equal, this would seem to refute the arguments of those who maintain that public plants, as a result of ultra conservatism, tend to drive away business and so retard the growth of their communi- 146 MUNICIPAL ELECTHIC LIGHTING tie?. . Yet, when we recall the fact that the publicly owned, plants are for the most part located in places which are devoted largely to manufacture, while the private plants are found mostly in residential districts, we might reason- ably ask why their population has not increased much more rapidly than that of the second group. It may be worthy of note that, on the one hand, the manufacturing city of Holyoke has grown only 5.4 per cent in numbers, while t on the other hand, the semi-residential city of, Quincy has had a 24 per cent increase during the same period, in spite of the fact that the latter has a much higher tax rate. This^ however, may be in large measure due to its close location to Boston. Two of the private generating plants, Attlebprough and Leominster, show a slight decrease in population served, due to the fact that in each case a small neighboring towji^ whose inhabitants formerly secured their current from; these companies, is now independently supplied. One of these towns, Lunenburg, now has a municipal plant, while the other, Seekonk, is served by a private concern. A third company, North Adams, shows a decrease of a few inhab- itants which the writer is unable to Recount for. Of the similar group of public plants, two, Merrimac and North^ Attiebprough, have also experienced some falling off in the number of inhabitants in their territory. The groups of plants purchasing current show an increase of population served of 7.3 per cent for the 14 companies, operating in 1910, and 18.3 per cent for the 9 municipal plants operating at the same date (or a 22.3 per cent increase if the manufacturing . town of Norwood be in- cluded). If, however, we omit Belmont, which was subject to an abnormal growth as a result of its proximity to Boston and Cambridge, the rate of increase for the muni- cipal group becomes only 12 per cent. Excluding another exceptional case, Wellesley, this rate would be further low- ered to 6.2 per cent for 7 public plants. Three private IN MASSACHUSETTS 147 plants and one public plant of these groups show some decrease in the number of inhabitants of the district served. There seems to be no getting away from the fact that, in general, the communities with their own purchasing plants have grown more rapidly than those depending upon pri- vate enterprise. However, it would be rash indeed to attribute this growth solely to the benefits arising from municipal ownership. Which is cause and which is effect would be difficult to state. The density of population, taking into consideration all of the territory and population served in both cases, is for the generating companies only 285.3 per square mile,, while for the corresponding group of municipalities it is 488.2, or 71 per cent greater. If the foreign localities be left out, we still find the districts served by the munici- pal plants 18 per cent more densely populated (550.2 as compared with 468.1 in the companies). On the other hand, the group of companies buying their current serve a district 60 per cent more densely populated than that of the similar group of publicly owned plants (218.2 as op* posed to 136.7 per square mile). This condition at once suggests the probability that these small municipalities can offer very slight inducements to private business — a probability which becomes a certainty when we recall that, though the average age of this group of municipal plants, including the time under private operation, is just about one half the age of the corresponding group of com- panies, yet only 8 of these municipalities out of the total of 21 were supplied by private plants or distributing sys- tems previous to the installation of their own plants. The municipal generating plants, on the contrary, seem to have selected the more favorable territory. Summary The conditions which have been indicated by the fore- going analyses may be summarized as follows: 148 MUNICIPAL ELECTRIC LIGHTING 1. The increase in station equipment of all kinds has been more rapid for the private than for the public plants. 2. Though relative to the amount of business done, there does not seem to be much difference in the total capacity of the various units, yet this seeming equality, on the part of the municipal plants, is accounted for by only one or two large plants. In boiler capacity, 53 per cent of the public plants have remained stationary or gone back. 3. The average size of units is, in every instance, much larger in the private plants. 4. As the average age of station units is 20 per cent greater for the public than for the private plants, it seems reasonable to conclude that the former have not been kept in as good repair as the latter. 5. The capacity relations which the various station units, boilers, engines, and dynamos bear to each other is almost identical in the two groups. 6. In proportion to the amount of current generated, the fuel economy seems to be about the same in the two groups, with an average advantage for the companies. 7. The municipal plants have rapidly increased the pro- portion of current bought since 1910 from 1.3 to 12 per cent, while the companies have shown only a slight increase from 4.1 to 6.5 per cent. 8. The had factors, so far as ascertained, are slightly better in the case of the private plants; their maximum demand factor is lower; and the diversity factors cannot be found, though the companies appear to have an advantage in this regard. 9. Relative to the actual generating capacity of stations, the amount of business done seems to be nearly the same for the two groups. 10. The public plants have a much lower efficiency of distribution as shown by an amount of current unac- counted for relatively more than 30 per cent higher than that of the companies. IN MASSACHUSETTS 149 11. While the municipal plants have shown a greater percentage increase in output, since 1910, their rate of increase in the quantity of current actually delivered has been about the same as that of the companies. 12. At present the relative amount of current supplied for all purposes is practically the same in the two groups, except in so far as the sales to other companies are con-- cerned, in which business the private plants are in the lead. 13. As to the different classes of business, the municipal plants have increased their sales for power, during the past five years, much more rapidly than have the companies, while the latter have increased their lighting business more rapidly than the former. 14. The companies are somewhat in the lead both in the quantity of current generated and in the amount actually supplied per kilowatt capacity of dynamos. 15. The average service per capita seems to be about the same in both cases; but the per capita consumption of current for street lighting is 50 per cent higher in the case of the municipal plants. 16. There has been a more rapid growth in the total number of customers of the companies (103 per cent as opposed to 90.2 per cent). In the separate classes of busi- ness, however, the number of power customers has in- creased more rapidly in the municipal plants, though the companies are still absolutely in the lead, averaging 91 cus- tomers per plant as opposed to 62 in the other group. The number of light customers, on the other hand, has increased more rapidly in the private plants, evidently due to their more liberal policy of extension. 17. The number of customers per 100 population has increased more rapidly for the companies, though on account of the wide extent of territory served, the ratio is still about the same as that of the municipal plants. 18. The average amount of current sold per customer is slightly greater in the case of the companies. 150 MUNICIPAL ELECTBIC LIGHTING 19. Though the connected load data are highly unsatis- factory so far as the public plants are concerned, the rate of increase in the total reported load is about equal in the two groups and corresponds closely to the increase in cur- rent sold. 20. The relative distribution of the connected load among the various kinds of business is about the same in each group, but there has been an absolute percentage decrease of the commercial lighting load for the municipal plants. 21. Both the total number of lamps per plant and the number per customer have increased much more rapidly in the companies, while there seems to have been an actual decrease in the number per customer in the municipal plants. This, however, may not be a true bill, since the municipal plants would naturally be inclined to estimate their load more carelessly than the companies. 22. There has been a more rapid increase of the con- nected power load of the public plants, and the average capacity of their motors, as reported, is somewhat higher than in the other group. This may be due to incorrect returns, and also to the different character of the indus- tries carried on in the separate localities. 23. While the connected load per capita is higher for the public plants, the connected load per customer, though it has decreased slightly, is still somewhat greater for the companies. 24. There appears to have been a decrease in quantity of current consumed per kilowatt connected load in the companies and an increase in the municipal plants — probably due to the more conservative policy followed by the latter in the matter of extensions. 25. The rate of increase in the total number of street lights, as well as the decrease in the number of inhabitants served by one light, has been much greater for the com- panies, though the per capita figures are still absolutely IN MASSACHUSETTS 151 greater for the public pknts. Both groups snow a marked increase" in lamp efficiency, arid the municipal plants appear to have a longer number of hours' use of lamps per night. 26. In length of lines, the rate of increase has been much more rapid for the companies; in length of streets with overhead lines, about twice as great; while in the number of poles owned, their growth has been almost three-fold that of the other group. 27. There has been an increase in the length of lines per customer in the companies and an actual decrease in the municipal plants. 28. The municipal plants to a large extent use privately owned poles instead of installing their own. 29. There has been a rapid growth of underground con- struction in the companies and apparently none whatever in the municipal plants except in the case of Holyoke. 30. Though it is practically impossible to make a sepa- ration between rural and urban territory, population, or roads, so far as the totals are concerned the districts served by the companies exceed those served by lie municipal plants in all of these respects. . Si. The rate of growth of population seems to have been about the same for the two groups of generating plants, while for the purchasing plants there has been a more rapid increase in the case of the municipalities. 32. The density of population is much greater in the districts served by the municipal generating plants than in the districts served by the corresponding group of com- panies. On the other hand, the density of the population of the area served by the municipal purchasing plants is markedly less than that of the purchasing companies. 33. The two outstanding municipal plants of Holyoke and Norwood have certainly done well; but their good record is probably accounted for by local conditions rather than by good management solely. Though beyond a doubt they have been excellently managed, they have a more 152 MUNICIPAL ELECTRIC LIGHTING favorable territory, due to no efforts of their own, and better business than any of the other plants studied. Tentative Conclusions on the Physical Results of Public Ownership Finally, though in some instances there seems to be little to choose between the two groups, and though at times the tendencies are not very marked, practically all of the phy- sical data of the generating plants appear to indicate that in spite of their less desirable territory the companies have been more active in the development of that territory, and have made better provision for future needs. The municipal plants, on the other hand, for the most part seem to be operating in more favorable localities and to be letting their business grow up around them. For the purchasing plants, however, our analyses of the physical data lead to almost the opposite conclusions. Viewed from almost every angle, this group of public plants seem to be making more out of their poorer terri- tory than do the corresponding companies with a more favorable district to serve. They appear also to have secured as customers a larger percentage of the inhabitants in the less desirable portions of their districts, and to have a much more efficient distributing system per customer. CHAPTER V FINANCIAL STATISTICS OF GENERATING PLANTS: THE CAPITAL ACCOUNT l Though it would be highly interesting to the account to make a careful study of the financial history of each group of plants from the very beginning, to do so would necessitate the expenditure of an enormous amount of time for which the recompense would be comparatively small. Accordingly, having made some analysis of the laws of the State in so far as they relate to the financial management of the electric lighting business, having reviewed the work and policies of the Board of Gas and Electric Light Commissioners, and having surveyed in a general way the development of the industry in Massachusetts under both public and private ownership, we will in this chapter usu- ally refrain from delving into the ancient history of our plants. The study will, for the most part, be confined to the years 1910 and 1915, with a more detailed analysis for the later date. As in the preceding chapter, the generating plants will be first and more fully considered. Since a reasonably thorough examination of the physical charac- teristics, equipment, and development of the two groups has already been made, the writer hopes, on the one hand, that his interpretations will be less likely to go astray, and, on the other, that his readers will have less difficulty m following his line of argument. Before taking up the subject of operating expenses, operating income, and fixed charges, we must logically devote some attention to the capital account. At the very outset of this financial investigation, however, we are con- fronted with difficulties which are well-nigh insurmount- 1 Appendix, pp. 424-431. 154 MUNICIPAL ELECTRIC LIGHTING able, occasioned by the fact that the accounting procedure of public and private plants is by no means uniform. This is in part the result of the different methods which the two groups employ in financing themselves. A further complication arises from the provision of the law which requires municipal plants to write off 3 per cent for depreci- ation each year, 1 while imposing no such restriction on the companies, which accordingly handle the matter in diverse ways. And, finally, the Board itself has probably not given as much attention as might be desirable to the problem of Securing from the two classes of plants data that would be conveniently comparable. However this may be, we are at first glance somewhat at a loss to know exactly what is the "investment" in either a municipal or a private electric lighting plant. In each case several possibilities suggest themselves, even though we waive all consideration of the different bases of valuation, which can really throw little light on our problem. So far as the assessed valuation of the companies is concerned, for dbvioUs reasons it usually bears no aecxi- f ate relation to the investment of stockholders and cred- itors in the plant. This Valuation is upon the average more than 25 per cent below the book value. Hence, since we must depend upon the returns for our information, it be- comes a question either of taking, as the true investment, the total cost of plant as shown by the books, — the cori- struction accounts, which have sometimes been depreciated and sometimes not, 2 — or, in lieu of this, of assuming that the total liability of the company for stdck, bonds, notes, 1 Mass., 1914, ch. 742, sect. 114. s The "plant accounts" ordinarily include — cost of real estate (lands and buildings are not always separated), steam plant, electric plant, water power plant, lines, transformers, meters, street lamps and fixtures. No "working capital" is included, and no allowance is made for mate- rials, tools, or other equipment of a transitory sort. Such allowance is unnecessary for our purposes, though it must always be borne in mind when valuation problems are' under discussion. IN MASSACHUSETTS 155 and premiums on stock if such there be, will give us the true index of capital investment. Since the law requires that all stock shall be fully paid up, and shall be sold for not less than par, and that for every dollar borrowed a dollar shall -be put into the business by the stockholders, 1 the latter would be a reasonably safe criterion, were it not for two considerations. In the first place, large surpluses are frequently built up out of earnings, and in the second place, while most of the numerous outstanding notes repre- sent bona fide investment, there are cases in Which they may have been issued to cover losses due to bad manage*- ment, bad luck, or even to exploitation by other interests in control. Did the Board have control over the issue of coupon notes as well as over that of Stock and bondsj this difficulty should be largely removed. A further complication arises, however, resulting from the fact that several of the plants are composite, and it is not possible from a study of the accounts to determine exactly hoW much of the liability was occasioned by the gas business and how much by the electrical business. 2 Upon an examination of all of the data available, it is reassuring to find that for the 12 purely electric companies, the total book value is just 4 per cent higher than the total amount of capital, loans, and premiums. Hence, whichever figures we use, it will make little difference. Even though in individual cases there is frequently a considerable dis- crepancy, the averages Will be sufficiently accurate. Since an excess of construction accounts over capital and loan liabilities is s when existent, doubtless built up out of reinvested earnings, the Writer has always taken the former as the true investment, except when the latter exceed this account, in which case the capital and loans 1 Cf. ch. n, p. 49. 2 In the case of the five municipal plants which are more or less linked up with the public water supply system, Concord, Ipswich, Merrimac, North Attleborough, and Hudson, the accounts are kept sufficiently separate to occasion no great difficulty. 156 MUNICIPAL ELECTRIC LIGHTING have been taken; for, even granting that the sum of these may not always represent "live" plant, it probably does indicate that so much money has been invested, whether wisely or unwisely, — a point which will be later referred to in connection with our study of depreciation. In accord- ance with this method of reckoning, then, there can be no doubt that the capital account of the companies is made sufficiently high. For the public plants the problem is less simple. Two different plant accounts are kept, the total (gross) plant cost — since 1912 not including payments of any kind from the depreciation fund — and the depreciated plant cost. The latter accounts average more than 25 per cent lower than the former, though in several instances the two are identical. In the depreciated plant account, as published annually by the Board, additions from construction fund and other sources as well as renewals from the depreciation fund are at present debited. The account is then credited with the statutory amount of depreciation, apportioned among the various items more or less arbitrarily according to the judgment of the manager, and with other items which are written off. Theoretically this account should represent the actual financial condition of the plant, and it might be expected to correspond with the plant account kept by the companies. Practically, however, such is not the case. In the first place, the practice of writing off 3 per cent depreciation annually (before 1906 the rate was 5 per cent), and the customary accumulation of a depreciation fund which is carried as an asset, makes the municipal plant account disproportionately low as compared with the accounts carried by the companies, some of which, to be sure, have very regularly written off their depreciation, but many of which provide for it in their operating accounts. Furthermore, the latter rarely carry a depreciation fund account. Consequently, when their plant account is cred- IS MASSACHUSETTS 157 ited with depreciation, a corresponding increase will ordi- narily appear in the entry for "additions made during the year," as a result of renewals, new construction, and so forth. But, secondly, the "dead" assets of the municipal plants are usually written off promptly, so as to show a low plant account, even though the original loan may be still out- standing. The companies, on the other hand, for suffi- ciently obvious reasons, frequently let their accounts stand as they originally were, even though a portion of the plant may be defunct. But, whenever they apply to the Board for the approval of a new issue of securities, this aspect of their finances is thoroughly investigated, and if a discrep- ancy is found to exist between the book value and the liability for capital and loans, the company is required to put aside from earnings until the deficit is made good. 1 The gross plant account of the municipal plants, which is never published by the Board, more nearly corresponds to the account carried by the companies, for, though it is undepreciated, no additions from the depreciation fund, even after a transfer has been made to the construction fund, are included. The dead assets are not as a rule written off, since the account is intended to show all the money that has actually been invested in the plant from the beginning. These accounts, however, are not similarly kept by the various municipalities. Some include additions from earnings — which is perfectly proper, though a most insignificant item — while others do not. Some persist in depreciating the account and debiting the renewals from depreciation, so that it coincides with the published plant account. And, finally, one or two, while not depreciating this account, have continued to include payments from the depreciation fund not merely for new construction but for renewals, as they did prior to 1912. For these reasons this account, in individual cases, is not wholly satisfactory, 1 Mass., 1914, ch. 742, sect. 40. 158 MUNICIPAL ELECTRIC LIGHTING particularly for the earlier period. To make the 1910 accounts absolutely comparable with those for 1915, would in some instances be a task which would require the serv- ices of a staff of expert accountants. In view of these difficulties, the writer has chosen, as most nearly representing the true investment in the pub- lic plants, the so-called total investment as computed from year to year by the Board. These figures include all amounts which have been invested by the municipality in each plant since its installation, whether raised by loans: or by direct taxation, and at a given time would be indi- cated by the bonds and notes outstanding, the appropria- tions for bond and note payments, and the appropriations for construction. It is frequently necessary to go back over the returns for a number of years in order to find the exact basis of computation, for occasionally one note has, been taken up by another, and sometimes a payment has been made from earnings, thus leaving no recorded liability in the published accounts of the plant. The aggregate investment as thus computed coincides so clpsely with the gross plant cost as, above discussed, bejng only 1.2 per cent below it, that, except for the sake of convenience in making comparisons with 1910, it would really matter little which figures we take for 1915. The chief reason for the slight difference between the two totals is due to the fact that in one or two cases a small' amount has been added to the plant out of earnings. In Holyoke, of course,, there has been a considerable addition from this source, and so the gross cost has been used. It should also be noted that in the case of all the composite plants the total cost has been used, except in the one in- stance of Wakefield, where this seemed not to represent the true investment. In these cases any attempt at a divi- sion of liabilities between the two branches of the business would be purely arbitrary, based on the relations which the electric assets bear to the gas assets. IN MASSACHUSETTS 159 The writer believes thai;, with these explanations and qualifications, the investment data herein presented are reasonably comparable, though far from satisfactory. They do not by any means necessarily represent the actual value of the property in either case< — indeed, they are frequently far from it. Consequently, conclusions derived from the use of these figures will be relative rather than absolute. Whenever feasible, exceptional cases will be lost sight of in the group averages. Otherwise attention will be given to each anomaly as it presents itself. Upon the whole, it is probably safe to assume that the conditions indicated by this particular study are not far from the truth. Upon comparison T>f the total investment in each group, as arrived at in the manner outlined, a number of highly interesting conditions become apparent. The total invest- ment per company was, in 1910, $187,067, or 36.5 per cent more than that of the average public plant, which stood at $137,461. During the five-year period,- however, the rate of increase of the former was 66 per cent, and for the latter only 25.1 per cent, or 28.6 including Holyoke, Hence in 19J5 the average investment per plant was $171,99-0 for the municipal group and $310,840, or 81.2 per cen^ higher for the private plants. Probably the casual student would be tempted to say, —r "There we have it. Public financijug is more economical than private financing!" But we must not be led into any hasty conclusions. These apparent differences in the investment accounts must; be interpreted in the light of the facts which have been reviewed in the preceding chapter, and of other facts which are presently to, follow. The accompanying table will help to recall to the reader the general features of the physical development of the two groups of plants. Now, it appears that the private plant investment in 1910, in proportion to the amount of business done, was ft o •& *»i| ^i o^ooot- o qo -* o © an i-«eooH KOOOSIO in « (O OJ CO CO cgococ-t-o «S 00 f-H I 1 isfl Miaesoo CM o 05 1-1 eo «* * SOS ■* » i-t ^ CA 00 00 00 US o'ooJi-i' 1> rH US US GO i-H rH £ a *0 rH ffj 50 CD ^^ ■a i on S a*' I -1 ooocMi-ioxi © ii gousgo' OS GO US US CO ■-( ■ ■ 8. «v. » us co , ©s i-< oo os a* os g jj"* 00 n l« us t-ooocM go 3 n , OS ■ ■ ,»-i 00 00 1 1 [-■jnooocn CO t- OS O US Tj" OMfflOrm co oc I ■« I « I g. g p JO CO * 00 S CO 3 r* CO US B "* 00 © CO CO OS CO t-oo ■ ^1 i-c OS. CO rH CO g &s"s s" s CO fc- CO !■* PH lO *** . . co oo os • . I to us us © . ."* ©>o .1 in lie " §.2 EhwQ 1-iil I'g _"-^00 bl 8 lsd4JJl ,s ' Hi? 1 'I 1 ! a a ■a 8 ■§.§ IN MASSACHUSETTS 161 by no means excessive when compared with the investment in the municipal plants. On the contrary, when we con- sider that the quantity of current sold by the former was 65.3 per cent higher than that delivered by the latter, while the kilowatt capacity of generators was only 35.3 per cent higher, it is probable that, relatively, the com- panies were somewhat under-equipped. Furthermore, from the fact that their length of streets with overhead lines was only 12 per cent greater than that of the pub- lic plants, it is evident that their territory had not been comparatively as thoroughly developed. For these reasons the spread between the average investment in the two groups was not great, and was almost identical with the difference in kilowatt capacity of stations. One seems to have been just as conservatively financed as the other, with the doubt probably in favor of the private plants. But, for the same reasons, we can expect to find a more rapid increase in investment in the companies as service is more widely extended throughout the districts served and as future needs are anticipated. Assuming, then, that we start in 1910 with a fairly accurate basis of comparison, we must discover why the increase in investment has seemingly been so much more rapid for the companies. Accordingly, first of all, we note that, while there is no underground construction in the 17 municipal plants (Holyoke has about $90,000 in under- ground cables and conduits), and while there was almost none of it in the companies in 1910, the increase has been extraordinarily rapid, though confined almost solely to the two companies of Gloucester and Beverly. This one item alone accounts for an increased investment of more than $350,000, which is not met with in the public plants, and if this amount be deducted from the total investment of the former, the rate of increase becomes only 55 per cent instead of 66 per cent. Again, the increase in number of poles owned has been 162 MUNICIPAL ELECTRIC LIGHTING so small in the public plants, due to the fact, as above ex- plained, that they have been impressing foreign poles into their service, that this one item further seriously distorts the comparative figures of investment. Had the increase in the companies been at a like rate, £8.1 instead of 76.2 per cent, they would in 1915 have had at least 12,000 fewer poles than they actually report at that date. Allowing about $15 per pole, by no means an excessive price as nearly as can be ascertained, to cover the cost of pole, set- ting, cross-arms, braces, pins and insulators, and inciden- tals, we would be able to account for an additional increase of from $175,000 to $200,000 in the private plant invest- ment. If this amount be deducted from the total, as well as the $350,000 for underground construction, the rate of increase in the investment of the companies becomes less than 49 per cent, while the excess of their investment over that of the municipal plants is reduced to only 62 per cent instead of 81.2 per cent. In view of the fact that the amount of current disposed of by the former is 63 per cent greater than in the latter, and also by reason of the fact that they are extending their distribution systems much more widely at the present time, this difference in investment is by no means disproportionate. Other reasons for the difference will be given presently. But this is not the whole story. While there has been a considerably more rapid growth in the generating ca- pacity of the companies (52 as opposed to 43 per cent in the other group), the increase in the average size of these generators has been almost twice as great (100 per cent as contrasted with 54.6 per cent). This naturally means a much more rapid increase in station investment, for in most instances the change from smaller to larger units has been in the nature of an addition or improvement rather than a renewal, and so may lawfully be considered a capital charge. Furthermore, the length of lines has increased almost IN MASSACHUSETTS 168 SO per cent more rapidly in the companies, and the length of roads with overhead lines nearly 75 per cent more rapidly. 1 Since the number of miles of line per mile of overhead is about the same in the two groups, 4.5 miles, the increase not only indicates a relatively greater invest- ment for wire and other materials, but it also probably signifies that the labor costs of extension have been more than proportionately higher as a result of the distribution of service over so much wider an area, where frequently, on account of the rocky character of the soil, construc- tion is a very difficult and expensive matter. 2 The more rapid growth in number of customers in the private plants brings with it a correspondingly greater investment in customers' meters. The much more rapid increase in the number of street lamps also occasions a considerably higher ratio of increase in investment. Fin- ally, in a number of cases which cannot well be ascertained, the customers of public plants have borne the cost of extensions on their own property -, — a practice which aids in keeping the line investment comparatively low. The writer believes that the more rapid rate of increase in investment in the companies is fully accounted for by the foregoing considerations, not to mention a number of others. But we should not overlook the fact that in some cases part of the increase might be due to bad management. This may be accounted for by lack of foresight and judg- ment on the part of those who manage the business, or it may be the result of actual exploitation by associations or individuals who control a majority of the stock. This exploitation may be of two sorts, first, the distribution of 1 It is true that companies might be more inclined to keep "dead" wire on their books than are the public plants, for in case of rate disputes or new security issues, there might be some advantage in making the physical property look large. There is, however, no reason to suppose that this tendency has been more marked since 1910 than before that date. 2 Cf. ch. xi, p. 305. The local survey has shown this to be a fact. 164 MUNICIPAL ELECTRIC LIGHTING the highest possible dividends, and the consequent pro- vision for depreciation out of new capital raised by the issue of notes — the payment of dividends out of capi- tal. And, secondly, material may have been sold to the companies by controlling associations at an abnormally high price, which would yield the favored stockholders a handsome return, even though no dividends at all should be paid on their stock. The additions to plant thus made would unduly inflate the capital account. At first glance, the internal evidence seems to suggest that some of these things might have happened in the case of Plymouth and Weymouth in both of which the invest- ment appears to have increased more rapidly than cir- cumstances would warrant, though in the latter the in- vestment per kilowatt capacity is low. In both of these plants, also, there were, in 1915, an abnormal number of notes outstanding, $162,499 and $217*000 respectively, 1 or in each case 40 per cent of the capital and loan liabilities, while in 1910 the amounts were only $54,000 and $36,000 — still rather large. However, so far as the writer has been able to ascertain, his theoretical deductions regarding these plants are scarcely justified at present, though during the year no depreciation was charged off. Amesbury, also, appears to have been rather badly managed earlier, and returns a higher investment than we would have expected in spite of the low investment per kilowatt capacity. On the other hand, probably most, if not all, of the rapid in- crease of investment in these plants can be accounted for by the enormous growth of their lines and streets with overhead lines, averaging 150 per cent and 120 per cent respectively. Accordingly, if these three companies, to- gether with Gloucester and Beverly, 2 all of which are abnormal, be eliminated, even though their investment . * The amounts were later greatly reduced. ! Cf. p. 133, supra._ Their underground construction has been very large since 1910. IN MASSACHUSETTS 165 has not increased more rapidly than their business, the rate of increase of investment in the private plants be- comes 41.2 per cent, in place of 66 per cent. And if, in addition, we leave out Buzzard's Bay, which was at its inception in 1910, the rate drops to 31.3 per cent, or little higher than the rate of increase in the municipal plants. Hence, from every point of view, the conclusion thus far reached seems to be that on the average the group of private plants suffers nothing in comparison with the public plants so far as their investment is concerned, and, if a few of the exceptional cases be eliminated, the remain- ing companies make a somewhat better showing than the municipalities. Upon analysis it appears that the total investment per kilowatt capacity of dynamos in the two groups, while practically the same in 1910, was considerably higher (30 per cent) for the companies in 1915. 1 For the munici- pal plants the decrease had been 15 per cent, from $207 to $176, while the other group showed an increase of 9.6 per cent, from $208 to $228. Most of the increase in the latter, however, was accounted fpr, as has been explained, by the construction of conduits and the installation of new poles instead of the utilization of foreign poles as in the case of the public plants. If, in order to make our data comparable, we deduct the cost of these items, about $550,000, the investment per kilowatt becomes $24 less,, or $204, an actual decrease of 2 per cent for the period. Half of the remaining difference of $28, is easily accounted for by the more rapid rate of extension of lines in the com- panies. The rest is probably covered by the other items above mentioned. So again, after reasonable allowances have been made for the obvious differences in physical development, the total investment per kilowatt capacity 1 At both dates Great Barrington and Winchendon are omitted from the list of companies, because their large investment in water power facilities makes their capital account abnormally high. 166 MUNICIPAL ELECTRIC LIGHTING will have decreased at approximately the same rate in both groups. The accompanying chart (II) shows the investment relations existing between the individual plants. It is for the most part easy to account for the con- spicuous peaks in the graph for the companies. The first two are due to the comparatively large investment in water-power development, with a correspondingly low generating capacity, found in Winchendon and Great Barrington. The next high point shows the condition of Plymouth, which was at the time doing a large business with a disproportionately small generating equipment, 1 and in which there has actually been a decrease in the kilowatt capacity of dynamos since 1910, in spite of a 150 per cent increase in the number of customers and a ZOO -per cent increase in the length of lines. The last peak represents Beverly, in which, as already stated, the cost of underground construction figures heavily. Charts III and IV throw further light on the situation. The question may at this point be asked, why, when the more obvious differences between the two groups have been eliminated, the investment per kilowatt capacity is not lower in the private plants, which are somewhat larger, than in the public plants. This fact is not in itself significant, for reasons that are about to be given. But several obvious replies might be made to the query, (a) The difference in size is not great enough to have much effect upon the per capacity investment, (i) There might be a higher proportion of "dead" assets in the plant account of the companies, in spite of the fact that the average age of their station units (7.6 years) is markedly less than the age of the municipal plant units (9.1). (c) The companies may, in some instances, not have bought their equipment so economically as have the other group — Massachusetts municipalities are noted among the 1 Plymouth has since found it necessary to purchase her current most of the time. cow oo.ye oooe OOfcT oogr ooLt oon oosz OOHt ootx oozr oon ooox oooi 0091 00 1 1 0091 00$l 00*1 OOtl 00ZI 0011 0001 oob 00? OOL 001 oos oon o 5 be -*» — A fi >~ .¥ e. H .t; Cg «n y 3 a .5 1 5 O / ' / 1 1 / I / O -E- _ 41 / / / ( \ ~J / o o J!! "3 / c >- a L_ f \ \ ^ --" u a. J- 01 - ( << s =* * 4 - K- / V v / \ / > 1 J J h \ s "U J> \ 1 >r ■3 7 _!"£ 1 = SC 1 ^y 1— t- r •"■ >• c -" .2 »*- a - 1« ° — f 1 - ^^ i^ - J _ » _ oLZ 1 . Ji « <3 o 2: 1 t- -^ ccez 1 -J -*^i - 001% J- - ^ co/ - ? 1— -:" - ocm 1— • -/ "i - 00A/ 1 ^ n «s P / * / 1 ^ - OQf/ -^-_- -/—-,$ -00*/ \/ 2- -4~ — «—- f^ '00X1 _^~--~ ^- K 00 fj — .- .1 .. ..-I 1 . .'.,.'. .-'-.. 1 . '. 1 : . 1 1 1 1 1 1 1 1 1 1 1 111 1 c i j * ^>n)« ^1 1 « fi Pi (N -* -< ^- -* IN MASSACHUSETTS 169 The investment in distributing system in 1910 was 47.5 per cent of the total investment in the municipal plants and only 41.5 per cent in the case of the companies. But five years later these relations had so reversed themselves that the ratio was only 43.6 per cent in the former and 51.5 per cent in the latter. This is truly a remarkable sit- uation, for, while the increase in investment in distribu- tion system was only 14.6 per cent in the public plants, that of the private plants was 105.4 per cent — a seven- fold more rapid increase! If the increase due to the con- struction of conduits be deducted, the rate would still be nearly 80 per cent. Furthermore, it must be observed in this connection that the station investment of the municipal plants, as given for 1910, is somewhat top high, due to the above mentioned practice, in many cases, of charging to the un- depreciated capital account renewals from the deprecia- tion fund. This largely explains the fact that 5 of the plants, including Holyoke, actually report a lower station cost in 1915 than in 1910, though some of them have simply written off their worn-out equipment. All of the public plants revised their accounts for the correction of this error in 1912. Hence, if the proper allowances were made, we would accordingly find the rate of increase in station investment considerably higher than it now appears, and the proportionate decrease in distribution investment even more marked than it is here shown to be. Now, the proportion of current purchased by the muni- cipal plants increased from practically nothing, 1.3 per cent of the total output in 1910 to 12 per cent in 1915. For the companies, on the other hand, the proportion increased from 4.1 per cent at the earlier date to only 6.5 per cent at the end of five years — a change which is practically negligible. In view of these facts, it is sufficiently surpris- ing to find the rate of increase in station investment of the former to be so nearly equal to that of the latter. At any 170 MUNICIPAL ELECTRIC LIGHTING rate, we would naturally expect a correspondingly more rapid growth in their line investment, since they obviously are, or should be, distributing more current than formerly in proportion to their generating capacity. But, as we know that several of the municipal plants are quitting the business of generating current, to find their station investment (Holyoke excluded) increasing nearly two and one half times as rapidly as their distribution investment, with nothing to show that this is caused by any special effort to prepare for future business, "needs must make us pause." To be sure, some allowance must be made for the fact that the municipal plants had a somewhat better developed territory than the companies in 1910. Hence we would not expect their rate of development to be equally rapid. Yet such a difference as we do find is almost unbelievable. Nor has the increase of the companies' investment been a reckless increase, if we may take the standard set by the municipalities as our criterion. In fact the former have relatively a good deal more to show for their increased investment than have the latter. Under these circum- stances, the results of municipal ownership herein discov- ered are, to say the least, rather surprising. The public plants have apparently played reasonably safe; but, unless all signs fail, they have done so at a considerable sacrifice of that service which they might legitimately be expected to render. And this is probably the most decisive consid- eration in the argument for or against public ownership. l The distribution investment per mile of line was, in 1910, $600 for the municipalities and $574, or 4 per cent less, for the companies. In 1915 the figures had changed to $430 for the former, a decrease of 28.3 per cent, and to $624 for the latter, an increase of 9 per cent. But this fig- ure includes the conduits, which we must eliminate in order to secure comparable data, whereupon the com- 1 Cf. ch. xi, pp. 309, 840-348. w 1 oo«-g ooLx ooTC OO+it 001Z oorz oon; oooz oo£/ 008 1 00L1 noil 00S' ooiil 00 e/ 00T/ 001/ 000/ 5. n 3 2" s. >-» .a 4 -£ -j; ^ >- 4 4 ££ ££ a > - .°- 5 •■£ o ~ jd s«3 / / / J / / 1 -6- -i - ^ -p J -4- - o >~ - u '0 ( \ \ > \ y S / --' ^ 1 \ — * j.° / / / r — ' • / c \ oog 00L oos> oott oop oox 001 ,\ / ««. I S / r r~i 1 t 1 1 t 1 1 'l 1 ' 1 I 1 "l 1 1 1 1 1 c t 3 \ n « < < 3 !- » < V u > ^ ,: i% IN MASSACHUSETTS 171 pany distribution investment per mile of line drops to only $420, a decrease of 27 per cent, and absolutely about 2.3 per cent lower than that of the public plants. But, in order to make the comparison really valid, we must go still farther and eliminate those new poles which the com- panies have installed in addition to the number which, with their correspondingly more extensive business, they would have installed, had they pursued the policy adopted by the municipal plants. When a reasonable deduction is made on this account, the distribution investment per mile of line becomes for the companies $350 to $375, or from 15 to 20 per cent lower than the investment of the public plants! Probably the reader will now be sufficiently satisfied that, so far as we can secure the evidence, the greater increase in investment of the private plants not merely has been fully accounted for, but they even seem to have gotten a good deal more for their money than have the municipalities. Aside from any theorizing, these appear to be the facts. As it has frequently been alleged that the municipal plants taken over from private ownership have been at a decided disadvantage inasmuch as they paid too much for the property which they acquired, a passing comment should be made upon the actual state of affairs which our analysis reveals. Accordingly, it appears that for the 6 plants, — Chicopee, Hudson, Hull, Middleborough, Taun- ton, and Westfield (Wakefield is omitted because it had definitely ceased to generate current early in the year 1914-15), — the total investment per kilowatt capacity of generators is only $154, or 12.5 per cent lower than the average for the group, $176! And this is in spite of the fact that two of the plants included, Chicopee and Hull, were buying a large proportion of their current, and hence have had no reason for increasing their generating ca- pacity. Furthermore, Taunton and Westfield have the lowest per capacity investment of any in the group of 172 MUNICIPAL ELECTRIC LIGHTING public plants, $111 and $113 respectively. The station investment per kilowatt capacity is $108 as opposed to $101 for the group — a condition easily explained in view of the fact that so much current is being purchased. The line investment per mile, on the other hand, is $500, or about one sixth higher than the average for the group; but this investment was acquired long after the plants had become municipalized! Holyoke, as might be expected, makes a better showing in all of these regards than do most of the other plants in either group^ the total investment per kilowatt capacity being only $112. 1 Obviously there is absolutely no ground for the above mentioned charge. Some additional analyses must be made of the total plant investment. It appears that the total investment per kilowatt hour supplied is 20 cents in the municipal plants and 22 cents in the other group. While this has remained practically stationary in the latter, in the case of the former there has been a decrease of 23 per cent, from 26 cents in 1910. This would seem to be an excellent show- ing for the public plants were it not that we have discov- ered how the decrease has been effected. Again, the in- vestment per kilowatt connected load is $126 in the com- panies and only $100 in the other group. And, finally, the investment per customer has decreased in both cases, but about twice as rapidly for the public plants, so that the figures now stand at $162 for the latter and $226, or nearly 40 per cent more, for the former. In view of the relations here set forth, which scarcely need further explanation after what has already been said about the physical equipment and the investment of the two groups, we might logically expect the rates charged by the companies for the same kind of service to be higher than the rates of the municipal plants, for they would need to secure a return on a relatively larger investment 1 The private plant of Attleborough, however, greatly betters this record, with a total investment per kilowatt capacity of only $90. IN MASSACHUSETTS 173 per customer. Had the increased investment been reck- lessly incurred, we could bring a serious charge against the companies. But, since the contrary is evidently the case, inasmuch as the additions to plant account have been for the purpose of taking better care of the trade, it appears that the private plants are to be praised rather than condemned. The per capita investment, due to numerous reasons already reviewed, while lower for the companies in 1910, has increased much more rapidly than that of the public plants (44.9 per cent as opposed to 9.2 per cent), until the amount is now $18.48, or 30 per cent higher than the per capita investment of the latter ($14.20). In view of our findings on the subject, this appears to indicate a rela- tively greater expenditure of 30 per cent for the purpose of giving the people better service. Finally, it is highly significant to note that, while the public plants have reduced their investment per dollar of operating income by 17.5 per cent, from $5.27 to $4.35, the companies, when the street lighting income has been deducted in order to make the data comparable, have actually increased their investment per dollar of operating income from $4.20 to $4.60, or 9.5 per cent. This fact fur- nishes us tentative proof that the latter are not keeping their rates higher because of their increased investment, but rather that they are investing far ahead of their pres- ent returns. The public plants, on the contrary, in the light of the facts which we have examined, (a) must be charging more for service than the comparative condi- tions would warrant, or (6) they may be restricting their investment and picking their business, or (c) they may simply be unusually fortunate in the territory which they happen to serve. The second and third of these assump- tions have already been found to be true; the first possi- bility will be presently examined. Before leaving the discussion of the investment statis- 174 MUNICIPAL ELECTRIC LIGHTING tics, attention must be directed to one other important feature, namely, the comparative amount of new con- struction found in the two groups during the year 1914- 15. As the companies keep their books, the gross addi- tions to plant account, including renewals from deprecia- tion, was $406,795, or 8 per cent of the book value. The net addition during the year, after depreciation and all other credits have been deducted, was $267,345, or 5.3 per cent of the book value. This was 36.5 per cent below the average annual increase in investment during the five- year period, $421,827 — a condition which can probably be accounted for by the abnormally high cost of material during the latter portion of the year. The municipal plants report a gross increase in plant account, including new construction from all sources as well as renewals from depreciation, of $150,640, or 6.8 per cent of the depreciated value. But the net addition to plant account, after depreciation and other credits have been deducted, is only $34,994, or 1.6 per cent. This is the figure comparable with the 5.3 per cent net increase in the case of the companies, and is relatively only 30 per cent as high as the latter, and absolutely only 13.1 per cent as great. To be sure, if the rate of depreciation writ- ten off had been as low in the municipalities as in the com- panies, this net increase would have been probably from $50,000 to $60,000 higher, or perhaps about 4 per cent of the depreciated plant account. But this would not be an accurate comparison, for under these circumstances we should have to compare the addition with a theoretical investment in plant which had been depreciated at the same rate as the company plants. The amount actually charged to construction accounts during the year, exclusive of any payments from depre- ciation fund, was in the municipal plants $80,098. This is the addition which appears in the "total plant cost," and should probably be further increased by about IN MASSACHUSETTS 175 $12,000 which was used for construction out of earnings (not including Holyoke, of course). Thus the additions during the year would be about $92,000, or 3.2 per cent of the total investment. But it must be remembered that no depreciation has in this case been written off. The figure most nearly comparable in the case of the companies would be the gross additions to plant account ($406;795) less the total depreciation written off ($49,232), J or $357,563, which is 7.3 per cent of the total investment at the beginning of the year. Reckoned in this manner, the addition to municipal plants during the year would be absolutely only 26 per cent as great as the additions to private plants, and relatively only 44 per cent as great.. Finally, the average annual increase in municipal plant investment during the past five years has been $117,398, while the increase in total plant cost for 1914-15, as car- ried on the books ($80,098), was 32 per cent less than this amount. All of these data simply confirm the above demonstrated fact that the public plants are following a very conservative policy in comparison with the com- panies. Since the additions during the year were relatively less than the five year average annual additions by an almost equal ratio in both groups of plants, it is probably safe to assume that the abnormal market conditions were responsible for the decrease. Brief mention should be made of the balance sheets of the two groups. The 12 municipal generating plants in operation in 1897 (the first year when the data are clearly available) showed a net deficit of $82,558. In 1900 the deficit had become $172,833 for 14 plants, and in five years more it had grown to $338,955 for the 18 generating 1 The amount of depreciation vnitten off in a, given year by a group of companies does not necessarily coincide with the actual charges for depreciation during the same period. This is due to the fact that some plants carry their depreciation under liabilities, as a reserve, frequently invested in the business, and do not, therefore, reduce their capital ac- counts. 176 MUNICIPAL ELECTRIC LIGHTING plants under consideration. By 1910, however, the net deficit had been reduced to a total of $281,796, excluding Holyoke. Of the 17 plants at this date 5 report a surplus of $78,926 and 12 a deficit of $360,722. In 1915, 8 report a surplus of $181,210, while 9 show a deficit of $236,469, so that the net deficit is reduced to $55,259.* Holyoke, with a little surplus of $6,254 in 1910, now boasts a sur- plus of $401,419, apparently due to the fact that a good share of its maturing indebtedness has been paid off out of earnings. This has also occurred on a very small scale in two or three other plants. The relatively rapid growth in the size of the net deficit after 1900 was partially occasioned by the scrapping of some of the now antiquated equipment which had been taken over a few years previously from private owners — • a kind of depreciation with which many municipalizers have failed to reckon, and which makes the annual rate of depreciation difficult to standardize. Fart of the deficit, also, has been the result of inefficient financial management. The figures in general indicate that the municipal plants are beginning to find their financial feet, largely through a policy of ultra-conservatism during the past few years. As a number of them cease to generate current, however, as is the present tendency, they will find themselves bur- dened with a large amount of "dead" assets, against which they have to date been able to make no provision. 2 Had the public plants received an income from street lighting, they might now show an appreciable surplus since they have no taxes to pay, and are relieved of numerous other expenses. This, however, would not be a true surplus, as will presently be made clear. 3 Of the 17 companies studied, 15 show a surplus of 1 In the case of composite plants the surplus or deficit has been roughly divided according to the ratio which the total cost of the gas plant bears to the total cost of the electric plant. a Cf. ch. xi, pp. 820-321. » Cf . ch. vn. IN MASSACHUSETTS 177 $800,528, a growth of 52.3 per cent over their 1910 surplus of $525,734. While 2 of the smaller plants (Buzzard's Bay and Vineyard) reported a negligible deficit at both dates, the net surplus for the group is equal to 15 per cent of the entire investment. This is a remarkably good showing as compared with the public plants, and would seem to indicate that, as so goodly a surplus has been built up out of earnings, the financial management of the com- panies has been all that could reasonably be desired, even though in some cases it may not have been ideal. As to the methods of financing their business, it appears that the 12 companies doing a purely electric business have 59.5 per cent of their total capital and loan liabilities ($3,563,964) in the form of stock, 20.1 per cent in notes, 17.7 per cent in bonds, and 2.7 per cent is represented by premiums realized from the sale of capital stock. The outstanding indebtedness of the 14 similar municipal plants ($1,351,682) consists of 82.2 per cent bonds and 17.8 per cent notes. Finally, while the aggregate indebtedness of the munici- pal plants has increased 10.9 per cent during the past five years, the ratio which this bears to the total investment has actually decreased from 60.3 per cent to 53.4 per cent. This is accounted for by the fact that a considerable portion of the bonds and notes have been paid off by means 6f appropriations from the tax levy, and in a few cases, as suggested above, by payments from earnings. The per capita indebtedness has remained practically constant ($7.85) during the period, and the ratio which the indebtedness bears to the total municipal indebtedness, for all purposes (16.3 per cent), has also been subject to little change during the period. It is sufficiently obvious that few risks are now being taken by the municipalities. The public lighting business appears to have been in a relatively quiescent state during the past few years. It is highly probable, however, that 178 MUNICIPAL ELECTRIC LIGHTING within the next period of 5 to 10 years there will be a rapid debt expansion, occasioned by the necessity of bringing the equipment up to date and meeting the needs of new business; or, in lieu of that, there may be a general scrap- ping of generating plant, and a resort to the use of pur- chased current wherever possible. SUMMABT The more important findings of the present chapter may be briefly summarized as follows: 1. Because of the lack of uniformity and the unsatis- factory character of the prescribed accounting methods, it is difficult to get wholly comparable investment figures. Those chosen, however, will if anything tend to put the companies at a disadvantage in relation to the public plants. 2. It is evident that the investment in the private plants has increased much more rapidly during the five-year period than has that of the municipal plants. 3. This more rapid increase in investment is readily and fully accounted for, however, by the growth of under- ground construction in the former, by the far more rapid increase in length of lines, the installation of a propor- tionately greater number of poles, the greater increase in the size of generating units, the more rapid increase in number of customers and in street lights, etc. 4. Though the investment per kilowatt capacity of dynamos is considerably greater for the companies, this is explained by some of the reasons just mentioned, as well as by the fact that their investment in real estate is much higher relatively than that of the other group, due to more adequate stations, etc. In fact a number of the municipal plants carry no account for land, as it is owned by the municipality, and many of their buildings have been found to be highly unsatisfactory. • 5. The public plants, in spite of the fact that they are IN MASSACHUSETTS 179 purchasing relatively more current than are the other group, have been increasing their station investment far more rapidly than their line investment, while the opposite has taken place in the companies. But, since the former have been shown to lag behind the growth of the com- munity rather than to lead, it would appear that we have another evidence of an undue attempt to restrict the extension of service only to the more promising customers. 6. The earlier deficits of the municipal plants are being gradually wiped out, largely as a result of the advantage gained from relatively more favorable territory, and due also to an unmistakable policy of great conservatism. The companies, on the other hand, though they have taken greater chances, have been constantly building up their surplus. 7. Holyoke, in the matter of investment, does not, in the main, seem to have any noticeable advantage, par- ticularly if due allowance be made for size and for the com- pact nature of the territory served. As it will appear later, also, there is now need of a greatly increased investment in station. CHAPTER VI FINANCIAL STATISTICS OF GENERATING PLANTS (continued} Operating Expenses and Operating Income The point has now been reached at which most stu- dents of the subject of municipal electric lighting begin the superficial investigations which lead to their hasty con- clusions. To the writer, however, the vital issues appear to lie much too deep to be discovered and decided by a mere examination of the income and expense accounts together with a few vague generalisations about rates. As the most obvious function of public service commissions is that of rate regulation, the public and the average student usually over-emphasize this one aspect of the problem, for- getting, or, rather, not even surmising, that back of all this specious analysis are a myriad of considerations, some of them highly technical and others more general, which must constantly be borne in mind if regulation is to be anything more than blind restriction or futile interference. The investigator who attempts to decide the case for or against municipal ownership by the elementary study of, the charge for service and its apparent cost under public operation as compared with that of similar service ren- dered by private enterprise, is accomplishing little more than the man who would commit suicide by shooting at his reflection in a mirror. The one who compares the exist- ing rates under municipal ownership with the rates which might have been or were under private ownership, and so makes out his case for one side or the other, is usually wasting his time. With regulation such as we find in Massa- chusetts, as well as in many other States at the present MUNICIPAL ELECTRIC LIGHTING 181 time, it is generally possible for the people to secure their full pound of flesh from any public service corporation whatever, provided they avail themselves of their rights. Hence we are primarily concerned with what is, in the matter of rates and costs, and with what has been and will be, in the matter of physical equipment and extension and conduct of service. Nevertheless, since a reasonable perspective has now been developed, it will be worth our while to give some attention to the methods and results of operation of our groups of plants during the year 1914-15, with occa- sional reference to the year 1909-10. Before discussing the price paid for service let us, accordingly, analyze the cost of that service. 1. Unit Costs 1 The total operating expenses of the companies per kilowatt hour delivered 2 decreased 18.6 per cent, from 4.386 cents in 1910 to 3.572 cents in 1915, while the ex- penses of the public plants (Holyoke excluded), decreased from 4.340 to 3.766 cents, or 13.2 per cent. 3 To the casual observer this might seem to indicate that the conditions are about the same in the two groups, and that the public plants, in view of their smaller size, are making a relatively better showing. And, indeed, they do give a reasonably good account of themselves. If, however, the taxes paid by the companies be de- ducted, in order to remove one of the most obvious addi- 1 Appendix, pp. 432-441, 446-447. 3 "Delivered" means "sold" in the ease of the companies and in reference to the public plants it includes current used for street lighting as well as current sold to commercial customers. Sometimes, however, the word "sold" is used indiscriminately in both cases to include all current "delivered" to consumers, whether public or private. s The cost per kilowatt hour is always given in cents or decimals thereof; but it hardly seems necessary to repeat the word "cents" each time the figures are given. Likewise the expression "unit cost" will ordinarily be used instead of the phrase "cost per kilowatt hour." 182 MUNICIPAL ELECTRIC LIGHTING tional expenses which the companies incur, since municipal plants are not taxed, the unit costs for the former become 4.100 in 1910 and 3.144 at the end of five years — a de- crease of 24 per cent. 1 In other words, the unit operating expenses of the municipal plants were, in 1910, about 6 per cent higher than in the case of the companies, and, in 1915, nearly 20 per cent higher. While there has been a decrease in both cases, it has been almost twice as rapid for the private plants. If we should go further and deduct the salaries of corporation officials (0.197 per kilowatt hour sold), an item which does not appear in the municipal expenses, the unit cost of the companies would decrease to 2.947, while the public plants would show a figure 28 per cent higher. In order to put the two groups on an absolutely equal basis for the purpose of studying their operating efficiency, we would have to eliminate a number of other items in the case of the companies and make several additions in the case of the municipalities. But of this more anon. Now, to be sure, some allowance should be made for the fact that the companies deliver considerably more current than the other group. Yet there is not necessarily much . difference between the total unit costs of a plant doing a 900,000 kilowatt hour business annually and one doing a 1,400,000 kilowatt hour business. We would expect a far greater difference to be found between a plant which de- livers 500,000 hours and one which delivers 900,000 hours. However, the public plants, which increased their business from a little more than 500,000 hours in 1910 to nearly 900,000 hours at the end of five years reduced their unit costs only 13.2 per cent, while the companies, increasing their current sold from 900,000 to about 1,400,000 kilowatt hours, reduced their costs by 24 per cent, or 18.6 per cent if the taxes be not deducted at both dates. 1 The unit cost for taxes increased from 0.286 in 1910 to 0.428 in 1915, a proportionate growth of 50 per cent! m MASSACHUSETTS 183 The fact that the two groups stood so close together in 1910, in spite of the difference in size, so far as the writer has been able to investigate, seems to speak well for the public plants, and -prima facie it might be said that the companies were not being operated as efficiently as they should be. But the wide spread between the two at the present time, when only the taxes paid are eliminated, seems more difficult to justify. Part of the comparative improvement is a result of the decreased amount of current unaccounted for in the companies and the correspondingly increased amount in the case of the public plants. It is also the result of more businesslike methods of operation along other lines. We must, however, analyze the different items entering into the expense accounts before attempting to draw definite conclusions. Table 26. Operating Expenses per K.W.H. delivered (1914-1915) Claee of expense Companies (cents) Municipalities (cents)* 3.572 3.766 0.428 0.197 3.144 3.766 2.947 S.766 0.648 0.782 1.376 1.829 0.408 0.626 (14) 0.808 (12) 0.742 (17) 0.915 (15) 0.933 1,650,091 1,437,544 1,024,023 881,914 1,232,050 670,276 $872,935 $562,643 Per cent by which (S) exceeds (1) Total Taxes. Salaries of officers Total — taxes deducted Total — taxes and salaries of officers out Cost of distribution Cost of manufacturing (per K.W.H. made) Labor at station (per K.W.H. made) Fuel of every kind (per K.W-H, made) Coal (per K.W.H. made) K.W.H. generated per plant K.W.H. delivered per plant K.W.H. delivered (street lighting out) Operating expenses (dollars) 5.4 20.0 24.0 20.7 33.0 53.0 13.2 26.0 ^-37.0 —38.8 —45.6 —35.5 1 Holyoke omitted here as elsewhere. 184 MUNICIPAL ELECTRIC LIGHTING Table 26 presents in a concise way some of the general relations which the operating costs in the two groups bear to each other. It is significant to note that in all of the important items the companies show a greater economy in operation. Reference will from time to time be made to these relations. To begin with the manufacturing costs, 1 we find that the graphs are surprisingly parallel for the two groups, though the unit cost of the public plants (1.829) is 33 per cent higher than that of the companies (1.376). In each case, three of the plants generating less than 600,000 kilowatt hours are abnormal — two are unusually low, due to the fact that water power or oil is used instead of coal, and one is unusually high. Were these plants elim- inated, the curves would be fairly close together, with the companies usually running somewhat lower. If the one extreme case of Buzzard's Bay were left out, the curve would be markedly lower for the companies generating less than 1,000,000 hours than for the corresponding mu- nicipal plants. For plants with an output between 1,000,- 000 and 2,500,000 hours there seems to be little evidence of decreasing costs because of increasing size in either group. This tendency is most marked for plants having under 500,000 kilowatt hours output, although it is plainly to be seen till the 1,000,000 size is reached. Excluding Holyoke, one of the municipal plants, Mid- dleborough, uses some gas and a good deal of water for 'generation of current, and Mansfield uses nothing but fuel oil. Hence these must be eliminated if We wish to secure comparable data for fuel costs. Of the companies, like- wise, three generated what little current they made by means of water power wholly, and so must be left out, together with two others, one of which used a consider- 1 The "'manufacturing" cost, as required in the returns, covers all the expenses " at station " connected with the making of current, in- cluding rentals, repairs, and maintenance of plant. OOG»_y OOStt r>ootr oose s-i.ee ojrr 0056 aosZ OJZZ SZIZ owe sLti BSLl Lxii oest OStl ST.II OOO/ tLS QJ-L SZ1 OOJ- s-Le osr ST.I in ■OiO" , c -^ "ti-S = c Is ^ 21 . '0 « »!; — ol So § £ 5"S r ~~ - t( < / / ' < - -f 1 *\ ,•' V • ' V ^ -\ J c " - ! \ "^ / *N 2 (s?uao) j "t c > U 1 T! ■a !' * S « ; - c - o . b I I , ": 1- <• » r < - . c bo p- O t i < >~ r > < 1 1 " D < 7 3 ooos OOJ* nooft oose arte SZIC oooe rdt osLx rtix •oft sict ostrt reiv ooox rUl oj?U tt?/ 0OJ 1 / rxii 00O1 J-i.8 »sL oqj* J-Le ost §1 o. s o g -i * -s " £ 3 C s 3 % ** — ° i '*! § I "3 ~Z* 1 1 > 1 -t5 ■3- - i - o - Q - o Of --* - c - -o- -c- o -X- — j -'2- -U- - , / Y * *s ~~ \ \ \ -. J- ^- < -- 1 5 3 2 ~ i - i \/ "J / \ / \ / «£ r / '- S \ / \ ■/ > / --■ :— ,.11111 c i c c < « 1 c > < * If- < ♦ c o 6 i 1 -1 i t \* > ■■ i : > « r 1% TO •3 < - > c IN MASSACHUSETTS 187 correspondence between the unit costs for labor in both groups for plants generating more than 1,000,000 kilowatt hours, the companies under this size have a decided advan- tage over the municipal plants. If the one extreme case of Buzzard's Bay be omitted, the graph for the private plants runs invariably much lower at this stage. On the other hand, if the three companies generating by means of water power be left out, though they are too small to have any notice- able effect upon the averages, the curves would not be so far apart. But the company graph would still run lower, particularly when we eliminate the oil using plant of Mans- field, and Merrimac, which probably secures some unac- counted for labor from the water department, perhaps included in the item "rent of station." Upon the whole it appears that the chief reason for the higher station wages of the public plants is due to the fact that so large a proportion of them are smaller than the companies, and, with two exceptions, are all using coal for generation, while three of the smaller companies use water power, and thus keep this cost item comparatively low. Yet, in several instances, the graph runs unreason- ably high for the public plants. The eight-hour municipal day, possibly higher wages, — the companies do not return the rate of wages which they pay, — and the slightly poorer load factor of the latter, may further help to explain the difference, without recourse to the time-honored and threadbare argument that public labor is less efficient than private labor. 1 Finally, since the station wages of the larger plants in both groups are, for the most part, not far apart, it would not appear that there has been a greater utilization of labor-saving devices by one than by the other. Of the remaining items entering into the manufacturing expenses, little need be said. It appears that the public plants are, with two exceptions, paying for the water 1 The local survey, however, has convinced the writer that there is a good deal of truth in the "efficiency " argument. 188 MUNICIPAL ELECTRIC LIGHTING which they use, though at a somewhat lower rate thau is ■paid by the other group (0.029 as compared with 0.035), due to the fact that the municipalities seem to be making their electric plants a lower rate than is customary. Their expenses for oil and waste (0.032) are 60 per cent higher than the companies incur (0.019), and for distribution tools and appliances they are spending three times as much as the latter (0.032 as opposed to 0.012). The differ- ence in the first case is probably largely the result of the economies which arise from greater output of current per plant, while in the second case it seems to be partially waste. For repairs of all kinds at station ("station struc- ture, steam plant, and electric plant"), the apparently higher cost of the municipal plants is mostly accounted for by the fact that Hull charged the installation of a new boiler to the operating accounts. With this anomaly elim- inated, the items are not far apart, 0.141 for the public plants and 0.115 for the companies. The difference can probably be accounted for by the greater output of the latter. The current purchased costs about the same in both cases, 1.500 in the former and 1.636 in the latter. The expenses of "distribution," as returned to the Board, are too indefinite to lend themselves to any con- clusive analysis. The accounts are not similarly kept by the two groups, 1 and many of the individual returns are open to serious question. In the first place, the wage item for the companies is supposed to include "wages for care of lights, meters and motors, meter reading, clerical labor, and salary or commission of collectors." In the municipal returns the directions are very vague on this point — "wages for care of lights, meters, clerical labor, etc.," with probably a good deal of emphasis on the et cetera. Wages of linemen are supposed to be entered, not here, but under "repairs and renewals of lines." In the case of the companies, however, these wages were formerly en- 1 Since 1915 there has been some improvement in this regard. 00 o Z. O ' t ' a) . o s- 2 " oooE 3LK osL% rziz oosz s£tx oszz ?XIX 009X os Li rej/ 0OJ*t pic/ oyer Fell ooof s-t-s aj-i oos jU SX/ - * * »— I > X / •f ** A -*. s 1 —* y "V ■>' -" +* — *" — jsii*. , ^J *o 3 f t - C - w > r .. -. > i » a \ r i - 1 : < > c ) < i ( f « > o 6 c a c IN MASSACHUSETTS 189 tered under the general item of distribution wages, and probably some of them still follow this policy, and so cause their "wages" to appear unduly large and their "repairs and renewals of lines" abnormally small. But, in practice, there seems to be much overlapping in the case of the wages reported, particularly in the smaller plants* Some of the employees are doubtless "jacks of all trades," and, from station expenses to general office expenses, it is largely a matter of chance where their wages shall appear and how the distribution shall be made. In 1915, for the first time, the companies were required to keep the "maintenance and renewals of street lamps separate from that of commercial lamps, and a separation is also made between "repairs and renewals of lines and conduits," and "repairs and renewals of meters and trans- formers." The municipalities, on the other hand, are re- quired to make no such separations. They return only the items of "repairs of lines, arc lamps, and meters," which corresponds only roughly to the two items just mentioned for the companies, and "incandescent lamps," which in- cludes both municipal and commercial lamp maintenance and renewals, though the arcs appear in the preceding entry. About the only thing to do under the circumstances, is to group together all of the items of repair and renewals or maintenance in each case, as the writer has done in the table appended. There is absolutely no way of discover- ing how much of the aggregate expense is maintenance and how much is renewal. Nor can anything more than the roughest guess be made as to how much of the cost is due to material and how much to labor. Bearing in mind the uncertainties involved, we note that the reported wages are 26.5 per cent higher for the com- panies (0.181) than for the municipal plants (0.143). But, as has been suggested, probably some of the linemen's wages are here included by the former, and it may be that %he latter report elsewhere wages which should be entered 190 MUNICIPAL ELECTRIC LIGHTING here. One municipal plant, Merrimac, reports no distribu- tion wages whatever. The individual anomalies are so numerous that it would be hopeless to try to account for them, except that it may be generally stated that when the commercial and street lighting business is proportion- ately large, the wages are found to be higher. For distribution tools and equipment, it also appears that the public plants are paying about 50 per cent more than the companies. There seems to be no rule or reason for the anomalies which here present themselves. The expenses for repairs and renewals of all kinds run 80 per cent higher for the municipal plants (0.494 as op- posed to 0.375). This seems to be a rather large differ- ence in view of the fact that the municipal plant lines are not so widely extended as those of the companies, and that they 'do not have relatively so many poles to look after. But, as suggested above, perhaps a greater proportion of wages is entered here. The advantages which the com- panies have can be accounted for partially by the fact that, in view of their recent rapid extensions, their distribution equipment is comparatively much newer than that of the other group, and partially to the fact that not all of their linemen's wages are reported in this item. In this case the underground construction, while highly important for the individual plants, does not seem to have much influence in reducing the expenses, since it is found principally in only two plants, and, strange to say, one of these, Glouces- ter, reports a unit cost (0.891) more than double the average for the group. Probably this is one of the instances in which the public plants are not so highly favored as far as their labor costs are concerned. This is a more highly specialized kind of work, and it would be rather difficult to combine the duties of a clerk or day laborer with those of a lineman. Hence there is doubtless less overlapping here than elsewhere. Furthermore, experience and observation teach us that 1 0007*7 eojf ooo? oo£r cost oo=>T °ojt: OO/jZ oc>/S 000? oobi VO&I ooL/ 00 Q-o Z J" 3 m J3 n -O > c *" — -^ ; r t;o q- pi O 3 g > ?i -a * - 1'. 1 - O " IK V i..- «/ > 3- "1 . 1. 3 - o r - -3 - 5 o . w 5 h-r 1 , U Q. >< / t / < < / / / / / / / / / s < -~- / ^ **- \ 1 \ J \ < > \^u-»S) 1 < <- .e 1 * i? 4 * is 1*1 «t «■! r< -C < O Q Q IN MASSACHUSETTS 191 municipal employees who have work to do along the pub- lic highways, whether it be repairing lines, setting poles, transplanting trees, or even shovelling dirt, are particularly prone to soldier on the job. Difference in size of plants would play little if any part in this item, for there is a fairly close relation between the extent of the distribution sys- tem and the amount of current delivered. Countless local considerations may affect the situation. It is true also that, in some cases, because of more careless initial installation the municipal plants now find it necessary to expend more on repairs. Definite conclusions could be drawn only after a careful study of this item over a period of years. The year taken may not be typical. The distribution cost graph of the companies, with the exception of Gloucester and Quincy, which do primarily a lighting business, runs for the most part lower than the municipal plant graph at all stages, but the difference is most noticeable for the smaller plants. Mere size of plant and extent of business seem not to enter into the differ- ences which here exist, unless in an indirect way. Among the expenses which the writer has classified as "management and miscellaneous," the item of "general salaries" seems to include the wages of most of the "soft handed" employees as well as the salaries of the munici- pal managers. This cost appears to be almost twice as high in the municipal plants (0.270) as in the companies (0.146). The difference may be in some measure due to the fact that the latter are larger, for the necessary number of salaried employees does not change greatly, even with a considerable increase in amount of current sold. Fur- thermore, there may be inaccuracy in the returns, — some of the salaries belonging here are perhaps hidden in the "general office expenses" of the companies which are comparatively high. On the other hand, the public plants have probably entered under this head some of the wages which should have been included in distribution wages, 192 MUNICIPAL ELECTRIC LIGHTING which, it will be recalled, were unexpectedly low. There might also be a certain number of municipal employees serving as ornaments and thus padding the pay rolls. And, finally, some of the corporation officials are doing work which would ordinarily be performed by salaried employees. It is instructive to observe that the "officers' salaries" of the companies (0.197) exceeds the "general salaries" by 35 per cent, and that the sum of these two, 0.343, is 9,1 per cent higher than the "general salaries" of the public plants.. Also, salaries of the municipal light boards (0.022) , of which 12 are receiving some remuneration, exactly coin- cide with the allowances for. directors of the companies. The general office expenses are, as has been suggested, 70 per cent higher in the companies (0.230) than in the other group (0.135). This difference may be due (a) to inaccuracy in entering the wage items in the returns, (b) to wasteful expenditure on the part of the companies, and (c) probably in large measure to the fact that many of the. companies do a good deal of advertising and soliciting of new business, whereas the public plants rarely indulge in this form of expense- It must be further noted in considering this question that a number of the public plants have their offices in municipal buildings, for which they pay no rent. The total amount of office rental paid by them is only 0.007, while that paid by the companies is 0.034. This, to be sure, is a very small item; but occasionally some of the public plants also receive other free service along with this free room, which will help to keep the office expenses low. Only three municipal plants, besides Holyoke, report any auditor's fees. And, since no charge to this account could well be hidden in the general office expenses, which run so low, there is good presumptive evidence that a number of the plants receive free service from the municipal auditor or accountant, as is the customary procedure. 1 In like 1 This presumption was fully confirmed in the local survey. IN MASSACHUSETTS 193 manner the law expenses, which amount to 0.019 in the companies, are almost too small to be recorded in the other group. While this may mean that there are no legal ex- penses in the latter, it may also indicate that the services of the city solicitor are utilized gratis. No note seems ever to be made of the fact that the town or city treasurer contributes a great deal of valuable time to the business of handling the funds and loans of the municipal plants. In the companies a good deal of such work would be given over to a high salaried officer. In the matter of bad debts there seems to be little to choose between the two groups, and the insurance charges are also about the same. The taxes paid by the companies, 0.428, seem to bear absolutely no relation to the amount of investment in plant or the extent of business done. The lowest unit cost for this item is found in two of the smaller plants, Lee (0.116) and Buzzard's Bay (0.147); but the next lowest cost is that of North Adams (0.171), which has the largest output of all. On the other hand, the smallest plant of the group, Citizens', shows the high- est expenditure for taxes per kilowatt hour delivered, 1.205, and one of the largest plants, Beverly, comes next with an expense of 0.849 under this head. So far as the total operating costs are concerned, there is little correspondence between the graphs of the two groups. When, however, we eliminate the two extremely high companies, Gloucester and Quincy, and the two ab- normally low ones, Lee and Winchendon, as well as the extraordinarily high municipal plant of Hull, the curves come reasonably close together, with the companies having only a slight advantage under 1,000,000 and a consid- erable disadvantage from that point to 3,000,000. The latter appear to make no remarkable showing, particu- larly in the case of the larger plants. Now, in view of the considerably lower costs of manu- facture and distribution, it is evident that the higher man- 194, MUNICIPAL ELECTRIC LIGHTING agement and miscellaneous expenses (1.548 as contrasted with 1.155 in the public plants), are responsible for the fact that the companies have on the average so slight an advantage (3.572) over the municipal plants (3.766). Nor is this higher cost at this point the result of an ex- cess expenditure of the former over the latter in items com- mon to both. It is rather accounted for by additional expenses not found in the returns of the public plants. The effect of taxes and salaries of officers has already been referred to. In addition, higher office expenses, though probably justified, higher legal expenses, higher rentals, all unite to make the showing of the companies worse in comparison with the municipal plants. When the more obvious deductions are made so that we can compare the operating efficiency of the two groups, we find that while the management and miscellaneous expenses run somewhat lower for the companies (0.923) than for the other group (1.155), the difference is not much more than would be expected as a result of their greater size. The very fact that they are private concerns renders it necessary for them to incur some expenses which munici- pal plants, by reason of their public ownership, would not be subject to. Furthermore, the law of decreasing costs, which appears to assert itself in the routine part of the business, particu- larly in the generation of current, is of rather doubtful application with regard to the important items entering into the miscellaneous expenses, including taxes. Upon the whole, however, the writer does not feel that the companies, in spite of their apparently better physical development, have done so well in their actual operation as might have been expected under more efficient manage- ment and less "control." The municipal plants, on the contrary, seem in general to have been operated with a higher degree of efficiency than might be expected. So far as Holyoke is concerned, the writer does not oov/r oose. OOOE oo6t OOSt ooLz ooyz oasz OOfft oozz cmz QOIZ oooz oo&l OO-S/ ooLi 00?/ oas-z ooe/ 00X1 OOI 1 oooi oob 008 oo£ OOJ oe>_f ooti ooe. oo% OOI St 5| 6 •5 J z<3v3 1 , 1 T3 0) ■ i; o' 1, -tf. < j '- 7 C L C r% c L < • 4 o U o L i « l- < i IN MASSACHUSETTS 195 Table 27. Percentage Analysis op Expenses (Generating Plants) Companies Municipalities Holyoke Kind of expense 'Amount Per cent of total Amount Percent of total Percent of total I. Operating expenses — General analysis. $386,109 44.4 $308,937' 55.8 70.7 Purchase of current 30,239 3.5 35,491 6.4 158,465 18.2 117,794 21.3 16.9 Office expenses and management 153,755 17.6 65,428 11.9 11.5 39,776 4.5 25,596 4.6 1.7 104,591 12.0 Total $872,935 $553,246 Total — taxes deducted — $768,344 II. Operating expenses — Detailed analysis (taxes out) Fuel $220,204 28.7 $158,648 28.7 49.8 Wages at station. . 114,590 14.9 109,048 19.7 16.2 Repairs at station. . 32,244 4.2 24.563 1 4.4 3.7 Current purchased. 30,239 4.0 35,491 6.4 Distribution wages. 44,236 5.8 21,366 3.9 5.1 Repair of lines .... 91,633 11.9 74,094 13.4 10.3 Distribution tools and equipment . . 22,596 2.9 22,328 4.0 1.8 General salaries . . . 35,781 4.7 40,750 7.4 7.7 Salary of officers . . . 48,201 6.3 .. . • . . Directors' allow- 5,388 0.7 ■ . . Salary_ of munici- pal light boards. . General office ex- 3,167 0.6 56,158 7.S 20,285 3.7 3.8 30,703 4.0 19,507 3.5 1.2 8,228 1.1 1,120 0.2 All other expenses.. 28,143 3.7 22,879 4.1 1.3 Total $768,344 $553,246 > Hull, new boiler, $9,397, omitted. 196 MUNICIPAL ELECTRIC LIGHTING believe that, judging by the statistics, any remarkable showing has been made when we consider the unusually favorable district which this plant serves. No particular effort seems to have been exerted to develop new terri- tory, and the amount of business done in 1914-15 was actually less than in the preceding year. 1 The accompanying percentage analysis of expenses (Table 27) shows the relation which the more important items discussed bear to each other. It appears that the items of cost other than manufacture, distribution, and purchase of current, constitute a very large proportion of the total outlay of the companies,. 34.1 per cent, as com- pared with only 16.5 per cent for the municipal plants. It is rather surprising to find the proportion spent for fuel, when taxes have been deducted, exactly the same in the two groups. The total expenditure for wages and salaries, including directors' allowances and the salaries of the municipal fight boards, is for the companies 32.4 per cent of all outlays, and for the municipalities 31.5 per cent. Taxes and salaries of officers, it will be observed, account for one sixth of the operating expenses of the former. 2. Rates and Income 4 The public in general are more interested in the prices which they pay for service than in the cost of that service to those who supply it. Too frequently a municipal plant is considered a success simply because its rates are low, and a private plant is condemned because its charges are high. Whether the pressure exerted by customers for the reduc- tion of rates is greater in the case of the former than the latter, it would be difficult to say. Undoubtedly, how- ever, without the proper legal restraints, a publicly owned plant, by virtue of the fact that it can cover up its losses in the tax levy, would be more subject to such influences 1 In the following year (1915-16), there was a very marked increase. * Appendix, pp. 442-453. IN MASSACHUSETTS 197 than a private concern. But, with such laws as are found in the state of Massachusetts, it is practically impossible for municipalities to lose money on their electric business as a result of charging too little for the services rendered {they cannot sell below cost), provided they conform to the requirements of the statute as discussed in an earlier chapter; 1 nor are they expected to make any considerable profit. 2 On the other hand, it is comparatively easy to force the companies to make such charges as shall leave them only a "fair" return upon a conservative invest- ment. 3 Hence we should not look for any marked differ- ences in rates between the two groups. Accordingly, it appears that while the companies reduced their unit oper- ating expenses 18.6 per cent during the period studied, their total income per kilowatt hour, from the sale of current for all purposes, has decreased 15.7 per cent. The munici- pal plants, however, while reducing their unit costs by an amount equal to 13.2 per cent, have lowered their average rates 25.3 per cent, or about 60 per cent more rapidly than the former group. But it must be noted that their rates in 1910 were much higher than the company rates, and that the reduction in their average rate has been occasioned almost wholly by the growth of their power business. Table 28 shows the close correspondence in average rates at the present time. The spread between the total operating income per kilowatt hour sold in each group, is practically negligible. But when the income from other sources than the sale of current, such as steam heating and rentals, if such there be, as well as the street lighting income in the case of the companies, has been deducted, the unit income is found to be 5.461 for the latter, and 6 per cent higher, or 5.786, for the municipal plants. This difference is not noticeably greater than the difference in the unit costs. Finally, if only the income from the com- . » P. 45. - -r- * Mass., 1914, ch. 742, sect. 115. ' Ibid., sect. 162. 19S MUNICIPAL ELECTRIC LIGHTING Table 28. Income per K.W.H. sold (Holyoke excluded) Item Com- panies (cents) Munici- palities (cents) 1915 Com- panies (cents) Munici- palities (cenU) Percent decrease Com- panies Munic- ipali- ties Total operating income Total operating income (street lighting out)... Total from sale of current Total from sale of current (street lighting out) Commercial light and power Commercial lighting l . . . . Street lighting Power Bales to other companies. . Net income Net income (street lighting out) Operating income ( dollars) .... Operating income (street light- ing out) Net income (dollars) Net income (street lighting oat) Operating ratio Operating ratio (street lighting out) 6.608 6.531 6:758 6.481 11.774 7.675 3.458 2.700 2.622 0.985 9953,675 767,293 312,685 116,304 67.2 84.5 7.960 7.960 7.742 7.742 11.077 3.615 3.000 1.091 443,423 62,202 86.0 5.800 5.503 5.764 5.461 5.950 10.062 7.575 (7.333): 3.047 2.418 2.227 1.332 $1,417,235 1,152,594 544,300 279,658 61.6 75.0 5.895 5.895 5.786 5.786 5.800 10.305 2.583 4.294 0.957 671,761 109,118 83.7 15.9 15.7 14.7 15.7 14.5 1.3 (4.5)' 11.9 10.4 11.7 +35.2 +47.5 +52.2 +74.0 +140.8 -8.3 -11.2 26.0 26.0 25.3 25.3 28.5 +43.1 12.3 +51.5 +T&4 -2.7 l "Commercial" lighting includes all other than street lighting. ' Including only companies reporting at both dates. mercial light and power business be considered, we find that for the companies the average rate is 5.950, and for the public plants 5.800, or 2.5 per cent lower. Now, in view of the fact that there is comparatively little difference in the nature of the business done by the two groups, and since the companies have been effec- tively regulated by the Board, we might, as has been sug- gested, logically expect an approximate equality in rates, provided, however, that both pay taxes, and that the in- vestment per customer, with the resultant fixed charges, is the same. But here we find a conspicuous difference. The public plants pay no taxes, — an item which will be at present overlooked, as their charges for service must, IN MASSACHUSETTS 199 according to law, be sufficient to cover the maturing debts and the sinking fund payments, — and their invest- ment per customer is far less. Without attempting to make a separation between the street lighting business and the commercial light and power business we have found that the total plant in- vestment per customer is $162 in the municipal plants and $226, or 40 per cent higher, in the companies. And we have also found that all of this investment is as well accounted for in the one case as in the other. But, when we carry the analysis further, and separate the investment in distributing system according to the proportionate re- lations to the total which the street lighting lines and the commercial lines bear in each group, it is evident that the fully justified investment per customer is only $43.50 in the public plants and $80 ($70, if the value of under- ground construction be deducted), or 84 per cent greater, 1 in the companies. Also it appears, from the study made in the preceding chapter, that the line investment has been more economical in the latter, since for correspond- ing equipment they have expended from 15 to 20 per cent less than have the municipal plants. 1 Though it would be rather difficult to estimate what portion of the station investment should be charged against the street lighting business, yet, in the light of the various analyses which have been made, it is probably safe to assume that the total investment lawfully created for the commercial service, is relatively 50 per cent higher in the 1 The investment in distribution system — lines, poles, meters, trans- formers, and street lamps and fixtures — was, in 1915, $2,717,202 for the companies, and $1,272,470 for the public plants. The ratio of com- mercial lines to total lines was, in the former, about 69 per cent, and in the latter 62 per cent. Making the division accordingly, we find that the commercial line investment of the companies is roughly $1,874,868, while that of the municipal plants is only $788,931. These figures are, of course, only approximately correct. The number of customers of the companies was 23,417, while that of the municipal plants was 18,069. 200 MUNICIPAL ELECTRIC LIGHTING companies than in the municipal plants. This means that the former might be expected to make their rates suffi- ciently high to provide for fixed charges proportionately 50 per cent greater than those incurred by the other group, granting that they could secure their capital at the same figure — as a matter of fact they pay at least 1 per cent more. Now, without making any allowance for div- idends on the investment, which we will assume are pro- vided for out of the profits resulting from the larger busi- ness done, we find that the aggregate outlays of the com- panies for taxes, depreciation, and interest, amount to about 25 per cent of the total operating expenses (includ- ing taxes) plus the interest and depreciation charges. Accordingly, since the investment per customer is 50 per cent higher, and since relatively 50 per cent more must be paid for the fixed charges, might we not, therefore, expect to find rates about 12 or 13 per cent higher in the companies than in the municipalities, since the unit cost of operation is about the same? In other words, would they not be justified in charging such prices as would make their total average income from sales of current, excluding street lighting and sales to other companies, at least 0.750 cents per kilowatt hour higher than the corre- sponding income of the public plants, which would be equal to 6.550, or 10 per cent above their present average income of 5.950 from this service? Or, if the company rates as they now stand are equitable, should not the municipal plants be furnishing current at about 88 per cent of their present rates, or 5.100, which is more than 14 per cent lower than the company rate? Many objections can be raised against this line of argument, and it may not be a wholly accurate way of stating the problem; yet the writer believes that, to say the least, he has been sufficiently conservative in these calculations. But, returning to a study of the rates as they actually IN MASSACHUSETTS 201 are, we notice that the commercial lighting rate of the companies has been reduced twice as rapidly as that of the public plants, until now it is a little less (10.062) than that of the latter (10.305), 1 in spite of the fact that they have been much more liberal in their policy of extending service to unprofitable customers, and have pushed their lines much farther in order to get new business. 2 The street lighting rates have been reduced but slightly during the period and now stand about 25 per cent below the com- mercial rates. All of this business, however, is done on the contract basis, at a fixed charge per lamp per year, with frequently more favorable rates for long-time contracts. The price charged for current sold to other companies, as might be expected under the circumstances, is about 75 per cent higher in the public plants. The power rates have decreased much more rapidly in the municipal plants than in the companies, due to the great increase in this part of their business. It is rather surprising, however, to find the rate for power about one sixth lower (0.464) in the former (2.583) than in the latter (3.047). The difference is mostly accounted for by the municipal plant of Danvers, which sells a large quantity of power current at a rate of 1.634 per kilowatt hour, lower even than the Holyoke rate. Evidently, if we may judge 1 For the municipal plants the sales to public buildings have been included with the commercial lighting though the rate charged for this service is only 8.018. This is necessary in order to keep our data com- parable, even though, as sometimes it seems to happen, no actual transfer of cash is made by the municipality to its lighting department for this service. 2 It is of some interest to note, in this connection, that the companies seem to make the same maximum net rate to all of their customers, even though they may be in other municipalities than those in which the plants are situated. On the other hand, the three public plants which have extended their lines outside their own borders, charge the customers in this foreign territory, respectively, 16.7, 27.2, and 53.0 per cent more than the usual rate. From this fact we can infer what might happen to their average rates if they served so many different places as do the companies.' An o H M I ft I I 3 I 3 ! I o t-' oeeo •o © 00° d © t- o io to d o to o « d o o ,HO o oo o .©© o o Q -o __ . _ - d r - 1 i-i «! i ■« i ^i © * oi a! ■* a « '~ l d o» i-i d d ■-< °5 t- IH O IH pH,rH H« Ort H OH OHH HKHrt QH a) Oo o» ■* o ooat o oo o o o «5 d d l " H **" d ■■* d co «5 d i> d © tw © d t» i-l rH 5 HHO) i-H rH i-H i-H rH CH rH CM i-H i-H « I 1 cs o *-> "Of. nuua 114 *g III -I o 5 II P30 si *i sSsS •I eo to iq o m to o to © to w © © d d t> oo d oo o o m o to i-H o o oo o o o us o o o d d cd d d d © o «s o Mi ^i ai i> « otooooocot- © d d d © d © i-I O O 00 O) o_ •a si d e d O ooSooooooooooot-o o o o o tNi-ioo>a>qo>QtN>o>aotNec9 O » «J o ' *9 a fl I - a -p S3 13 S g :■§, s S -a "S 2 •S 3j w .8 aS££ I sli oSi JT4 aoi j& en J-& 00/ Ji? «") 00 << s< o ^ 1 <» 1 O^ XT.' — Q) -M . ug"5| .. E fc * >-c £ * 7 > o ^ ^ X • ^ "0_ - o ■ / . - 0- ^ j> 1 - 5S 5 " /). 8- 3 O" t. M H " -«. O ' o. i_ i *^ > >< ^ s \ -" ^ ?* ^ X f}lH3) s t 9 ft V i 5. 1 7 r 3 1 1 * *) ( ? < •i J (' - * < 3 t r- C 3 3 I. 3 5 3 1 t 7 MUNICIPAL ELECTRIC LIGHTING 203 by the average capacity of its connected motors (13.23 K.W., or more than 100 per cent larger than the average for the group, and much larger than the motors of any other plant in either group) this plant has an unusually favorable business. It must also be recalled that the aver- age size of connected motors (6.47 K.W.) is somewhat greater in the public plants than in the companies (5.95 K.W.). Finally, in both cases it will be observed that the average charge for current supplied for power purposes is much below the average cost of production of all classes of current, as revealed by the operating expenses. As to the equitableness of the various rate schedules,, not much need be said, as we are not particularly con- cerned with individual cases. Most of the lighting current is sold at a fixed rate per kilowatt hour, subject to prompt payment discounts. However, one of the public plants and 6 of the private plants give quantity discounts for his service. Also 6 of the former and 10 of the latter appear to offer contract rates, which are too varied to admit of any classification. Nor are these schedules, in most cases, important, for very little contract lighting business is now done. Several plants make special rates to large consumers, to summer customers, or to those who use current for arc lights. Finally, every municipal plant except one imposes a minimum monthly or yearly charge upon fighting cus- tomers, varying from $0.50 to $1 per month, and all but two of the other group report a similar charge, which is usually $1 per month; in rare instances this charge takes the form of a meter rental. 1 In the accompanying charts are shown the differences between the average and maximum net rates, which result from the rate schedule of the two groups of plants. The 1 Cf. Mass., 1918, ch. 623. "No charge shall be made by any person, partnership or corporation furnishing electricity for lighting purposes for the use of a meter during any portion of twelve consecutive months, if the consumer during that period uses electricity to the value of nine dollars." 204 MUNICIPAL ELECTRIC LIGHTING state of affairs disclosed is highly interesting, though not to be wondered at. The close correspondence between the two in the case of the municipal plants — even in Holyoke, which has a maximum net rate of 6 cents and an average of 5.980 — indicates that practically all customers are served alike, and that the municipalities are not making any particular attempt to develop their lighting business by the offer of specially attractive rates. There seems to be no tendency whatever for lower rates to be charged by those plants which have a higher average consumption of current per customer. That the average rate is sometimes a little higher than the maximum net, is in the main ac- counted for by the minimum charges and the prompt payment discounts lost. The companies, on the contrary, have maximum net rates which seem to be for the most part merely nominal, particularly in several of the smaller plants. Obviously, in some cases, certain classes of customers gain enormously by the special rates or quantity discounts, though these usually become effective so speedily that all customers are benefited thereby. The very slight difference between the maximum and average rates in a number of the larger companies, may mean that they are not desirous of in- creasing the lighting portion of their business at the pres- ent time. We also know that they have a large number of small customers, and that their power business is rela- tively small. Our data show that, in the case of Gloucester and Quincy, which have unusually high rates in view of their large total sales, the consumption of current per customer is much below the average for the group. On the other hand, the plants showing the widest spread between the two rates, such as Lee and Vineyard, sell a relatively large amount of current per lighting customer. In connection with these rate schedules, it must be ob- served that none of the plants of either group do any free wiring. Also, 9 of the companies and 10 of the municipal 000Z oobl 00SI ooLi 009/ 00SI OOtll ooei 00X1 0011 000 1 OSb 00b osS oos> osL 00L as-') 009 ej-s- oos asii ocrti oj? ooe asx oox os-i 00/ OS I/O r- < S 2 d 2 ^? < \ \ - - * a)- (J ->~ £' o - 1 o - o O" l„- 0. 2- 3 O rr. i- _ ?- 1- O- s- _ t» O- £ 3 J - 2 aj e 2 -".5"-; > \ \ V / \ / \ / \ / \ / \ x s, s s x / 1 , z 1 / / / 1 / ^ | 1 s | (S?W3) c 1 C > 5 > l 1^0 i - » « 3 > I i t -4 •• 1 I M 3 f : F » ) C i < » - ) < > L : c , I i IN MASSACHUSETTS 205 plants make no free renewals of lamps. But 6 of the former and 7 of the latter renew carbons, while one of the former and two of the latter renew tungstens under certain condi- tions. In the matter of power rates the usual custom in each group is to fix a certain minimum monthly charge per horse power of connected load, usually $1, followed by a charge per kilowatt hour decreasing with the quantity of current consumed, according to the Wright method. A study of the maximum and average rates of the plants in each group, as revealed in the charts, indicates that they have adopted similar methods of rate making, and that even in the smaller plants, the schedules are such as will benefit the average customer. The average price received per kilowatt hour for street lighting shows a marked tendency to decrease as the quan- tity supplied increases, particularly for amounts above 100,000 hours. By reason of the diverse conditions under which the plants operate, it is probably futile to attempt any com- parison of the individual unit income of each group. However, having excluded the street lighting business in order to make the companies roughly comparable with the municipal plants, we find that, for total sales under 800,000 kilowatt hours, the former have a markedly smaller income per kilowatt hour than the latter. Yet, above this point, the average rate is considerably higher in several of the com- panies than in the corresponding public plants. The three plants which practically account for this difference are Beverly, Gloucester, and Quincy, each of which has either a very high investment per customer, high operating ex- penses, due to the character of the business done, or both. For the most part, also, they do a lighting rather than a power business, and in the quantity of current delivered per customer they stand at the bottom of the entire group of companies. Were it not for these exceptional cases, the 206 MUNICIPAL ELECTRIC LIGHTING curve of the private plants would almost always run below that of the other group, and in only a few instances slightly above it. Table 29 (p. 202) shows that the rate of increase in operating income has been about equal in the two groups since 1910, whether or not the street lighting income be included in the case of the companies. The growth in net income has also been approximately the same, if street lighting be included. The gross income of the companies exceeds that of the other group by 110.9 per cent, and their actual sale of current — as distinguished from cur- rent "delivered" in the public plants — was 114.6 per cent greater. But their gross income, excluding street lighting, as we must do for comparative purposes, was only 71.6 per cent larger than that of the municipal plants, while the quantity of current sold for commercial purposes was 84 per cent greater. Finally, the total operating expenses of the private plants were only 55.1 per cent above those of the other group. Again, the net income of the private plants, including street lighting, is about five times as great as that of the municipal plants, or, excluding the street lighting income, two and one half times as great. The comparative net income per kilowatt hour sold for all commercial purposes is 0.957 in the latter, and 1.332, or 35.2 per cent more, in the former. 1 At first it may appear that the absolute financial ad- vantage, which, from these analyses, the companies appear to have, is due solely to the greater amount of current which they sell. However, an examination of the relation 1 Two of the municipal plants, Hull and Wakefield, were subject to an actual loss in operation of about $3,500. None of the companies was operated at a deficit; but if the street lighting income be deducted in each case, so that we can have a basis for comparison with the mu- nicipal plants, it appears that three plants. Buzzard's Bay, Citizens', and Vineyard, would have suffered a deficit amounting in the aggregate to about $7,000. ^ ooo/ ooJj ooL sLt, OS-h Stir ootr sLe asi JTF 00£. sLe °sz six 007 sU oSI sri oal Si OS St o b i la §** *■ h >5r X 1 - -Li j-. I o o o 1 j o o 1 — o , * \ o V. s 3 \ \ \ \ \ J / J / / L (S5M3J) S^ » « > L ; < > I '- ,- 'i 14 i L 7 « L > c _ >- > t ) >- ! c (, > c ) L i < L c L > t c ^ IN MASSACHUSETTS 207 which the operating expenses bear to the operating in- come, discloses the fact that there is greater operating efficiency in the former, and that their improvement has been more rapid. At the present time the operating ratio of the companies, omitting the street lighting income for the sake of comparison, is 75, while that of the public plants is 83.7, or relatively 11.6 per cent higher. This ratio has been reduced during the five-year period 9.5 per cent by the former, and only 2.3 per cent by the latter, though the companies at the earlier date had only a slight advantage in this regard. Nor do these computations make any allowance for the fact that taxes and other charges not incurred by the municipal plants are paid by the private plants. To this aspect of the matter, reference will shortly be made. Table 30. Percentage Analysis of the Various Classes of Income 1910 1916 Class of income Munici- palities Companies Munici- palities Companies Companies (street litjltt- ing out) Commercial lighting. . . 78.1 ..18.5 54.3 20.3 20.6 ' 4.1 0.8 72.0 25.3 0.9 1.8 53.1 22.4 18.7 5.2 0.6 65.3 27.5 0.6 2.8 6.4 0.8 So far as the percentage distribution of the income be- tween the various classes of business is concerned, when the street-lighting income of the companies is deducted, we find that there is little to choose between the two groups, except in the matter of sales to other companies. 1 It will 1 Though the public plants of Holyoke and Mansfield sell to the local authorities the current used for street lighting, and make a corresponding entry in the income account, just as if they were private concerns, this "income" is naturally not included, since the averages would thereby be distorted. 208 MUNICIPAL ELECTRIC LIGHTING also be observed that the income from "other sources" is proportionately higher in the municipal plants. Before leaving the subject of the income, it is instruc- tive to make a few more analyses. In the first place, while the investment per dollar of operating income, excluding street lighting, has decreased from $5.27 to $4.35, or 17.5 per cent for the municipal plants, it has increased from $4.20 to $4.80, or 9.5 per cent for the companies. In other words, the comparable income per dollar of investment is in the former 23 cents and in the latter 21.7 per cent. The difference, to be sure, is slight; but the tendency indicated during the past five years is sufficiently obvious. In the light of our previous analyses, this increasing investment is justified; though, as has already been suggested, it does not appear that the companies are taking advantage of this fact so far as their rate policy is concerned, notwithstanding their fixed charges are proportionately increased. While the total income per customer from light and power sales has decreased more rapidly (25.7 per cent) in the companies than in the public plants (19.8 per cent), — the absolute figures are still about 25 per cent higher in the former ($45.75) than in the latter ($36.19), — both in light and power income they are in the lead. The per capita in- come also, when the street lighting income of the companies is deducted, is 25 per cent greater in the one group ($4.03) than in the other ($3.26). A like rate of increase in this item is to be found in both cases (32 per cent). Finally, the increase in the street lighting income per capita is due to a longer hours' use of lamps per night, rather than to an increase in the connected load. 1 The average income per kilowatt connected load, exclud- ing street fighting and sales to other companies, is, for the 9 municipal plants furnishing the complete data, $26.41, and for the companies $28.20, and the rate of decrease since 1910 has been more rapid for the latter. These figures 1 Appendix, pp. 410-413, 416-417. 1 aotrff OOSZ ooot oobt ooix ooLz ooyz oojZ OOtiZ ootX oox% 001% oooi aoil ooSI ooLl 0011 OOSI oof/ Sosi ooTl 00 1/ oool oob 008 ooC 009 00s ooir ooe oo-c 001 1) £ -u o g) J! JS^ £ a i •, is *» > _ ? tl 1 ■ ■ > . i ) > > . i > 1 i . 4 . ) j - > i - ■ 3 I ■ i i 3 3 . r / c < c -u _9 S ( -V (r A -s: -c (I >■ U) \ c -2 -j. - > < i . < -i 4fi -' to U1 »»; 5': > < > . i < * - > t <5 < > 1 1 ' -J < i r 6 J I ». ^ ^ 3 V i <■ 3 L> o ( ■7 5 l 9 < < - 7 3 i IN MASSACHUSETTS 209 are surprisingly close together. Taken separately, we find the income per connected commercial lighting load to be almost identical in the two groups; but the public plants have had an actual increase in this item (1.8 per cent) during the period, while the companies have been subject to a decrease of 18.6 per cent. This fact serves to prove our earlier conclusions to the effect that the latter are rapidly extending their service to the less profitable cus- tomers, while the former are avoiding the unattractive business. In this connection it must also be remembered that the consumption of current per kilowatt connected lighting load has increased 10 per cent for the public plants and has decreased 5.6 per cent for the private plants. It is instructive to note that the rate of decrease in in- come per connected power load has been twice as great in the municipal plants (38.7 per cent) as in the other group (18.6 per cent). This is accounted for largely by the great reduction in the power rates of the municipal plants. The income per kilowatt capacity of dynamos (street lighting excluded) has remained practically unchanged throughout the period, but is absolutely about 25 per cent higher for the companies. This condition is due in large measure to their better load factor and better diversity factor, as well as to the fact that their dynamo capacity, in proportion to the amount of business done, is somewhat less. 1 Summary From this chapter the following facts stand out prom- inently. 1. If municipal plants abide by the law, which forbids 1 Attention should be called to the fact that, while the income of the companies, excluding the street lighting income, is 25 per cent higher than that of the municipal plants, whether per customer, per capita, or per kilowatt capacity, the income per kilowatt connected load is only 7 per cent greater. This, again, indicates that they have made provision for a large proportion of customers with bad load factors, thereby, perhaps, improving their diversity factor. 210 MUNICIPAL ELECTRIC LIGHTING them to sell current below cost, — cost being broadly defined as including not only operating expenses but also charges for interest, depreciation, and maturing debt, — they cannot possibly lose money in operation. In 1915 only two of these plants, Hull and Wakefield, showed an operating deficit. 2. In 1910 the average unit cost of the companies was conspicuously lower than that of the other group. 3. Between 1910 and 1915 the public plants reduced their unit costs much more rapidly than did the private plants. 4. At the present time, when the total unit costs of the companies are put on a comparable basis, they still have a considerable advantage over the municipal plants, a part of which is probably due to their greater output. 5. The companies have a very noticeable advantage over the other group so far as the unit cost for "manufacturing " is concerned. 6. The average income from all sales of current per kilo- watt hour is almost identical in the two groups, with a slight advantage for the companies, except in the matter of power sales, in which the unit income is somewhat lower for the public plants, due to one or two exceptional cases. 7. The much more marked rate of decrease in the unit income of the municipal plants has been occasioned by the rapid growth of their power business. 8. Because of the far greater investment per customer in the companies, we might logically have expected con- siderably higher rates than we do find, or, on the other hand, we might have looked for proportionately lower rates in the public plants. 9. While the maximum net lighting rates appearing in the companies' schedules average higher than those of the municipal plants, these rates are rarely effective, because of the liberal application of the quantity discount policy. Hence even the small consumers rarely pay more than IN MASSACHUSETTS 211 would be charged by the municipal plants, in which the maximum net rate is almost without exception also the minimum rate. 10. Though the maximum net power rates of the com- panies are in the main higher, in this case also the quan- tity discounts take effect early, so that, again, the position of the smaller customers is about the same as in the public plants. 11. The operating ratio of the companies is considerably better than that of the public plants, the latter having shown little improvement in this regard since 1910. 12. Holyoke, as might be expected, shows a much lower unit cost (1.592) than that found in any of the other plants. This advantage in operation, however, is largely the result of abnormally low distribution expenses (0.266) due to the small length of lines, rather than to economies in generation, in spite of the use of some water power. The unit income (2.831) is not much lower than one would reasonably expect, in view of the nature of this plant's territory and business. CHAPTER VII FINANCIAL STATISTICS OF GENERATING PLANTS (concluded) 1. Disposal of Net Income * We are at length in a position to make some examination of the financial results of operation in the two groups of plants, as shown by the disposal of their net income. Adding to the net a few practically negligible profit and loss items of income, derived for the most part from "job- bing," interest on deposits, and the rent of fixtures, we find the total to be $566,521 for the companies and $112,075 for the municipal plants, against which charges are made as indicated in Table 31. It is interesting to observe that, while the companies have financed themselves to the extent of a little more than three fifths of their investment by means of stock issues, yet their total interest payment on notes and bonds is almost 50 per cent greater than that of the public plants. The actual amount of interest paid per kilowatt hour delivered is almost the same in the two groups, 0.414 cents in the latter and 0.369 in the former, in spite of the fact that the municipal plants must secure their cap- ital wholly by borrowing, unless they call on the tax levy. 2 It is to be remembered, however, that the private plants 1 Appendix, pp. 454-457. * In 1915, this group of municipal plants (Holyoke excluded), had outstanding $1,283,010 in bonds and $278,210 in notes, a total of $1,561,220, or 53.4 per cent of the total investment ($2,923,825). The remainder of the expenditures on capital account have been secured from the tax levy, either through "appropriations for construction," "appro- priations for bond and note payments," or "appropriations to the sinkng fund." The sum total of payments to these accounts out of earnings is exceedingly small. MUNICIPAL ELECTRIC LIGHTING £13 Table 31. Percentage Analysis of Charges against Income Companies Municipalitiea l Eolyohe Amount Percent of total Amount Percent of total Per cent of total Other income (pro- fit and loss items) . . $1,417,235 22,222 $671,761 2,957 Total $1,439,457 566,521 872,935 90,094 56,314 353,870 23,415 62.6 6.4 4.1 25.4 i'.e $674,718 112,075 562,643 62,143 92,306 24,596 55,797 8,096 70.0 7.7 11.4 3.0 6.9 1.0 Total available ("net") Charges against income: Operating expenses. . . 67.9 7.6 15.7 Sinking fund pay- Note and Bond pay- 9.2 All other charges 0.2 Total $1,396,628 42,829 100. $805,581 130,863 (deficit) 100. 100. , l Holyoke omitted. pay from 1 to 1.5 per cent more for their borrowed capi- tal than do the public plants, which have the entire assets of their municipalities to offer as security. The one group pays an average rate of not more than 4 per cent, while the other pays from 5 to 5.5 per cent, and sometimes higher. 1 The unit charges for depreciation, as a result of the statutory provisions, are much higher (0.615 cents), in the municipal plants than in the companies (0.234 cents), in 1 This was true for conditions as they were prior to 1915. During the present abnormal times the rates for new loans run much higher in both groups. 214 MUNICIPAL ELECTRIC LIGHTING which they constitute only 4.2 per cent of all charges against net income. More detailed attention will in a moment be given to this particular item. As would be expected, the larger share of the net in- come of the companies goes to the stockholders. The total amount of dividend payments during the year was $353,870, or 25.4 per cent of all charges against income. Three of the smaller companies, to be sure, paid no divi- dends, 1 but the remaining 14 paid at rates ranging from 5 to 32 per cent. The average rate was 11.94 on the out- standing stock of all the companies (10.8 if premiums be included), or 6.66 on the entire investment. Apparently there could, in some instances, be an appreciable lowering of the rates without doing any injustice to the stock- holders, though it must not be forgotten that frequently present high returns merely compensate for earlier low returns or the failure to earn any dividends whatever. The miscellaneous charges against income appearing in the profit and loss accounts, are too small to deserve atten- tion. The sinking fund and maturing debt payments of the public plants, however, — which, by the way, do not theoretically belong here, — are a considerable item, amounting in the former case to 0.164 cents per kilowatt hour delivered, and in the latter to 0.372. Together they amount to $80,393, or 9.9 per cent of all charges against income, if we consider that they should be counted in this connection. After all payments have been deducted, the companies show an operating balance for the year of $43,929, while the municipal plants are subject to a deficit of $50,415, or $130,809 if the charges just mentioned are included. Now, before discussing these charges which are in them- selves of no great significance for our comparative study, let us make a more careful study of the amount charged off for depreciation by each group of plants, for this is one 1 Buzzard's Bay, Citizens', and Vineyard. IN MASSACHUSETTS 215 of the vital issues which confront us in an investigation of this kind. Accordingly, we must note first that during the year 1914-15, 7 of the 17 companies made no allowance what- ever for depreciation. During the five-year period there are 3 plants which have never credited anything to this account, 1 and there are only 6 which have regularly writ- ten off their depreciation each year. 2 Of the individual plants, 2 charged off more than in the preceding year, and 6 made a less allowance. Also, 2 which in the preceding year charged off depreciation failed to do so in 1914-15, while 2 others which had not done so at the earlier date made a slight allowance this year. Prom these data it should be sufficiently apparent that the rate of deprecia- tion provided for by the separate companies which actually write off depreciation, is considerably higher than the average for the group. This rate we find for 1914-15 to be 1.64 per cent of the total investment of the plants reporting this item, or 50 per cent higher than the average rate for the entire group. 3 Bearing these considerations in mind, we must attempt to discover the significance of the fact that the depreciar tion charges of the public plants are 150 per cent higher per kilowatt hour delivered than those of the private plants, or, computed as a portion of the total investment, why the ratio thus expended by the former (3.16 per cent) was 200 per cent greater than that of the latter (1.10 per cent). This marked lack of correspondence might be accounted for in several ways: 1 Buzzard's Bay, Newburyport, and Vineyard. * The number of plants making allowance for depreciation during the series of years, 1910-15 inclusive, was, respectively, ll, 9, 13, 11, 10, 10. The average number thus appears to be 10.7 per year, or about two thirds of the total number. 8 The plants not writing of depreciation during this year were Buz- zard's Bay, Newburyport, Plymouth, Vineyard, Weymouth, and Winch- endon. The total investment of this group was $1,730,094, or about one third of the total investment of all of the companies studied., 216 MUNICIPAL ELECTRIC LIGHTING 1. The legal amount written off annually by the muni- cipal plants may be somewhat higher than is necessary in order to meet the depreciation as it occurs. Some sup- port for this view is found in the fact that they now have depreciation funds carried as assets, amounting in the ag- gregate to $96,728, or 3.3 per cent of the total investment of the 17 plants, and that the net addition to these funds during the year 1914-15 amounted to $16,641, between one fifth and one sixth of the total depreciation allowance, equivalent to 0.111 cents per kilowatt hour delivered, or 0.57 per cent of the entire investment. But this explana- tion does not throw much light on the problem when we find that in two or three instances the companies also have created little depreciation or reserve funds, which, how- ever, they customarily carry as a liability, and for which they make no separate return, so that in all probability the sums so designated have simply been spread over various portions of the assets. 1 2. Prom another angle it may be argued that the public plants have used a portion of their depreciation for addi- tions to plant instead of for renewals, while the companies, on the other hand, have charged off only enough to meet the necessary renewals. And, as a matter of fact, the municipal plant returns indicate that about $20,000 has been put into new construction during the year, though the records are kept in such a way that it is frequently very difficult to differentiate additions and extensions from renewals. But if we assume that our figures are correct, together with the amount added to depreciation funds, we could thus account for at least two fifths of the total de- preciation written off by the municipal plants as used for purposes other than current renewals. Prom a careful study of the returns it does not defin- itely appear that more than $40,000 of the total depreci- 1 In two or three instances small earning investments have been created at one time and another. These, however, scarcely merit attention. IN MASSACHUSETTS 217 ation was used for renewals. This would be equal to 0.267 cents per kilowatt hour delivered, and 1.4 per cent of the total investment, or in reality only slightly higher rela- tively than the amount written off by the companies. 1 It is rather difficult to say exactly where the remaining $10,000 to $15,000 of their depreciation went. Some of it was used for extensions, some for renewals, no doubt, and some was even transferred to the operating accounts for current repairs and there debited. Also, it is very certain that, in view of the comparatively small amount charged off, the entire depreciation allowance made by the com- panies was not more than sufficient to cover renewals and extraordinary repairs — indeed, it would scarcely seem to be enough for this purpose. Here, then, we have pretty good evidence that the actual provisions for present depreciation may not have been particularly different in the two groups after all. And we know conclusively that the companies are dis- posed to provide for their depreciation either when it is most necessary or when it suits their convenience, rather than according to any fixed policy. 3. Again, there is the possibility that the companies are more skillfully managed than the public plants, and that their equipment is newer and their construction and engin- eering better, so that the element of depreciation has been reduced to a mi nimum . Hence their charges under this head would be correspondingly low. There is no doubt a good deal of truth in this argument, when we remember that their station units are considerably newer (7.6 years as opposed to 9.1 years), that they use comparatively few foreign poles, and so would have less trouble with their lines, and that nearly half of their distribution system has been installed since 1910. Local conditions may also affect the problem, as well as the fact that there is a certain 1 The rate is a little less than that of the companies actually reporting depreciation allowances (1.64 per cent). 218 MUNICIPAL ELECTRIC LIGHTING ' amount of underground construction in the companies. It is also probable that in the case of many of the plants the personal factor is important; but we are not now in a position to state definitely just what weight should be attached to this element. 4. Furthermore, it may be suggested that the compan- ies are providing for their depreciation in the operating accounts; that they have adopted the "one hundred per cent efficiency " slogan of the " boys " who are in the electric light and power business, as represented by the National Electric Light Association. While they do not call deprecia- tion by that name, they may provide for it all the same in their current repairs. But if this were the case, we would expect, other things being equal, to find a comparatively high unit cost for repairs of central plant and lines. In this, however, we are somewhat disappointed, for it appears that the total expended for repairs and renewals appearing in the oper- ating accounts, was relatively lower per kilowatt hour delivered for the companies (0.380 cents) than for the municipal plants (0.519 cents). In relation to the total investment in both groups, the amounts thus expended were respectively 1.83 and 2.78 per cent. 1 Of course, some of the preceding considerations regarding more care- ful management and more modern equipment, apply here as well; yet this argument is not sufficiently conclusive. 5. Finally, there is the possibility, in fact a strong 1 In making this computation the writer has attempted to separate out the expenditures strictly for repairs from the other items in the dis- tribution expenses. Consequently, only the entry "repair of lines, arc lamps, and meters" was taken for the public plants, and the items, "repairs and renewals of lines and conduits" and "repairs and renewals of meters and transformers," for the companies. The amount accredited to the former under this head will be relatively too high, because it in- cludes arc lamp repairs. If all of the items under distribution expenses which relate in any way to repairs be included, the ratios are increased to 2.4 per cent and 3.4 per cent, respectively, while the difference be- tween the two remains practically unchanged. m MASSACHUSETTS 219 probability, even granting that there may be some truth in all of these arguments, that the year 1914-15 was not a typical' year so far as the industry was concerned. Chance may have played some part; but we know further that the market conditions were abnormal and that the price of material became almost prohibitively high. Under these circumstances, might we not logically expect that the companies, which are bound by no legal restrictions in the matter, would put off until better days a good many of the customary renewals, and consequently write off a correspondingly smaller amount of depreciation? Might they not also be induced by the desire to pay the custom- ary dividends, to postpone repairs wherever possible, whereas the public plants would be subjeet to no such influence? The writer has satisfied himself on this point by making a careful study of all of the returns of each plant for the years 1910 to 1915 inclusive. The results of- the compu- tations made appear in the accompanying table (Table 32) which presents some unusually significant data. In the first place, it is evident that the companies, as is frequently asserted, have provided for their deprecia- tion as it has occurred, and that the average yearly rate has been even a little higher than that of the municipal plants, though there have been wide fluctuationsi from year to year. If the investment in real estate were de- ducted in both groups, since so large a number of the public plants either do not value their land at all or value it low, the difference in favor of the companies would be even more marked. In the expenditure for repairs, the public plants have maintained a remarkable uniformity, as have also the companies, if the last year be omitted. In the case of the latter, the rate of depreciation charged off each year does not seem to have had any noticeable effect upon the ratio expended for repairs, except that in the year when the us l-l a> r-l A r-t A 1-1 1 at £ I |.S & -G e i-i a eo ih © © o PH i-H -4 t-l r-l r-l 1.-1 si « <* « o a ,•* 4*1 » oi oi o» as i- Ol g 00 ■* '"» o r- 50 t* r-l A r- e £ 1 O I 9 a) >a a 09 9 a 2 "-<' H fc" c a os a © a a • € «■ r-i 1 i 1 4*1 O O r-l O CO CO i-i I 1 1 GO CO 09 09 09 91 09 1> 4 1 c 1 i- ot j I «s a) *j or , .0! r- 09 1 c e s s o a oc . s <• r- 1 ts a r* a r- « ■e 5 SB- **• "si •6 s t 1 s 00 O) s . ■ o *-* 09 ^ s § a cc r- a t- I cc i- c «C »— o 1 ft * o oc Of Of CC r- * a ' 1 „ t» e p- r- t- >r 1 1 0" a oc cc K CC Ol •9 a o a or ' *■* 1 25 a e* >e T- 91 , Sf . or K 92,806 Other cost items 8,096 Total $217,355 Add taxes lost (0 . 428 cents per K.W.H. delivered) 64,200 Total charges $281,555 Deficit $169,480 Cost per K.W.H. for street lighting (cents) 4 . 710 Gain over company rate (7.575 cents) 2.865 Equivalent to (about) $101,100 In order to put the public plants on the same bases for comparison as the companies, we should deduct from this apparent gain: (a) Additional interest which would be paid under private ownership (1%) 29,238 (6) Salaries which would have been paid to officers. 30,000 Total .... $59,238 Equivalent to rate per K.W.H. used for street lighting of (cents) 1-650 Making cost per K.W.H. (cents) 6.360 Apparent gain from municipal ownership of $41,800 Equivalent to per cent on investment ($2,923,825) of . . . 1.4+ 234 MUNICIPAL ELECTRIC LIGHTING In Table 37 are indicated the ordinary charges against net income, aside from sinking fund and note and bond payments, which were actually incurred during the year. From this simple analysis it would appear that the plants were subject to a deficit of only $50,470, which is equiva- lent to 1.400 cents per kilowatt hour used for street light- ing, or 6.175 cents below the average rate charged for this service by the group of companies under consideration. This would be equal to an apparent saving of $221,800 as a result of municipal ownership. Unfortunately this is literally too good to be true. Our next table (38) carries the analysis somewhat farther and includes the sinking fund and maturing debt pay- ments, which are a current charge that must be met out of the tax levy if not out of income, and which would never have been incurred had not the municipality owned its plant. Having made this addition, we find that the deficit which might be considered the "cost" of street lighting, is increased to $130,863, and that the apparent saving under public ownership is $140,400. If any one should ask what policy is to be pursued when the debt has all been paid off, the logical reply is that, so far as can be determined from our study of the situation, it is scarcely probable that a progressive plant will ever be debt free, unless it draws upon the tax levy for capital charges. There must be constant new investment in order to keep up with the progress of the arts and the growth of industry and population. But thus far we have failed to make allowance for the fact that the public plants have not been paying the taxes which a private business would have paid. The income thus lost must simply be made good by levying at a higher rate upon other private property. Bricks cannot be made without straw: municipalities cannot be financed without funds. Expenses foregone should result in correspondingly lower charges for service under municipal ownership. Since we IN MASSACHUSETTS 235 have found this not to be the case, and since the rates appear to' be comparatively higher for the public plants, it is logical to charge against the street lighting account the additional contributions made by the taxpayers — a burden of which they would have been relieved, had the electric plants been privately owned. This is very tangibly a part of the real cost to the community. Doubtless the principle here involved is too well understood to merit further comment. l Accordingly, we have computed the taxes lost at the same rate as is paid by the companies (Table 39). This can be variously estimated at 0.428 cents per K.W.H. delivered, at 12 per cent of the operating expenses, or at about 2 per cent of the total investment, based upon the relative amount paid for taxes by the companies. Thus the deficit is increased by about $60,000 to $75,000, and the gain through decreased cost of street lighting as a result of public ownership, drops to about $75 ,000. 2 But municipal light boards, selectmen, mayors and aldermen, municipal treasurers and auditors, not to men- tion others, have contributed to the municipal plants, with 1 In England, and probably in Germany, surpluses earned by the mu- nicipal lighting department are frequently used for other public pur- poses, and thus effect a lowering of the tax rates. This, however, could not happen in Massachusetts. Cf. Mass., 1914, ch. 742, sect. 114. 2 The computation based on the total investment makes the estimated taxes disproportionately small, due to the conditions of investment existing in the public plants, as previously discussed. Had the plants been privately owned, so far as we can judge from our study, taxes would have been secured on a considerably increased investment; hence the municipalities have lost relatively a greater sum. Probably the percentage computation, 12 per cent of the operating expenses, is the closest approximation, and, though the figures thus reached are absolutely highest, the public plants really are given a con- siderable advantage, for without salaries of officers, etc., the taxes would form a comparatively higher portion of the total expenses. The computed amount based on the rate per kilowatt hour delivered, is reasonably satisfactory, though probably too low, since, for obvious reasons, the unit cost for this item might tend to grow higher as the out- put of the plant becomes smaller. ' 836 MUNICIPAL ELECTRIC LIGHTING little or no refaiuneration, the services which, in the com- panies, are performed by the salaried officers. This freely rendered service should be reflected in lower commercial rates, and, in lieu of that, the street lighting should cost correspondingly less. Hence another adjustment may be made for this item, estimated at the same rate paid by the companies, if we wish to find out how much the street lighting is really costing. 1 Having made this cal- culation, the "gain" of the public plants is further re- duced to $35,000 or $45,000 — not a very princely sum (Table 40). We may, however, approach the problem from another point of view, and in addition to the taxes lost we can include interest, at the customary rate, on the total invest- ment, — not merely on the bonds and notes outstanding (Table 41). The resulting figures seem to indicate that the municipalities have saved about 2.865 cents per kilo- watt hour on their street lighting, or in the aggregate some- what more than $101,000. If the salaries which would have been paid to officers be also added, so that our stand- ard of measurement may be kept unchanged from the point of view of operating efficiency, ^we must reduce this amount by about $30,000. And, finally, if allowance be made for the higher rate of interest which would have been paid under private ownership (at least 1 per cent) and which should also be reflected in lower cost of street lighting, we must make a further reduction of almost $30,000, so that the total advantage is slightly less than $42,000, or 1.4 per cent on the entire investment. Naturally the sinking fund and maturing debt payments are not included in this particular computation, for, since we have charged interest 1 It makes no difference whether we deduct from the company rate, which is our standard of measurement, the saving in costs which theo- retically should be effected in such cases as this — and then note the difference between this corrected rate and the actual municipal rate; or whether we simply add the item to the previously indicated cost of street lighting, and subtract the total from our standard, 7.575. IN MASSACHUSETTS 237 on the total investment, that would seem to amount to "paying interest on the debt already paid." As to whether or not interest on the total investment should be included in such cases as this, where a consider- able portion of the debt has been paid off and where an- other portion has been "borrowed" from the taxpayers in the form of "appropriations for construction," there has been much diversity of opinion. The writer, however, is clearly convinced that /the position which he has taken is logically sound. 1 In order to find out what a service ren- dered by the public really costs in the economic sense, we must not lose sight of any of the capital involved in the production of that service. The mere fact that bonds and notes have been paid off through the tax levy, or even out of earnings, does not in any particular alter the fact that just so much capital has been invested by the public, on which a fair return should be earned — and this, in the present instance, would be expected to show itself in the lower cost of street lights. Even if the debt had been can- celed out of earnings, it must still be remembered that the customer has contributed, yes, invested, his money, as a result of paying more for the service than that service cost the municipality. This does not at all mean that he would capitalize against the customers of a municipal plant past profits in operation. It does mean that, in computing the actual cost of street lighting, we must not let the higher charges to the consumer carry the street lighting account. In practically all cases, as just stated, the investment in addition to that represented by the outstanding debt, has been created by means of appropriations from the tax 1 The view herein held is confirmed by letters which the writer has received from New York Public Service Commission of the First District and from the Wisconsin Railway Commission. It is also consistent with the Massachusetts law regarding the cost of service of the public plants; and for nearly twenty years, the Massachusetts Board of Gas and Electric Light Commissioners has considered interest on the total investment in making its calculations. 238 MUNICIPAL ELECTRIC LIGHTING levy either for construction or for the payment of maturing debt; hence the question is relieved of some of its complex- ity. The practice followed by some of the public plants of appropriating liberally from the tax levy for street lights, depreciation, and interest payments, and then appropriat- ing from earnings for note and bond payments, is a naive way of covering up the actual financial conditions. In- stances of bona fide payment out of earnings are exceed- ingly rare except in the case of Holyoke. 1 So far as the writer can determine, the case is not par- ticularly affected, whether, on the one hand, to the cus- tomary charges against net income we add sinking fund and maturing debt payments as well as taxes lost (together with the theoretical item of "salaries of officers," in order to be exact), or, on the other hand, omitting sinking fund and debt payments, we include the interest on the entire investment. The latter position, however, would appear to be the more correct one. What does the small advantage in the price paid for street lighting according to these computations really mean? In the light of our earlier investigations it signifies very little. In the first place, even this "profit" would probably be wiped out if we were to apply all along the line the same tests to the public plants as to the private plants. In addition to taxes and salaries of officers which have already been discussed, there would be interest on a higher and frequently much needed investment, together with a number of other operating charges. In the second place, we should expect the street fighting costs in the municipal plants to be much lower than in the other group, because of the longer number of hours' use of lamps per night (9.1 hours as contrasted with 7.6 hours), as well as because of 1 So far as the writer is informed, the municipal plant of South Norwalk, Connecticut, is the only public plant which makes allowance for taxes lost, interest on total investment, and in addition a reasonable return on capital invested. m MASSACHUSETTS 239 the more favorable territory served and the shorter lines per lamp (511 feet vs. 617 feet). But, on the other hand, many gains along other lines under private ownership might be cited. The tables show that the companies not only could have given absolutely free street lighting to their municipalities, but also that in addition they would have been able to make a considerable profit if put on the same basis as the public plants. There are also good reasons for believing that the quality of street lighting service rendered by the public plants is, in some instances at any rate, inferior to that demanded and secured from the privately owned plants. However, it is futile to cany this discussion further. The results of our analyses in this chapter seem to indicate that the municipal plants in general have simply held their own financially, even though, in some instances, it may have been at the customer's expense. The actual "profit" which they are at present making is practically negligible. Having made a similar study of the cost of street lighting for the year 1909-10, the writer finds that the conditions then were not greatly different from those met with in 1914-15. For earlier years it is difficult to secure accurate information, as the current was not usually metered. Sotmaey The main points developed in the present chapter may be summed up as follows: 1. The interest rates paid by the municipal plants are from 1 to 1.5 per cent lower than the rates paid by the companies. The average rate of dividends paid by the latter are at present rather liberal, though probably not excessive, in view of the earlier low rates and complete absence of returns in several cases. 1i While the average depreciation allowances made by the companies in 1914-15 was relatively much lower than that made by the public plants, this year is found not to 840 MUNICIPAL ELECTRIC LIGHTING be by any means typical. On the contrary, during the five-year period studied, the average rate charged off by the private plants was fully as high as that written off ac- cording to law by the other group. A few of the com- panies, however, have been very lax in this regard. 3. The average expenditures for repairs during the period 1910 to 1915 have been relatively, though not conspicu- ously, lower for the companies. 4. When put on a reasonably comparable basis, the financial showing made by the municipal plants is consid- erably less satisfactory than that made by the companies. 5. The only financial gain accruing to the communities owning their plants, is that they apparently secure their street fighting at a slightly lower cost per kilowatt hour than would otherwise have been the case. This gain, how- ever, is too small to be of any consequence, when consid- ered in connection with the facts as we now know them. 6. There does not seem to be any direct relation existing between the size of the municipal plants and the estimated financial gains accruing through a lower cost for street lighting. Tentative Conclusion on the Financial Results of Public Ownership Finally, so far as the financial aspects of operation are concerned, there seems to be little in the rates and less in the investment policy to cause us to feel optimistic on the subject of municipal ownership in the cases studied. Nor, on the other hand, have they apparently made any con- spicuous failures, except in one or two instances. 1 They simply seem to have had the pleasure of doing for them- selves, with slight tangible returns, what might have been done, and perhaps better done, by private enterprise. When we take into consideration the great loss which is certain to result when a number of the generating plants are junked and current is purchased from private con- > Hull and Wakefield. IN MASSACHUSETTS 241 cerns, — a tendency which is at present well defined, both in the public and the smaller private plants, — the out- look is not reassuring. True it is, in many cases considerations other than finan- cial may be of the greater importance in questions of pub- lic ownership. To this aspect of the matter some attention has already been directed and further reference will pres- ently be made. Yet we must not forget that a commercial enterprise, whether in private or in public hands, should normally meet both the physical and the financial tests. From the coldly practical point of view, if our public plants fail in either of these tests when compared with private industry, the burden of proof being naturally put upon them, they cannot be called a success. If it be contended that our decision should be based on more ideal and less tangible considerations, it may be suggested in reply that we are in danger of losing ourselves in a maze of uncer- tainties even greater than those at present encountered, as a consequence of attempting primarily to measure the results of commercial business by other than commercial tests. It is a question whether the demands of political expedi- ency should normally ever outweigh the physical and financial efficiency in matters of this kind. And, surely, if the commercial tests fail, there must be some unusually urgent political or social motive in order to justify any change from private ownership. CHAPTER VIH FINANCIAL STATISTICS OF THE PUKCHASING PLANTS 1. The Capital Account » After the detailed analysis which has been made of the financial data of the two groups of generating plants, it will be possible to review rapidly the less important, but constantly increasing group of plants which purchase then- current. The same methods of study will be followed as in the preceding case. Accordingly, we find that it makes practically no dif- ference whether we select as the total investment in the municipal plants, the aggregate liabilities created by the outstanding debt, and the appropriations from the tax levy for debt payments and for construction, or, on the other hand, simply use the gross plant cost as explained in the earlier chapter. The latter is only a fraction of one per cent higher than the former. Hence these figures have been chosen to compare with the total plant cost of our group of 16 companies. 2 It appears from Table 42 that the total investment of the comparable companies is 56 per cent higher than that of the municipal plants, omitting Norwood, and that the average investment per plant is about two times as great in the former as in the latter, though their output of current is less than 70 per cent higher. This disparity is 1 Appendix, pp. 466-467. 2 The aggregate of the capital and loans of the private plants out- standing is a little too high (about $68,000), due to the fact that three of the companies, North Brookfield, Provincetown, and Randolph, are unincorporated and have issued an excess amount of stock, which has not been approved by the Board. When these exceptions are deducted, the capital and loan liabilities are almost equal to the cost of plant as carried in the construction accounts. MUNICIPAL ELECTRIC LIGHTING 243 Table 42. Comparative Investment Data (Purchasing Plants) Corn-panics Municipal plants Total investment $1,110,738 $579,508 (905,060)* ' Average per plant 70,000 $39,000 ' (60,337) s Net additions during year $111,632 $42,680 New construction during year 111,632 53,567 Number K.W.H. delivered 3,221,028 2,428,240 Average per plant 201,314 121,412 Average purchased per plant 266,715 157,173 Connected load (K.W.) 7,793 6,638 Average per plant 487 332 Length of lines (miles) 1,100 1,458 Average per plant 68.7 72.9 (71.6) a Number of poles per plant 750 794 (792) 2 Investment per K.W.H. delivered (cents) . . 34 24 (30) 2 Investment per K.W. connected load $144 $81 (128) a Investment per mile of line $1,010 $400 (843) a Percentage of total lines in commercial lines 68.6 65 .7 Investment in commercial lines $760,000(?) $S80,000(?) Investment per customer $126 $66 (112) s Operating income (street lighting out) $227,528 $150,884 Investment per dollar of operating income . $4 . 90 $3 . 90 (4.70) 2 Total number of customers 6,021 5,776 Inhabitants of territory served 87,480 53,581 1 Norwood omitted. s Manchester omitted, as all lines are underground. caused, partially at any rate, by investment in dead as- sets. The fact that 6 of the public plants do not value their land, which is returned as "owned by the town," and that 6 others report no real estate whatever, helps to keep their investment disproportionately low, though real estate should not be a very significent item in the capital account of a distributing plant. But, from our earlier 244 MUNICIPAL ELECTRIC LIGHTING study, it will be recalled that the municipal plants have, on the average, a somewhat more extensive distributing system, the investment in which might be expected to be sufficient to cancel the lack of investment in real estate. (In these comparisons it seems best to omit the company of Manchester, which has put $150,000 into underground construction — a rather large venture for so small a plant, but necessary in order to satisfy the "artistic" tastes of the people of the town.) The figures here presented serve to show more clearly the truth of our earlier suggestion to the effect that the relations which exist between the two groups of purchas- ing plants are very different from those found in the case of the generating plants. This second group of companies do not seem to have given a good account of themselves either from a physical or from a financial point of view. They are, in the main, suffering under the financial burden which must always be borne by those electric plants which, after equipping themselves for the production of current, scrap their central station equipment and purchase current from others. 1 But even those which have never had gen- erating equipment seem to have much less to show for their expenditures than have the municipal plants. To be sure, a larger investment can be expected in the former because their business is two thirds greater; yet for this very reason some of the data given make their case so much the worse. About all that can be said for the companies, since they appear to have by far the more favorable territory to serve, is that their investment per dollar of gross income approaches more nearly to the figure shown by the munici- pal plants than do any of the other data — and this, under the circumstances, is no particular cause for satisfaction. Finally, it must be remembered that 14 of this group of 1 It will be remembered that only five of the group, Harvard, Ludlow, Manchester, North Brookfield, and Williamstown, began merely as dis- tributing plants. IN MASSACHUSETTS 245 private plants are "controlled" — possibly with some degree of success ! Just a word should perhaps be said regarding the increase in investment during the year under consideration. It appears that the net additions to plant amounted for the companies to $111,632, or about 10 per cent of the entire investment, and for the municipal plants the net additions were $42,680, equal to nearly 8 per cent of the investment. Though the showing here made is more favorable for the former, it hardly seems sufficient to absolve them for their earlier financial blunders or to remove the effects of their financial misfortunes, if such we choose to regard them. On the other hand this apparently healthy policy of exten- sion may indicate that, from the public point of view, the companies are now endeavoring to give a quid pro quo. However, when we compare the total increase in length of lines during the year, 116 miles for the companies and 132 miles for the municipal plants, 1 with the amount ex- pended on new construction, $111,632 and $53,567 rer spectively, we find that the cost per mile of new line, since most of the increase legitimately belongs here, is still nearly $1,000 in the one group and about $400 in the other. The leopard does not seem to have changed his spots! There could scarcely be sufficient difference in the quality of the construction to justify the difference in expense. The balance sheets show a small surplus for each group, $20,000 in the case of the companies and a little more than $30,000 for the public plants. Only two of the former and three of the latter return a slight deficit. The com- panies have financed themselves to the extent of two thirds of their investment by the issue of capital stock. The municipal plants, on the other hand, have secured about one third of their construction funds by means of direct 1 The new plants of South Hadley, Lunenburg, and Paxton, account- ing for an increase of 136 miles of line in the municipal group, must be omitted because their Uses were not reported in 1914. 246 MUNICIPAL ELECTRIC LIGHTING appropriations from the tax levy; and they have, by the same method, paid off a large portion of their bonds and notes, so that the actual outstanding indebtedness is now only $253,163 — less than one half of their total invest- ment. 2. Operating Expenses and Operating Income * The operating efficiency of the group of companies, when compared with the public plants, is far from what we might reasonably expect in view of their superiority in size. The only instance in which they appear to be effecting any considerable economies is in their distribution expenses. The better showing here made is due partially to their larger output of current, and partially, perhaps, to the character of their territory. It is also possible that they are not keeping their lines in as good repair as are the other group. Furthermore, the municipal plants are probably including here labor costs which should be charged to the construction accounts. Many of the other important items of expense are con- spicuously higher for the companies than for the public plants, and the difference is very marked in the case of general office expenses (under which the companies enter advertising expenses, etc.) and general salaries, where, pre- sumably, it should be easiest to cut down the costs. If, however, the taxes paid be deducted, the two groups are put on a reasonably equal basis, so far as the total ex- penses are concerned. Some additional items should also be charged against the municipal plants, for the free services which they receive from town officials, or, instead of this, we might deduct the salaries of officers in the other group. Free quarters in the town hall are an important item. It is also significant that only 9 out of the 20 public plants are paying insurance, though the average rate paid by the group is almost as high as that paid by the companies. 1 Appendix, pp. 468-475. m MASSACHUSETTS 247 Table 43. Comparative Expenses pee K.W.H. sold (Purchasing Plants) Companies Municipal plants (cents) (excluding Nor- wood) (cents) Total ... 6.818 6.890 Current purchased 8.577 3.780 Distribution (total) 0.821 1.500 Distribution wages 0.270 0.490 Maintenance and repair of lines 0.485 1.000 Per mile of line . .. $14.20 $16.50 Per cent of total investment 1.6 4.2 General salaries 0.376 0.265 General office expenses 0.452 0.194 Insurance 0.183 0.109 Taxes 0.410 Salaries of officers 0.219 Total management and miscellaneous 1 . 920 . 700 Total — taxes deducted 5.908 5.980 Total — taxes and officers' salaries deducted 5 . 769 5 . 980 Operating ratio (street lighting out) 90 . 96 . Operating ratio (taxes out) 84. 96. Total operating expenses $208,492 $145,202 Total — taxes deducted 190,340 Total — officers' salaries deducted 183,285 145,202 It is surprising to find so close a correspondence in the unit income of the two groups of plants. The companies seem to make up by means of higher lighting rates the concessions which they give to their power customers. In view of the better character of their business and the larger income per customer, their rates are probably too high, if we accept as our standard the municipal plants, which are apparently giving good service at low cost, though many of their customers would seem to be unprofitable. It should not be forgotten that. the former find it necessary to be 848 MUNICIPAL ELECTRIC LIGHTING Table 44. Percentage Analysis of Expenses (Purchasing Plants) Companies Municipalities Norwood Character of Expense Amount {dollar a) . . Per cent of total Amount (dollars.) Per cent of total Per cent of total I. Operating expenses — General analysis: N 3.0 56.6 13.0 17.1 3.9 6.5 £1,671 91,878 36,371 12,476 2,807 1.2 63.3 25.0 8.6 1.9 16,054 115,161 26,435 ' 34,825 " 7,865 13,152 0.1 Purchase of current .... Distribution . . .'.'■» jl . . . . , Office expenses, andj^oan- 80.0 11.2 7.8 0.9 Taxes .........%,... Total — without taxes $203,492 - 190,340 ¥145,203 100. 100. II. Operating expenses — Detailed analysis, taxea out : 6,504 115,161 8,805 15,607 2,023 12,123 7,055 1..Q74. 14,560 4.296 2-,24ft 1,333. 3.2 60.6 4.6 8.2 1.1 6.4 3.7 0.6 7.7 2.3 1.2 0.7 1,671 91,878 10,047 24,165 2,159 6,430 263 4,720 2,639 683 548 1.2 63.3 6.9 16.6 1.5 4.4 0.2 3.3 1.8 0.5 0.4 0.1 Distribution wages. Repair of lines, meters, 80.0 3.2 7.0 Distribution tools and 1.3 Directors' allowances. .. Salaries of municipal 6.0 1.2 General office expenses. . 1.8 0.5 All other 0.3 Profit and loss income — $287,560 11,92.8. $151,556 1,631 Total $299,478 $153,187' Total charges against in- come : $203,492 24,302 17,565 51,657 5,341 67.3 8.0 5.8 17.1 1.8 • $145,202 9,345 16,106 280. 20,997 " 92 . 75.6 4,9 8.4 0.2 10.9 0.1 84.6 3.3 6.2 Sinking fund payments. . Note and bond payments '5I9 - Total $302,357 2,879 100. $192,022 38,835 100. 100. 1 earning a fair return on a much larger investment; but this consideration should cause them to effect greater savings in their operating expenses. 3s 0©00©©0t>at0©»o©©ct*© >o O Qi»O-0 O 1-1.O : ai >o a> S ■< ; O OJ ■ © 00 . id •& .iiid &=1 3 a I £?? :§.§ >» 5 ■ S 0"° ^'^oSaSJJlilllJJJIJlJ 250 MUNICIPAL ELECTRIC LIGHTING , Table 46. Comparative Income (Purchasing Plants) Municipal Plants (excluding Companies Norwood) A. Income per K.W.H. (cents): Total operating income 8.928 9.090 Total (street lighting out) 8 . 945 9 . 090 Total from sale of current 8.723 9.070 Total (street lighting out) 8.700 9,070 Commercial lighting 12.418 10.387 Street Lighting 8.870 Power 3.754 5.635 B. Other comparisons: Net income $84,069 per K.W.H. sold (cents) 2.610 Net income (street lighting out) $24,038 $6,353 per K.W.H. sold (cents) 0.946 0.380 Number of lighting customers 5,961 5,718 Number of power customers 305 309 Income per lighting customer $30 . 40 $23 . 25 Income per power customer $123.10 $40.80 Income per kilowatt connected load: Light $33.60 $23.60 Power $16.20 $14.50 Total operating income $287,560 $151,556 Total income (street lighting out) . $227,529 $151,556 Profit and loss income 11,918 1,631 3. Disposal of Net Income: Comparisons 1 Nine of the municipal plants suffered some loss in oper- ation, while the net gain for the group was a little more than $6,000. Of the private plants, if the street lighting income were to be omitted, 6 would have been operated at a loss. The amount of depreciation written off during the year is not far apart in the two cases, 0.661 cents per kilowatt hour in the municipal plants and 0.545 cents in the com- panies, though 7 of them did not make any allowance for this item. Judged by the ratio which the amount of depreciation bears to the total investment the rate allowed 1 Appendix, pp. 476-477. IN MASSACHUSETTS ' 251 by the latter would appear to be too small. Since, how- ever, it is probable that in many instances a good portion of their property has been "junked," they are not liable to serious criticism. The assessed valuation, it must be remembered, is little more than half the "total invest- ment" as we have taken it. The dividends declared amounted to more than $50,000, 7.4 per cent on the capital stock, and 4.7 per cent on the investment, swollen though it be. 1 After all charges were met, there was a deficit for the year of about $3,000. Had the companies given free street lighting service, and had they not paid taxes, they would have had at the end of the year a net income of nearly $40,000, about half of which would be accounted for by the company of Manchester. This sum would be just enough to meet the depreciation and interest charges. The municipal plants, on the other hand, can show an operating surplus of only $6,000. Other comparisons might be made, though it appears that the financial advantage in operation of the private plants is accounted for chiefly by their larger busi- ness. Their total income exceeds that of the other group by an amount proportionately equal to the difference in quantity of current sold. 4. The Cost of Stbeet Lighting 2 An attempt has been made to compute the cost of street lighting by a method similar to that employed in the pre- ceding chapter, of which no further explanation need here be given. It is evident that, if we consider only the actual outlays during the year resulting from public ownership, allowing for the taxes lost at the same rate paid by the companies, there has been an aggregate saving of about $16,100, or less than 3 per cent on the investment. If, in 1 Three of them, Harvard, Ludlow, and Sunderland, did not earn enough to pay dividends. 2 Appendix, p. 478. 252 MUNICIPAL ELECTRIC LIGHTING addition the appropriations from the tax levy for new construction were to be counted, this apparent gain would be more than offset. Table 47. Cost of Street Lighting to the Towns owning their distributing system I Net income from operation $6,853 Other income 1,631 Total $7,984 Charges against income: Depreciation $16,106 Interest paid 9,345 Taxes lost (estimated at 0.41 cents per K.W.H. de- livered) 9,963 Other items 92 Debt payments 23,777 Total $59,283 Deficit 51,899 Number of K.W.H. used for street lighting 760,923 Cost per K.W.H. (cents) 6.750 Rate charged by companies 8.870 Apparent saving per K.W.H. (cents) 2. 120 Equivalent to (about) $16,100 II. A. Available income from all sources $7,984 Charges against income: Depreciation $16,106 Interest on entire investment @ 4% 23,180 Taxes lost 9,968 Other items 92 Total , . . . $49,341 Deficit 41,357 Apparent cost of street lighting per K.W.H 5 . 485 Apparent saving per K.W.H 3.435 Equivalent to (about) $26,100 B. Commercial lighting rate of companies (cents per K.W.H.) 12.418 Commercial lighting rate of public plants 10. 387 Apparent gain under municipal ownership (cents per K.W.H.). 2.031 Number of kilowatt hours used for commercial and domestic lighting in municipalities owning plants. .1,279,982 Aggregate saving $26,000 Making an apparent total gain of $52,100 and actual (?) cost of street lighting $15,250 Equivalent to a rate per K.W.H. (cents) 2. 000 A saving per K.W.H.of (cents) 6.870 m MASSACHUSETTS 253 According to the other method, when interest is com- puted upon the entire investment and maturing debt payments are omitted, the cost would seem to be some- what lower, about 5.435 cents per kilowatt hour instead of 8.870 as in the companies, and the advantage arising under public operation might be said to be about $26,100, somewhat more than 4 per cent on the plant cost. Most of this surplus would be absorbed, were we to give due consideration to the free services of various kinds ren- dered by the towns, as well as the lower interest rates which result from the credit of the municipality. 1 These advantages, however, should, and probably have resulted in lower charges for commercial service than might other- wise have been secured. Hence, as indicated in the table (47, II, B) these municipalities seem to be getting their street lighting at a very low rate indeed. From the foregoing brief analysis, so far as the statis- tics can show, it appears that this group of little public plants have been operated with a considerable degree of effectiveness. Though they have just about broken even, financially, they have certainly justified their existence by giving comparatively low commercial lighting rates. Supported by the hearty coSperation of the communities in which they are located, assisted at all times by the Commissioners, they have been able to render their con- sumers at a reasonable rate that service for which private enterprise would probably have expected a much more liberal reward. Dependent on private enterprise for the solution of the more technical problems connected with the generation of current, they have been able, at a merely nominal outlay, to find public spirited citizens who are willing to devote a large part of their time to "managing" the municipal plants, and doing a little of every kind of work for which private concerns would have to pay dearly. 1 The average rate paid by the small public plants is close to 4 per cent, while this group of companies pay usually 5.5 per cent. 254 MUNICIPAL ELECTRIC LIGHTING Addendum: Perhaps it should be suggested in this con- nection that, after having studied the local situation with some care, the writer feels that the preceding statistical analyses may in some ways tend to be misleading in regard to this group of municipal plants. 1 In the first place, the investment in useless equipment, amounting to something less than $200,000 as nearly as can be esti- mated, should be deducted from the total investment of the companies in order to put them on a reasonably com- parable basis with the public plants in so far as present- day financial efficiency is concerned. This would reduce all of their investment data by more than 20 per cent. 2 Accordingly, we find that, with this adjustment, the in- vestment per kilowatt hour delivered is only 1% cents for the private plants, instead of 30 cents. Also, the invest- ment per dollar of operating income, street lighting ex- cluded, becomes only $3.10 in the companies as contrasted with $3.90 in the other group. And the average invest- ment per plant, then, is by no means out of line with the relatively greater amount of current sold. Again, not only do a large proportion of the municipal plants own no real estate or buildings of any kind, as pre- viously stated, but also as the current is metered at the town line and frequently transformed by the selling com- pany, they are saved the expense of large transformers and transformer sheds, etc. Their investment is in lines alone, while the companies naturally have a good deal of money in land and buildings. In a number of cases, also, the line construction of the smaller municipal plants is reported to be below the standard which is common with the other group. This fact may partially explain the much higher cost of recent extensions per mile of line in the private plants. Finally, it has been found that, in many instances, when extensions are made, the cost of labor and superintendence 1 Cf. ch. xm, infra. ^ a Manchester omitted. IN MASSACHUSETTS 255 which is properly chargeable to the construction account has in the municipal plants been treated as an operating expense. Though every influence is exerted to keep the capital accounts low in the public plants, the tendency is wholly in the opposite direction in the private plants, for reasons which it seems scarcely necessary to comment upon. Hence, this policy has operated to make the com- parative investment much lower in the former than in the latter. If all of the foregoing factors could be properly evalu- ated, it is probable that the disparity between the two groups would not be so noticeable, though the companies would still be under a disadvantage. And, so far as the operating expenses are concerned, it must also be recalled that practically all of the public plants are so new that there has been very little replacement or renewal of the dis- tributing system needed, while the cost of upkeep has been almost nil. In a few years the turning point will come when we can look for a greatly increased unit cost of oper- ation, in spite of the fact that practically nothing is being paid for management. SUMMAKT The results of our study of the financial conditions of these two groups of purchasing plants may be briefly stated as follows: 1. There appears to be far greater economy in invest- ment in the municipal plants than in the companies. In this connection, however, we must remember (a) that the latter, having for the most part formerly generated cur- rent, have an unavoidably large investment in "dead assets." Also (6) the tendency of these small public plants is to keep the apparent investment account low, and to include in operating expenses what is really a capital charge. 2. The companies seem to have an unnecessarily high 256 MUNICIPAL ELECTRIC LIGHTING unit cost of operation, as compared with the other group; but the municipal plants receive a good deal of unpaid or under-paid service, and on account of their recent installation the cost of upkeep is at a minimum. 3. Though the public plants appear to have the less desirable territory to serve, their average income per kilo- watt hour sold is practically the same as that of the com- panies. The lighting rates of the former are lower (about 10 per cent), while their power rates average very much higher (50 per cent) than the corresponding rates of the private plants. 4. This group of municipal plants, with the exception of Norwood, does not seem to have made any direct financial gains. However, there is little question that the rates charged are in general lower than those which would have been charged by private plants, had they been in the field. Whether this will continue to be the case, after the "season- ing" period is passed, is an open question. 5. The public plant of Norwood, during the year 1914- 15 at any rate, made a better financial showing than any other municipal plant of either group. It appears not only to have given the town absolutely free street light- ing, but also, in addition, to have made a little money in operation ($255), after all possible charges have been allowed for. It must be recalled, however, that the local conditions and the business are unusually favorable. CHAPTER IX MISCELLANEOUS CONSIDERATIONS 1. Labor and Wages » Having examined at some length those aspects of our subject which can be most readily measured in terms of physical units, we must devote brief attention to several other considerations, more difBcult to evaluate, but none the less highly significant. Many students of the problems of municipal ownership are particularly concerned about the questions which relate to the employment of labor. Frequent assertions are made to the effect that public labor is less efficient than private labor, not to mention the possi- bilities for political corruption. Accordingly, before dis- cussing the information secured in the local survey, it will be of interest at this point to attempt a few comparisons of the conditions which are indicated from our study of the returns of the two groups of plants. - In no respect are the accounts prescribed by the Board less satisfactory for our purposes than in the data which they require regarding employees and wages. While the "average number of employees" for the year — whatever the "average" may be — is given by both groups, only the public plants are compelled to return the wages which they pay. For the companies, however, the salaries of officials are given, and it is possible in a very crude sort of way to estimate, in part, the average wages per employee, by comparing the number reported with the outlays for wages appearing under the different heads "wages at stations," "distribution wages," and "general salaries." But there is constant overlapping, and, particularly in the 1 Appendix, p. 458. 258 MUNICIPAL ELECTRIC LIGHTING case of the linemen, no accurate data can be secured, for costs of material and labor are lumped together in the item "repairs and renewals of lines, etc." Other difficulties, however, present themselves because of the lack of consistency and uniformity in the methods which are followed in determining the average number of em- ployees. In many cases no line is drawn between regularly employed labor and occasional labor, or between full- time and part-time employees. Nor does any clear dis- tinction seem to be made between labor which is used on new construction, the wages of which would be charged to the capital account, and labor which is employed in the operation of plant. The growing policy of "jobbing" cer- tain portions of the work, — even in the case of repairs, — which is found in some of the larger companies, also tends to obscure the relations which exist between the number of employees and the operating labor costs. Again, in many cases, wages are returned under a cer- tain head, with no report of a corresponding number of employees; while frequently a number of employees are listed, though no wages appear for them in the operating accounts. Some plants, both public and private, which are doing a large business, report no clerks or bookkeepers whatever. On the other hand, one small purchasing plant boasts of one clerk at the local office and two additional clerks in Boston! The municipal plants frequently report none of their female employees, because the return form literally calls for the number of men employed! Such are some of the puzzling problems which present themselves. However, after having checked up the returns with great care, the writer finds that, while there are numerous additions and omissions in each group, the generating com- panies in the aggregate returned about 6 per cent too many employees, even though we include among the list those officers of corporations who really do some work and whose salaries are partially distributed under other IS MASSACHUSETTS 259 heads than "salaries of officers." Hence the total number, corrected, excluding those officers who do not appear to be directly connected with the actual operation of the busi- ness, is 295 (17.4 per plant), instead of 313 as reported to the Board. The corresponding public plants, on the con- trary, appear to have reported about 4 per cent too few employees, so that their corrected number, including the managers, is about 240 (14.1 per plant) instead of 230. Since the possibility of error in 1910 would in both cases probably be about the same as in 1915, the uncorrected figures will be used in making comparisons with that year. It appears that the total number of employees has increased just twice as rapidly for the companies as for the municipal plants, though the figures were close to- gether in 1910. The close correspondence at the. earlier date, waiving the possibility of inaccurate returns, was probably in large measure due to the fact that, though their actual business was considerably greater than that of the other group, their distributing system was not pro- portionately so extensive. And, so far as the number of employees at station is concerned, the difference in size here found does not appear to be particularly significant. (This, by the way, is very obvious in the 1915 figures, for the total number of station employees in the two groups is respectively 110 and 103.) Furthermore, the public plants in 1910 seem to have been just completing one of the stages of their growth, whereas the companies, for the most part, appear to have been entering upon a period of rapid expansion. The marked increase shown by the companies during this period has not been incommensurate with the growth of their business and the extent of their lines. The rapid development of their distribution system, their increased commercial fighting service, and their evident efforts to serve all of the public, have naturally necessitated the use of a proportionately larger force of employees. Yet they 260 MUNICIPAL ELECTRIC LIGHTING are probably somewhat "over-staffed" at present; while the municipal plants, though they would not be expected to increase the number of their labor force as rapidly as their business, are doubtless getting on with as few em- ployees as possible, depending in many instances upon the practice of hiring "extra help as required." However this may be, it is gratifying to find that there is no evidence of "making work" for municipal employees, if we may take as our criterion the condition found in the group of companies. Tabijs 48. Comparative Efficiency of Labor Baa 1910 1915 Percent increase Com- pany Munici- pal 1 Com- pany Munici- pal 1 Com- pany Munici- pal I. Generating plants : Total number of employees Corrected for 1916 Number of salaried offi- cers Number K.W.H. delivered 194 74,616 $3,904 $600 179 49,071 $2,477 $320 313 296 33 78,077 82,008 74,500 $3,682 $3,868 $3,614 $894 $948 $863 68 52 56,536 (62,000) $3,920 (4,376) $344 (384) 230 240 65,044 62,469 $2,915 $2,800 $474 $455 46 62,788 $3,280 140 61.4 4.6 -5.7 30.0 31.1 +171 Corrected for 1915 Including salaried officers Operating income per em- ployee, excluding street Corrected for 1916 Including salaried officers Net income per employee, excluding street lighting . Corrected for 1915. Including salaried officers II. Purchasing plants : Total number of employees Corrected for 1915 Number K.W.H. delivered per employee Corrected for 1915 Operating income per em- ployee, excluding street lighting Corrected for 1915 Net income per employee, excluding street lighting. . Corrected for 1915. i Holyoke and Norwood omitted throughout on account of their size. m MASSACHUSETTS 261 When, however, we compare the sales and income per employee at both dates, we find the companies far in the lead, after street lighting sales have been deducted, even though the salaried officials be included. But, obviously, they should not be counted if we are trying to put the plants on a comparable basis from the point of view of operating efficiency — unless, of course, we wish to regard as employees of the public plants a number of town offi- cials together with the members of the municipal light boards, Yet it appears that while the income per employee of the public plants has increased to an appreciable ex- tent, that of the companies has actually been subject to a slight decrease. While this state of affairs speaks well for the former, yet in view of what we have previously dis- covered regarding the physical and developmental fea- tures of the two groups, the showing here made affords no cause for elation. The amount of current delivered per employee has in- creased in both groups, but far more rapidly in the public plants, as they have been growing up to their earlier equip- ment and labor force. The growth in amount of net in- come per employee, when street lighting income is elimi- nated, has been at an equal rate (50 per cent) for both. And probably the net income, which is twice as great in the companies, is the most significant consideration from the point of view of those who are in the business. Mere size, in the aggregate, plays some part in causing the differences which have been observed, and the influ- ence of this element was particularly noticeable in 1910. The number of employees should not by any means or- dinarily increase pari passu with the growth in quantity of current sold, other conditions remaining equal. But, in this particular, as in others, the development seems to come by stages, rather than according to any fixed law. Finally, viewed from all angles, we find a higher labor efficiency in the purchasing companies than in the similar 262 MUNICIPAL ELECTRIC LIGHTING municipal plants, and the advantage is almost as marked as in the other group. As a result of the numerous difficulties which have been suggested, it has been no small task to put the wage data on a comparable basis. 1 However, by a process of inter- Tablb 49. Relative Wages Employees i Number Total amount of wages and salaries Average wages ' or salaries Com- panies Munici- pal* Com- panies Munici- pal Com- panies MunicU pall I. Generating plants: Total number employees on pay-roll (linemen ex- cluded, officers included) Number of salaried officers Number of municipal man- 234 33 "aoi 201 110 91 91 69 19 "46 165 17 165 148 103 62 45 30 20 30 10 $231,230 48,201 183,030 183,030 114,690 68,440 68,440 27,983 7,055 20,928 $161,551 28,600 161,661 132,951 109,048 62,606 23,906 16,477 11,099 16,477 6,378 $988 1,461 '9ii 911 1,042 762 752 474 371 623 $979 1,682 Total (excluding officers).. ' Total (excluding municipal 979 898 Employees other tban at station or linemen — mostly clerks, etc. (muni- cipal managers included) Ditto (excluding munici- 1,059 847 531 linemen (municipal) II. Purchasing plants : Total number of employees (linemen excluded, offl- (925) 649 Number of salaried officers Number of municipal man- Total (excluding officers).. Total (excluding municipal 655 649 538 1 Holyoke and Norwood omitted from the public plants. pretation and elimination it has been possible to arrive at an approximation of the truth. When linemen and repair men of all kinds are deducted, the wages of the re- maining employee, particularly in the generating com- 1 On account of the rapid and highly irregular changes taking place since the outbreak of the war, the wage data secured through the local survey are not of much value. Hence no attempt is made to use them here. IN MASSACHUSETTS 263 panies, will be found almost wholly in the items of "sta- tion wages," "distribution wages," and "general salaries" (plus salaries of officers in the case of the companies). While there will be a good deal of overlapping, especially in the smaller plants where one or two men do all of the work, the condition will probably be about the same in each group. It is also possible to find out exactly (so far as the returns are concerned) the number of men em- ployed at the station itself as firemen, engineers, oilers, tenders, and the like. Having reached this point, we can determine, though with a much less degree of accuracy, the wages of the "soft-handed" laborers, the so-called "salaried " employees. 1 1 The writer has secured some data from the Bureau of the Census at Washington, which have never been published, but which appear so untrustworthy in certain respects that they have not been used in this connection. The averages which have been worked out from these data, are, however, appended in the following table: Table 50. Comparative! Wages fob all Plants in Massachusetts Item 1902 Com- panies Muni- cipal 1907 Com- panies Muni- cipal 1912 Com- panies Muni- cipal Number of stations All employees '. Average income. .- Officers of corporations Average salary Salaried employees Average salary Average salary (including cers) Wage-earners Average wages 97 1,891 $793 112 81,276 308 $1,067 1,474 $715 17 130 {671 ¥590 91 $706 96 2,448 $844 122 $1,662 473 $1,003 $1,091 1,853 224 $756 $671 164 $787 87 3,630 $750 148 $1,514 759 $870 $976 2,723 675 30 324 $796 85 $714 $626 The apparent decrease in average wages paid by the companies since 1907 seems hardly consistent with the facts. Probably the discrepancy is due partially to the different methods followed in reporting the aver- age number of employees at the different dates. (In 1912 the number actually on the pay-roll on September 16th was called for, while only the 264 MUNICIPAL ELECTRIC LIGHTING It accordingly appears, from the accompanying table, that the station wages, of which we are practically cer- tain, are surprisingly close together in the two groups. The total wages paid per employee, when the officers of corporations are excluded, are somewhat higher in the public plants, though otherwise they are not far apart. Also, the wages for other than station labor are consid- erably higher than in the companies. If the municipal managers be eliminated, the salary of the remaining group, mostly clerks and helpers, is ridiculously low, — from which we would infer that a number are on part- time employment. No such separation can be made for the companies, though the conditions are doubtless about the same, unless, as is scarcely probable, in view of the services rendered by the salaried officials the wages of managers and superintendents happen to be cut down. The figures for the purchasing plants suggest some rather surprising conditions, for it appears that the re- ported number of employees, divided into the returned amount of wages paid, would give each one less than a living wage. There is little to choose between the two groups, however, and the seemingly low wages are caused by the fact that most of the labor is employed on a part- time schedule. Of the municipal plants, nine report no regular employees, aside from the manager, and of the managers themselves, two receive no salary. average for the year was given at the earlier dates.) It is noticeable that the average income of the so-called "salaried" employees in the munici- pal plants, including the managers, is not only much lower than the aver- age salaries paid by the companies, but is also far below the average wages paid to the "hard-handed" employees. This would indicate that managerial wages were small, indeed, in the earlier days, since about two fifths of those on salary at the various dates were managers of muni- cipal lighting. The wages reported by the companies, however, are in 1912 much lower than those paid by the public plants — a condition which does not now seem to exist. There is little doubt that many part- time workers have been included, though it is not evident why this error should have been greater in the one group than in the other, unless be- cause of the higher number of workers employed by the private plants. m MASSACHUSETTS 265 As to the general aspects of the labor problem in so far as it relates to our study of the electric lighting industry, it is not possible to draw definite conclusions. Probably, however, as a result of some of the recent labor legisla- tion, the municipal employees may have some advantage over the laborers employed by the companies. Many of them have the eight-hour day, 1 two weeks' vacation annually, 2 and a half-holiday on Saturdays. 3 The Work- Table 51. Adoption of Labor Legislation (Close of 1916) Action of Ike municipalities studied Municipalities owning plants (.89) Municipalities served by companies (88) regarding recent labor legislation Number tak- ing action Per cent of total Number tak- ing actum Percent of total I. Workmen's Compensation (Mass., 1913, ch. 807). 33 6 28 11 18 21 24 15 24 15 85 15 72 28 46 34 62 38 62 38 31 2 25 8 22 11 25 8 24 9 94 Rejected or no report . . II. Pensions for employees (Mass., 1912, ch. 503) 6 76 24 III. Eight-hour day (Mass., 1909, ch. 514, sect. 42, and Mass., 1911, ch. 494) Rejected or no report . . . IV. Vacation for employees (Mass., 1914, ch. 217) 67 33 76 24 V. Saturday half -holiday (Mass., 1914, ch. 688) 73 Rejected or no report. . . 27 man's Compensation Act has been generally adopted by the municipalities studied, 4 while a large proportion are 1 Mass., 1909, ch. 514, sec. 42, and 1911, ch. 494. * Mass., 1914, ch. 217. • Mass., 1914, ch. 688. ' Mass., 1913, ch. 807. 266 MUNICIPAL ELECTRIC LIGHTING providing for pensions to their employees. 1 Private labor does not have all of these advantages, and sometimes longer hours are worked, as there is little if any unioniza- tion among the workers in this industry in the smaller places which have been investigated. 2 It is interesting to note in this connection the appar- ent effects of municipal ownership upon the adoption of the progressive labor legislation just mentioned. Based upon an examination of the "Acceptances" filed with the Secretary of the Commonwealth, the writer has been able to make a comparison between the two groups of plants with respect to the action which they have taken. (The data are for the close of 1916.) While it may be merely a coincidence, it is noticeable that in every case the municipalities having private ownership have more readily adopted this recent labor legislation. On the other hand, the cities and towns owning their plants have been particularly backward about voting for the eight-hour day and the vacations, which would, in many cases, ne- cessitate an increased expenditure for the operation of their lighting plants. 2. Valuation of Estates and Tax Rates s A. Municipalities served by Generating Plants Frequently it is asserted that public ownership of such an industry as the electric light and power business is not conducive to the growth of a community, first, be- cause little effort is exerted to attract new enterprises, no inducements are offered, and no risks run; and, secondly, because the already established concerns are often shab- bily treated. There is no doubt that a public plant can with impunity adopt a policy which would prove highly 1 Mass., 1912, ch, 503. 2 Cf. Mass. Labor Bulletin, No. 114, 1915, pp. 84-85. Cf. also ch. xn, infra. Appearances are sometimes deceptive. • Appendix, pp. 424-425. IN MASSACHUSETTS 267 disastrous if attempted by a private concern. Yet, if our group of public plants (those generating current are here referred to) had followed a conspicuously mistaken policy in this regard, we might expect a slower growth in the population of the districts served, — which, by the way, has not been the case during the past five years, — and, in lieu of that, we might at least have looked for a less rapid increase in the total valuation of property in the places served by them than in the territory supplied by the corresponding group of private plants. Our figures, however, indicate that the growth in assessed valuation of estates has gone on at equal pace in both cases, 35 per cent for the companies and 34 per cent for the municipal plants. It is rather interesting to note that the per capita valua- tion of estates is 34 per cent higher ($1,171) in the terri- tory served by the companies than in that served by the other group ($874). Also, the ratio of taxpayers to cus- tomers is very nearly the same in each case (42.6 and 38.8 per cent respectively). In view of this noticeable diver- gence between the two parties who are most concerned about the results of public ownership, it is highly impor- tant for the municipal plants to avoid mulcting one class in order to benefit the other. An injudicious financial policy would mean that many who have received no direct services from their electric plant would be called on through the tax levy to bear the burden of losses for which they were in no way responsible. From a study of the tax rates in the places in which the plants are situated, it is evident that the rates are about 8 per cent higher ($20.97 per $1,000 valuation) in the municipalities owning their plants than in those dis- tricts served by the companies ($19.42 per $1,000). The rate of increase since 1910, though not marked in either case, has been 40 per cent more rapid in the former than in the latter (10.4 as opposed to 7.4 per cent). Whether 268 MUNICIPAL ELECTRIC LIGHTING this may be in some measure an artificial difference, due to the lower valuation of estates in those districts having public ownership, it would be difficult to state. It is obvious, however, that frequent calls are made on the taxpayers for funds to finance improvements and exten- sions, as well as to cancel old debts. The deficits which have existed from the beginning show plearly that the financial management of our municipal plants has been such as to impose added burdens on the tax levy. The total appropriations for construction, to date, amount to more than $820,000. And, in addition, there have been appropriations for bond, note, and sinking fund pay- ments, which cannot by any means always be regarded as merely the payment for street lighting. These sums, compounded annually, would disclose the fact that the public has contributed to its experiment in ownership a far greater amount than at first is evident. The usual result of municipal industry which is not in all respects carried on as a commercial enterprise, and which can always call upon the taxpayers to make good any losses, no matter how incurred, is to make and keep the tax rates comparatively high. But, while the foregoing analysis is suggestive it is far from conclusive, inasmuch as the five-year period covered is too brief to give sufficient background. In order to discover whether there is any vital connection between the valuation of estates, the tax rates, and municipal ownership, it is necessary to study the data from the be- ginning. Accordingly, in the accompanying tables are presented analyses of the material found in various re- ports of the State Tax Commissioner. Only the valua- tion of real estate is considered (which, of course, includes buildings and factory equipment as well as land), for it is of much more significance than the total valuation of all estates, since it will probably be more directly influ? enced by the general state of the public utility service in IN MASSACHUSETTS 269 Table 52. Valuation of Real Estate and Tax Rates in Municipalities in which Generating Plants are Located a Assessed valuation of real estate at certain periods in the districts in which plants are located — (to nearest $000,000 — 00,000 omUted) 1890 1895 1900 1905 1910 1915 Total increase (dollars) 876,0 19,6 n',6 $92,0 70,5 ,(71,0) 20,5 $110,0 80,5 (82,0) 29,0 $131,5 88,0 (91,0) 31,0 (32,0) $154,0 104,0 37,0 $188,0 132,0 (135,0) 48,5 $112,0 82,5 (85,5) 31,5 (Corrected for changed (Corrected) Holyoke omitted. B Increase of real estate valuation by percentages between certain periods— (to nearest 0.5 per cent) 1890- 1895 1895- 1900 1900- 1905 1905- 1910 1910- 1915 1890- 1915 1895- 1915 1895- 1910 21.0 42.6 (43.4) 20.5 20.0 14.0 (15.5) 41.5 19.5 9.0 (11.0) 6.9 (10.3) 17.0 18.0 19.4 22.0 27.0 si'.i 147.4 166.6 (172.7) 185.3 106.6 87.2 (90.1) 67.2" 67.4 47.2 (60.7) (Corrected for changed (Corrected) 1 Holyoke omitted. « 1900-1915. * 1900-1910. Tax rate per $1000 assessed valuation of all estates at certain periods (arithmetical average) 1890 1895 1900 1905 1910 1915 Total increase $15.17 15.02 $16.68 16.92 $17.10 17.74 $18.38 19.22 $18.08 19.00 $19.42 20.97 $4.26 6.95 Percentage increase of tax rates between certain dates D 1890- 1895 1895- 1900 1900- 1905 1905- 1910 1910- 1915 1890- 1915 1895- 1915 9.4 12.7 3.1 5.0 7.5 8.4 -1.0 -1.0 7.4 10.4 28.3 40.0 17.1 23.8 Tax rates in municipalities which acquired their plants between certain dates, together with percentage increase in rate during first Jive years 1 ownership Nwm- ber Hate Per cent increase Rate in 1900 Per cent increase Rate in 1905 Per cent 1890 1895 increase Between 1890 and 1894. Between 1895 and 1899. Between 1895 and 1899. Between 1900 and 1904 . 6 6 t $14.28 $18.15 16.90 (16.80) 27.0 $18.00 (18.50) 16.45 6.5 (10.0) $17.98 9.3 270 MUNICIPAL ELECTRIC LIGHTING a given locality and will be more sensitive to changes in business conditions. As statistics of this kind are liable to be misleading, the writer merely gives them for what they are worth, having made an honest attempt at a plausible interpretation. It is not altogether possible fully to verify the accuracy of the presumptions which may in certain instances be created. From the figures given it appears that the valuation of property other than personal in the group of munici- palities which later acquired their own generating plants, was increasing with great strides between 1890 and 1895, twice as rapidly in fact as the valuation of real estate in the other group. Now, while it is possible that the valua- tion in individual cases might be very arbitrary, this would probably not occur more frequently in one group than in the other, and the influence of this factor may be almost wholly discounted when we are interested in the total valuation of real estate in a group of seventeen places chosen more or less at random. Again, it is doubt- less true that a good deal of the increase was occasioned by the installation of the private plants which were later taken over by the municipalities in question — an influ- ence which, by the way, had in some measure spent its force in the other group, since their plants were built on the average a few years earlier. At any rate, there was a period of unusual growth in property values in these municipalities just preceding the time when they entered upon municipal ownership. The rate of increase would be even greater if a correction were made because of the fact that the plants acquired were not included in the tax levy of 1895. Between 1893 and the end of 1895, however, eight municipalities began to do a commercial lighting busi- ness, and by the end of 1900 fourteen out of seventeen, excluding Holyoke, were operating their own plants. In view of this fact, it is, to put it mildly, very surprising to IN MASSACHUSETTS 271 find that the rate of increase in real estate valuation in these municipalities had dropped from more than 42 per cent in the preceding five-year period to only 14 per cent from 1895 to 1900. And in the next five years, after all of the group have undertaken the lighting business, there is a still more conspicuous drop in the rate of increase to 9 per cent. If corrections be made for the value of the plants taken over themselves, the rates are slightly in- creased to 15.5 and 11 per cent respectively. On the other hand, the group of municipalities served by the com- panies showed practically no variation in the rate of in- crease of real estate valuation throughout the entire period, while in the ten-year period, 1895 to 1905, their valuation had increased 43 per cent, as opposed to only 28 per cent in the other group after adjustments are made. It is still more perplexing to find that the city of Hol- yoke, which purchased its plant in 1902 after some years of litigation, suffered a drop in rate of increase of real estate valuation from 41.5 per cent in the period from 1895 to 1900 to slightly more than 10 per cent in the suc- ceeding five-year period, even after the correction is made for the change in ownership. It has been discovered that the valuations were abnormally increased during the first period, but even that fact seems scarcely sufficient to account for the marked decrease in rate from 1900 to 1905. x Though there are doubtless many other reasons for this decrease not known to the writer, yet the fact that the rate increased again to 19.4 per cent for the years 1905 to 1910, and the fact that there is a close cor- relation between the figures for Holyoke and for the group of municipalities owning their plants, makes it an open question whether the uncertainties regarding business which might naturally have resulted from the public 1 A large amount of property belonging to the Holyoke Water Power Company, and formerly not taxed, was added to the taxable estates shortly before' 1900. 272 MUNICIPAL ELECTRIC LIGHTING ownership agitation, were partially responsible, at any rate, for the almost stationary state of real estate values during this period. It might be argued in this connection that the munici- palities, when acquiring their electric light plants, were also induced at about the same time to take over their water-supply systems, and that in this way the valua- tion of real estate for the time being was made compara- tively less. Having looked carefully into this matter, however, the writer finds that the effect of any correction, with a view to eliminating this factor, works to the dis- advantage of the group under public ownership and to the advantage of the group under private ownership. For, while the former, between 1890 and 1905 purchased or constructed waterworks to the total value of about $1,200,000, as indicated by the statement of municipal assets and liabilities returned to the State Tax Com- missioner in the years 1890, 1895, 1900, and 1905, the latter took over in the same period systems valued at about $2,500,000, or about twice as great a valuation as in the first case. Now, we would not be at all warranted in drawing any sweeping conclusions from the preceding figures. Too many qualifying conditions may, without our knowledge, enter into the problem. Yet, in view of the fact that the municipalities now owning their plants were at the earliest period growing far more rapidly than the other group which always retained private ownership, the data for the intervening years may indicate that many business enterprises were kept out or discouraged because of in- adequate service or the lack of reasonable and customary inducements. It may also be that there was a general decrease in "progressiveness," due to the unbusinesslike policies which certainly characterized the earlier stages of public ownership of electric plants in this State, which might be expected to "react" upon the local business . EST MASSACHUSETTS 273 men in such a way as to cause them to quit "boosting" for their municipalities. While private electric compa- nies frequently, on their own initiative, endeavor to bring in new factories which will improve their power load, it is well known that, until recently at any rate, practi- cally none of the public plants have followed this policy. Conversation with those in a position to know, including business men as well as the present managers of munici- pal lighting, has convinced the writer that there is much truth in the suggestions here made. 1 Finally, the fact that the rate of increase in real estate valuations was by 1910 practically the same as that in the places served by the companies, and was somewhat more rapid between 1910 and 1915, may point in some measure to an encouragement of new industries and a general increase in business activity, as a result of the attempt to develop a power load on the part of the munic- ipal plants, which had hitherto been lagging far behind. It must, however, be remembered that, as a group, the municipalities owning their plants are at present much more active manufacturing communities than are the others, for reasons which in a majority of cases probably have no direct dependence upon the local light and power business. Many large establishments have always used water power, and others have been forced to install elec- tric plants of their own, because of the inadequacy of the facilities offered by the local plants. Whatever may be the reasons, the disparity still re- mains between the two groups. If the period since 1895 be taken, as that date really marks the beginning of municipal electric lighting in Massachusetts, it is found that the total increase of real estate valuation in the places having public ownership has increased in twenty years about 90 per cent, after corrections are made, while the valuation of the corresponding group of municipalities 1 Cf. ch. xh, pp. 840-341. 274 MUNICIPAL ELECTRIC LIGHTING under private ownership has increased nearly 107 per cent, or approximately one fifth more rapidly. And during the critical period from 1895 to 1910 the increase in the latter was 30 per cent more rapid than in the former. In the matter of tax rates it is interesting to note that the group of municipalities which later acquired their lighting plants actually had a slightly lower average rate in 1890 than had the other group. However, the rates began to rise for all concerned, and, as public ownership became more common, for every period the rate of in- crease was considerably greater in these places than in those served by the companies; while the total increase during the period here studied was more than 40 per cent greater in the former than in the latter. It must further be observed that if the municipalities now owning their plants be divided into groups according to the periods in which this business was undertaken, the rate of increase in the tax rates of these is markedly more rapid for the first five years of ownership than that of the remainder of the places not yet under public ownership or which have already for some time owned their plants. The reasons for the fact just mentioned, and, indeed, for the more rapid increase in the average tax rate through- out the period, have already been partially suggested as caused by appropriations to meet operating deficits as well as some of the fixed charges. Yet this reasoning would apply more particularly to the earlier periods, when, as a matter of record, the increase was not so rapid as at present. During one of the five-year periods, how- ever, from 1905 to 1910, there was in both groups actually a slight decrease in the rates. The entire problem is ac- cordingly beset with a good deal of uncertainty. Never- theless, we must remember that there are numerous in- direct expenses which result when a municipality becomes an entrepreneur, but which it is rather hard to estimate. Public wants tend to be multiplied. Furthermore, there IN MASSACHUSETTS 275 is the possibility that a municipality, having gotten a good taste of public ownership of this kind, and having contracted a considerable debt in consequence, inclines to be somewhat more careless about the expenditure of money. To incur debts which later become very burden- some, may become habitual. The public purse-strings are often not held so tightly, and the tax rate must accord- ingly go up, particularly in cases where there is not an unusual increase in property valuations. Nor does the writer mean to dogmatize on this question of tax rates, for, as in the matter of valuations, there are too many unknown factors entering into the problem, many of which are dependent upon local conditions. Suffice it to Table 53. Financial Condition op Municipalities in which Generating Plants are located, 1915 Municipalities Municipalities owning plants served by (excluding Holyoke) companies Valuation of estates $172,750,000 $269,800,000 Outstanding indebtedness $9,556,000 $12,227,000 Electric plant debt $1,508,825 Annual expenditures for maintenance, in- terest, and debt requirements (1814) 1 . . . $4,208,000 $5,705,000 Including expenses of electric light de- partment $4,824,000 Population 200,062 244,021 Per capita valuation $864. $1,106. Per capita debt $48. $50. Excluding lighting debt $40. Per capita expenses $21.03 $28.75 Including lighting expenses $24.12 Batio of debt to valuation (per cent) 5.5 4.5 Excluding lighting debt . 4.6 ... Ratio of expenses to valuation 2.4 2.1 Including lighting expenses 2.8 • The expenditures tor 1914 are used because later data are not yet available. It is probable that the figures would be higher {or 1915. 276 MUNICIPAL ELECTRIC LIGHTING say that, whatever may be the correct explanation, the average tax rate in the group of cities and towns which own their lighting plants has markedly increased, and the rate of increase has been 40 per cent more rapid than in the other group under private ownership. Table 53, which the writer presents without comment, may be of interest to those who wish to theorize further on this subject. B. Municipalities served by Purchasing Plants It is scarcely necessary to go back of 1910 in our study of this aspect of the municipal ownership of purchasing plants, for the problems which they present are much different from those which characterize the group which has just been discussed. The prosperity of the territory of a plant which buys its current, other things being equal, probably depends more upon the source of supply than upon the plant itself. It does appear, however, from Table 54 that the real estate valuations of the districts served by the munic- ipal plants have been increasing much more rapidly than they have in the places occupied by the com- panies. While the rates of increase were in both cases comparatively close together between 1900 and 1910, the rate from 1910 to 1915 was almost twice as rapid for the former as for the latter. There is also, no doubt, a close correlation between the rapid appreciation in real estate values since 1910 and public ownership in these towns, for, if we include Wellesley, which began to operate its commercial lighting business early in 1907, nineteen out of twenty-one of them adopted municipal ownership between 1907 and 1914. Of these places, fur- thermore, only six were previously served by companies, and in some of these cases the service was far from satis- factory. Hence it is not to be wondered at that property IN MASSACHUSETTS 277 Table 54. Valuation op Real Estate and Tax Rates (Purchasing, Plants) A Valuation of real estate at certain dates in districts in which plants are located — {to nearest $500,000 — 00,000 omitted) Percentageincrease of real estate valuation between certain dates 1900 1905 1910 .1915 ' Total increase 1900- 1905 1905- 1910 1910- 1915 1900- 1915 1905- 1915 Companies 1 . . . Municipalities* Norwood.... $29.0 27.0 3.6 $32.5 30.5 4.3 $38.0 36.5 8.4 $44.0 47.0 11.5 $15.0 20.0 7.9 12.1 13.0 19.4 16.9 19.7 95.3 15.8 29.0 37.0 51.7 74.0 219.4 35.4 54.4 200.0 i Franklin omitted — no return for Turner's Falls. » Norwood omitted. B Tax rate per $1000 assessed valua- tion of all estates at certain dates (arithmetical average) Percentage increase of tax rates between certain data 1 1900 1905 1910 1915 Total increase 1900- 1905 1905- 1910 1910- 1915 2.9 17.3 1900- 1916 8.0 21.5 1905- 1915 Companies i.... Municipalities.. $16.35 14.48 $16.45 15.13 $17.15 16.00 (15.30)« $17.65 17.60 (17.83) $1.30 3.12 0.6 4.5 4.2 -1.0 (+1.0)' 7.S 16.4 1 Franklin omitted • — no return for Turner's Falls. 1 Norwood omitted because of abnormal conditions. increased greatly in value since 1910 as compared with the other group of towns which were supplied with elec- tricity many years earlier, even though there may have been no particular increase in the number of industrial establishments and no noticeable heightening of busi- ness activity. And, finally, it is more than probable that many of these little towns are more progressive than those of the other group. The case of Norwood, which apparently has had a 200 per cent increase in real estate values during the past ten years, is abnormal and somewhat misleading. During this period, or more precisely between 1905 and 1910, the town enjoyed a thorough house-cleaning, and among 278 MUNICIPAL ELECTRIC LIGHTING other things an attempt was made to assess property at its true value, as a consequence of which policy there was an enormous artificial appreciation, which in turn led to an almost 50 per cent drop in the tax rate. There is, however, no denying that Norwood, due in large measure to unusually favorable circumstances, has made a very creditable showing with its plant and seems to have lost nothing in operation. Finally, it is worth while to note that the average tax rate in these municipalities which have gradually ac- quired their plants, was much lower in 1900 than the aver- age rate in the other group of towns, and there was prac- tically no increase until after 1910. But, while the rate in the places served by the companies remained almost stationary between 1910 and 1915, the rate in the towns having municipal ownership — all of them having now acquired their plants — increased more than 17 per cent, or six times as rapidly as the average rate in the former. Though the tax rates in the two groups were in 1915 prac- tically the same, yet during a period of ten years the in- crease in rates has been more than twice as rapid under public ownership as under private ownership, and this in spite of the much greater appreciation in value of estates. Here, again, we must avoid drawing unwarranted con- clusions from insufficient evidence; but the rapid increase in rates during the last period seems to have some signifi- cance when compared with the figures for the other group of public plants. Hence a few suggestions may not be amiss. Some of the possible or probable reasons for this state of affairs, though not so generally applicable in this connection, have been already referred to in the above discussion regarding the generating plants. It must fur- ther be observed that these little towns, having tried the experiment of municipal ownership, probably found it desirable to make numerous other civic betterments which had too long been neglected, just as a man who buys a IN MASSACHUSETTS 279 new suit finds that he must have a new hat, a tie, and a few more things to go with it. No doubt numerous im- provements were made in the public highways, and pos- sibly land was acquired or developed for parks — which could be lighted with municipal electricity. It is also true that a considerable number of them have installed water-supply systems within the past few years, which, because of local conditions, it has often been impossible to avoid operating at a loss. Table 55. Financial Condition op Municipalities in which PuBCHAsma Plants aee located, 1915 Municipalities Municipalities owning plants served by (excluding Norwood) companies Valuation of estates $69,748,000 $68,151,000 Outstanding indebtedness $1,527,000 $879,000 Electric plant debt $253,163 Annual expenditures for maintenance, inter- est and debt requirements (1914)' $1,085,000 $1,041,000 Including expenses of electric light de- partment $1,264,138 Population 53,581 69,397 Per capita valuation. $1,300 Per capita debt $28.50 $12.70 Excluding lighting debt $24.30 Per capita expenses $20.25 $15.00 Including lighting expenses $23.60 Eatio of debt to valuation (per cent) 2.2 1,3 Excluding lighting debt (per cent) 1 .85 Ratio of annual expenses to valuation (per cent)....... 1.55 1.53 Including lighting expenses (per cent) .... 1.8 1 The expenditures for 1914 are used because no later data are available. The figures would probably be somewhat higher for 1915. But, while it is not altogether satisfactory to explain theoretically why the tax rates should have increased, and while this increase may only in a slight degree, so far as these towns are concerned, indicate that the plants 280 MUNICIPAL ELECTRIC LIGHTING have been losing money, yet we are at least safe in draw- ing the conclusion that the incentives for "boosting" the rates under municipal ownership are unusually numerous and urgent. Though it is entirely too soon to form a fixed opinion on the subject, for reasons which have been suggested in various connections, the writer feels justi- fied in predicting that the next five or ten years may wit- ness an even more noticeable increase. 3. The Intangible Items In 1897, a special investigating committee, appointed by the city of Holyoke to look into the subject of muni- cipal electric lighting, reported that, under public owner- ship, there would result a saving of more than 25 per cent in the rates, and that after five years the city would own its plant, debt free. 1 Holyoke has done well, and the rates are low; but the outstanding liabilities, current and funded, together with the appropriations from the tax levy for debt payments, at present amount to about $1,200,000, though the plant still confines its operations to its own narrow territory, and probably a large investment in a new station will soon be needed. Sixteen years later, another special committee, having made a careful investigation with the assistance of a trained engineer, reported to the selectmen of South Hadley that, if the town would take over the plant of the South Hadley Falls Electric Company, there would, in one year, be effected a saving to the municipality of $4,250, and the street lights, which had been costing $5,800, could thus be secured for $1,550. The plant was bought, — and under the first year of public management, the actual cost of the street fights, allowing for taxes lost, was between $6,500 and $7,000, or one sixth higher than when the service was supplied by private enterprise. To be sure, such examples are merely suggestive rather 1 Mass. G. & E., xra: 44. IN MASSACHUSETTS 281 than convincing, yet there is no magic in the mere fact of public ownership which will enable service to be ren- dered at no cost to the public. If private business is al- ready in the field, and if that business is properly regu- lated, there appears to be little reason for expecting that, in the economic sense, a gain will result from municipal operation of that service. On the other hand, there may be benefits of another sort, due to the enlivened interest which the people in general take in their public affairs. To quote from the aforementioned South Hadley Report, the committee, after investigating municipal ownership in the eight towns of the State, 1 made the following state- ment: Suffice it to say that all, without a single exception, were heartily in favor of municipal ownership, for both financial reasons and better service. . . . The matter of politics has not interfered in any case with the successful administration of the plant. 2 They also received favorable reports from a number of other towns in the State. Though the writer himself has not been able in person to investigate the actual conditions in all of the places mentioned, he is glad to believe that they are as stated, in these towns, as well as in most of the other municipali- ties in the State which own their distributing system and purchase their current. But a reverse picture is possible, and corrupt politics may be found instead of civic better- ment. From what it has been possible to ascertain, the municipalities having their generating plants are not al- ways so well satisfied. Some of them would gladly dis- pose of their plants. It has been in many instances a long, tiresome struggle, with the handicaps resulting from ignorant or hampered management and lack of foresight, 1 Shrewsbury, Norwood, Wellesley, Groton, West Boylston, Ashburn- ham, Templeton, and Belmont. Cf. South Hadley Report, p. 3. » South Hadley Report, p. 3. 282 MUNICIPAL ELECTRIC LIGHTING in the course of which the careful supervision of the Board has prevented many serious mishaps. In addition to the service rendered by the Board directly through its audit of the municipal plant returns, and its advisory capacity, an expert engineer and accountant is employed to give assistance locally to those plants which are most in need. Thus they have managed to keep themselves going, and many of them appear to have done well. Appearances, however, are frequently exceedingly de- ceptive. One cannot always discover the true conditions without being actually on the ground, and even then it may be almost impossible to find out what has happened in the past. In this connection it is worth while to give the following statement, secured by the writer before the local survey was attempted, from the very efficient mana- ger of a municipal plant which had appeared for many years to be making an unusually good showing. As nearly as may be, the statement is here recorded just as the speaker made it: When I became manager of the plant (about two years ago) the lines were in such a condition that they were positively dangerous, and in order to put them in proper shape again, it was necessary for months to employ four times as many linemen as had previously been employed. The voltage was inconstant — 50 or 60 when it should have been 110. Transformers were being overworked — in many cases a 5 kilowatt transformer was bearing a 15 kilowatt load. Many of the important customers' meters were found to be hopelessly incorrect. The circuits were not properly balanced; the power service was highly unsatisfac- tory. The returns made by this plant, as those of many other public plants, were hopelessly inaccurate, being for the most part mere guesswork in so far as the output of current is con- cerned, for the station meters had not been tested for years. There is no opportunity to look for new business, because the old cannot be properly cared for. All in all, the entire plant is so much out of date that it would require a doubling of the invest- ment to put it in such a condition that it could properly serve the future needs of the community. Yet the public will not stand for the expense; they never seem to realize that the old equip- IN MASSACHUSETTS 283 ment must be replaced by new before it actually falls to pieces. I am trying to rectify the blunders of the past; but life as manager is simply "one damn thing after another." The trouble with this plant, as with most of the municipal plants in the State is that, both in the construction and the operation, no foresight has been exercised. Taking the public plants as a whole "I would not give them much." Now, the reader might contend that the above state- ment is little more or less than a bad case of "sour grapes." This, however, is not true. The information was secured under conditions which left no doubt as to the veracity of the witness, and, furthermore, the writer, upon visit- ing the plant several months later, found conditions even then far worse than he had been led to expect. He also knows that the condition now is critical, and that there have been some active negotiations with a view to selling the plant to private interests, which, by the way, will probably never amount to anything, as a result of the legislation passed not long ago to the effect that a muni- cipality wishing to dispose of its plant must go through the same tedious process by which it acquired that plant. 1 Needless to say, local pride will probably keep the ma- jority of the people of a community from admitting at the polls that they have made a failure, and there will always be many who fear that to sell their plants, even though they may have developed into white elephants, would be to "sell out" the "public" to the "interests." , Without further multiplication of examples, the writer can state that the foregoing is by no means an overdrawn picture of many of the conditions which are about to be discussed in the following chapters. It is also true that, though conditions appear at present to be somewhat im- proved, the ignorance and inefficiency which have in numerous instances characterized municipal manage- ment, often due to the fact that so many people feel it i Mass., 1917, ch. 205, sect. 1. 284 MUNICIPAL ELECTRIC LIGHTING incumbent on them to take a hand, have frequently been in the past astounding. Here, as in Wisconsin, 1 the most arduous task of the Commissioners has been that of im- pressing upon the municipalities the need of applying to their business, in part at any rate, the same tests by which the efficiency of private business is measured. Yet, after a quarter of a century of regulation, the lesson does not seem to have been wholly learned. Reams of corre- spondence regarding the simplest problems of accounting, are from year to year passed between the clerk of the Board and the various public plants. As fast as managers change, many lessons must be taught afresh. The wonder is that, under the circumstances, municipal ownership has done so well. Whatever may have been the short- comings of commission regulation in this State, the degree of success attained by these plants has been due in large measure to the Board, rather than to their own unaided efforts. Here, for the present, let us leave this aspect of our study, reserving any criticisms or suggestions until the results^ of the local survey have been set forth. 2 StTMMABT 1. The returns are highly unsatisfactory so far as the labor and wage data are concerned. 2. There, has been a more rapid rate of increase in the number of workers employed by the generating compa- nies, due, perhaps, to their more extensive distributing system. 3. The labor efficiency of the companies, in both groups, is greater than in the municipal plants. That of the pub- 1 Holmes: 281. 2 The writer's recent work on the Federal Census of Central Electric Light and Power Stations has enabled him to discover how far superior the records and business methods of the Massachusetts municipal plants are to those of most other states. In the majority of cases they do not seem to have the least inkling of how their accounts should he kept, and they rarely know whether they are actually making or losing money. IN MASSACHUSETTS 285 lie generating plants, however, is increasing rapidly, while there is really not much choice between the purchasing plants. 4. So far as can be ascertained from the returns there is little difference between the average wages paid by each group. 5. The municipalities owning their plants have been noticeably slower in adopting the recent progressive labor legislation than have the municipalities served by the companies. 6. The tax rates of the municipalities owning their plants have increased more rapidly in both groups than have the rates in those places served by the privately owned plants. The average tax rate is at present consid- erably higher in those municipalities where the public generating plants are found than in the other group. For the purchasing plants, however, the rates are almost identical. 7. Though formerly the real estate valuations increased much more rapidly in the districts served by the gener- ating companies, at present the rate of increase seems to be about the same for the two groups. In the municipali- ties owning only a distributing system, the rate of in- crease in valuations has, on the contrary, been much more rapid than in the places securing service from the corresponding group of private plants. 8. While the municipalities owning their distributing systems only, seem in most cases to be well content, there is or has been evidence of considerable dissatisfaction in many of the places which own their generating plants* The returns do not always represent the true conditions. 9. The passing degree of success which has been at- tained by some of the municipal plants, has frequently been due largely to the fostering care of the Board of Gas and Electric Light Commissioners rather than to any su- perior efficiency of their own. CHAPTER X THE LOCAL SURVEY Though the preceding careful analyses of all available statistical material have clearly pointed the way to rather definite conclusions upon the subject of municipal owner- ship, yet the reader might still reasonably entertain doubts regarding the accuracy of this investigation, provided the writer had not made a first-hand examination of the local conditions and the operating policy of a represen- tative number of the plants studied. Many doubtful questions can be readily solved when one is actually on the ground. Much additional information of great value can thus be secured. And, finally, a personal knowledge of the individual cases lends interest and life to a study which might otherwise prove somewhat dull and aca- demic to the average reader. Accordingly, the writer will in the present chapter outline the manner in which he personally conducted an extensive local survey of the groups of plants under consideration, after having com- pleted his analyses of the annual returns made to the Board of Gas and Electric Light Commissioners. Before launching into the details of this portion of our subject, it may be well to explain with some care the methods of investigation which were followed. In the first place, the writer, assisted by expert and wholly disinterested engineers and accountants, studied with great care the operation and the managerial policies of some typical central stations in the State which are not included in the list of plants herein discussed. Thus it was possible not only to become more familiar with the actual conduct of the electric light and power business, MUNICIPAL ELECTRIC LIGHTING 287 but also to establish certain impartial standards which might safely be used in passing judgment upon those plants which were later to be visited. Then a composite schedule of questions was prepared, covering many points of necessity overlooked in the an- nual returns, though highly significant for one who is attempting to pass upon the comparative merits of pub- lic and private ownership. Needless to state, this schedule was meant merely to serve as a rough sort of guide in making the survey. It was neither inclusive nor exclu- sive, and often not altogether logical, but was at any rate suggestive. Some of the questions admitted of no definite answer, while others were significant only to the extent that they might throw light upon certain obscure aspects of the problem, or furnish clues to further inves- tigation. The topics were not treated in the schedule in the order in which they have been developed in the pre- ceding chapters. In fact, this order was in some cases practically reversed, as it seemed easier in that way to secure the information desired. The later and more de- tailed questions frequently served as a check upon the more general questions appearing earlier. Perhaps it will be of some interest here to reproduce this list, which was substantially as follows: SCHEDULE FOR MUNICIPAL AND PRIVATE ELECTRIC LIGHT PLANTS Name of Plant (Answer those questions which apply) A. General 1. Why did municipality acquire plant? 2. What is the attitude of the citizens in general toward this form of management? 3. What is the attitude of business men? 4. What is the attitude of the municipal government? 5. Is there friction with other municipal departments? (In- dicate clearly.) 288 MUNICIPAL ELECTRIC LIGHTING 6. Have politics played any part? If so, indicate definitely. (Also see later questions.) 7. Is there competition of gas or of other electric plants? If so, what relations exist between the two? 8. Is any effort made to secure new business? If so, what methods are followed? 9. Have industries been kept away because of lack of ade- quate electric facilities? 10. What proportion of the local industries is supplied with power? 11. Has the future development of business been adequately provided for? 12. What are the objections, if any, to the present system, and what needed changes can be suggested? 13. Is there any desire to change to private (public) owner- ship? Why? 14. Is municipal (or private) ownership in a real success? Why or why not? Remarks: B. Management {These questions apply largely to municipal plants) 1. Is the Municipal Light Board bi-partisan? 2. Have the members of the board a technical knowledge of the business? 3. By whom is the manager appointed? (a) For how long a term? (6) How long has present manager served? (c) What is the basis of selection? 4. How much authority is given the manager? 5. Has his authority been wisely used? 6. Who purchases materials? 7. How are contracts let? 8. Are local dealers favored? 9. Is it difficult to obtain supplies because of slowness of appropriations? 10. Is the manager ever offered a discount by dealers, in the form of a "rake-off"? 11. Is the manager a technical graduate? If not, what is his general education and his special preparation for this work? IN MASSACHUSETTS 289 12. Is he a member of any technical society? If so, give name. Does he attend meetings of any scientific societies? 13. Does the manager give all of his time to the work? If not, how much? 14. Has the manager ever played politics? 15. Has he ever been interfered with for political reasons? 16. Is his salary deemed adequate? State salary. Does he receive any perquisites besides his salary? 17. Has there been dishonesty or incompetence in the past? Remarks: C. Labor 1. How is the average number of employees returned to the Commissioners computed? Give number. 2. How are the employees chosen? 3. Have political considerations governed appointments of employees? 4. Have employees taken any undesirable part in politics? 5. How many of the employees are technically trained? 6. How many belong to technical societies? 7. What are the hours of labor? 8. What are the customary wages for the different classes of labor (salaried employees included)? 9. What rate is paid for overtime? 10. Do the employees give all of their time to the electrical business? 11. Is the service of employees of other municipal departments utilized? If so, to what extent? 12. Is any system of promotion followed? 13. Is there any definite attempt to measure the comparative efficiency of employees? 14. How long, on the average, are the different employees retained? 15. Who has the power of discharge? (a) Is there an appeal from this decision? (6) What are the usual grounds for discharge? 16. Are foreigners employed? What nationality? 17. What vacations or holidays are allowed with pay? 18. What is the extent of the sick leave granted (with pay), if any? 19. Is there any welfare work? 290 MUNICIPAL ELECTRIC LIGHTING 20. Do employees receive any free service or gratuities? 21. Are they unionized? 22. Have there been any strikes or less serious labor troubles? 23. Do the employees seem to be satisfied with their wages and conditions of employment? 24. Are the relations between employees and employers alto- gether pleasant? 25. Are they courteous in their dealings with the public? Remarks: D. Central Station 1. What is the condition of the boilers? 2. What are the facilities for handling coal? 8. What is the condition of engines? 4. What is the condition of generators, and the actual capacity? 5. Are there any storage batteries? 6. How often are the station meters tested? 7. How is the maximum demand measured? 8. In general, is the equipment up-to-date? Criticisms. 9. What recent additions or improvements have been made? 10. What additions or improvements are under way or contem- plated? 11. Is there a storeroom? If so, in what condition is it kept? 12. Is the "housekeeping" of the plant good? 13. Is the ventilation adequate and are safety appliances pro- vided? 14. Is the station sufficiently roomy? 15. Is the plant adequate for the present as well as for the immediate future? (Indicate clearly.) 16. Does it seem desirable to continue the generation of current? If not, why? 17. Why did the plant cease to produce its own current? 18. Is the electric plant operated in connection with a water- supply system or a sewage disposal plant? 19. Is the location of the central station satisfactory from an engineering and an economic point of view? 20. Are there any experiments being carried on? 21. Is there adequate office-room? Remarks: IN MASSACHUSETTS 291 E. DISTRIBUTION 1. Is the town level? 2. Are the streets straight? 3. Is there much foliage? 4. Was blasting necessary in setting poles? 5. Is there an underground system? (Give length.) If so, what policy governs its installation? 6. Are the lines extended according to the demand? If not, what policy governs the extension? 7. Are extensions promptly made? Has favoritism ever been shown? 8. Do the customers ever bear a part of the cost of extension? Frequently? If so, how is the cost apportioned? 9. When a customer pays part of the cost are the construc- tion accounts written up proportionately, or is this item not recorded? 10. What proportion of the poles are owned? (Give numbers.) 11. Is pole rental paid? If so, how is the charge carried? 12. What seems to be the average life of the poles? Of lines? 13. How is the length of lines and of streets with overhead lines determined? 14. Is there a complete map of the distributing system? 15. How is the connected load determined? (Distinguish as to light and power load.) 16. What percentage of current is used at station and un- accounted for? 17. What reason can be given for this high percentage (if total is over 25 per cent) ? 18. In general, what is the condition of the distributing system? 19. How frequently are the lines inspected? 20. Is a careful account kept of distribution tools? 21. Is the contract or "job" system used in making extensions, or is the direct employment method followed? 22. Was the original line construction satisfactory? 23. What proportion of territory and of population is served? 24. Are small customers avoided? Remarks: 292 MUNICIPAL ELECTRIC LIGHTING F. Consumption 1. Are customers' meters regularly tested? 2. Are customers' complaints promptly attended to? 3. How are complaints handled? 4. Is inside work done by the company (municipality)? 5. Are appliances sold? Fixtures? On what terms? 6. Are special rates made to large customers? On what basis? 7. Is there general satisfaction (a) with the rates? (6) with quality of service? 8. How often are street lamps patrolled? 9. How often are accounts collected? 10. Are customers' deposits required? 11. Does the Department collect accounts? 12. Who does billing? 13. Have rates been reduced without an appeal to the Com- missioners? 14. Enclose rate schedule. Remarks: G. Financial and Miscellaneous (Questions 1 to 20 apply in the main to municipal plants only) 1. Are the accounts audited? (a) How often? (6) Who does the work? (c) Who bears the charge? 2. Is service rendered to other municipal departments with- out compensation? 3. Is service secured from other departments without com- pensation? 4. Is payment made (in case of municipal plants) for street lighting? For lighting public buildings? For municipal power? 5. Are these actual payments or merely nominal? 6. Is city water paid for at the usual rates? 7. Is telephone and transportation service fully paid for? 8. Is any portion of salary of town treasurer or of the solicitor paid for (if services of latter are used)? IN MASSACHUSETTS 293 9. Are any quarters used rent free? 10. Is any land not carried on the books of the plant used rent free? 11. Is the police and fire alarm service furnished free? 12. Is there any other free service? 13. Estimate, by items, the value of the free service given and received. 14. What different kinds of insurance are carried? Who pays the premiums? 15. How is depreciation provided for? 16. Is the depreciation fund a real fund? (Municipal plants.) 17. Are the construction accounts considered accurate? 18. Has the construction or maintenance of plant been financed to any extent by gifts or public contributions? 19. If so, is any record of such sums kept on the books? 20. If the plant is operated in connection with a waterworks system or a sewage disposal plant, how are the operating expenses and the investment apportioned. 31. What is the approximate investment in equipment not in use? (Refers particularly to plants which have ceased generating.) 22. Has there been waste or extravagance in investment? In operation? (Indicate clearly.) 23. Has the financial policy been over-conservative? 24. Is a clear distinction made between ordinary repairs or maintenance, renewals, and additions? 25. Has the normal amount of new construction been installed during the year 1916-17? 26. What is the length of contract for municipal lighting? What are the terms? 27. How much is expended for advertising and getting new business? 28. What check is there on financial dishonesty? 29. Criticism of accounts. 30. Enclose latest annual report of the department (municipal plants). Remarks: SlGNATUBE 291 MUNICIPAL ELECTRIC LIGHTING The next step was to prepare the way for the personal visit. This was done in the case of the municipal plants by means of letters to the manager and to the chairman of selectmen or the mayor, and sometimes to the chairman of the municipal light board. In dealing with the private plants it was necessary to follow different methods, de- pending upon the nature of the ownership in each case. For the plants independently owned and operated, letters were sent to the managers or superintendents and to one of the active officials of the company. When, however, the plants were controlled -by groups of investors, it be- came necessary first to get in touch with the recognized officials of these groups or with their general managers, and through them to take up the matter with the local managers or superintendents. In addition, letters were also sent to the chief municipal officials as in the case of the publicly owned plants. The following is a sample of the usual form of letter used, which was varied in details to suit the different cases: Deab Sir: As a member of the Department of Economics of Harvard University, I have been making a detailed study of municipally owned electric light and power plants in the State of Massachu- setts. In order to make this study more conclusive I have se- lected a number of private plants which, chiefly by reason of their size, may fairly be used for purposes of comparison. The local plant happens to be on my list. My work has until recently been confined largely to an examination and interpretation of the annual returns submitted to the Board of Gas and Electric Light Commissioners. With a view to testing my conclusions, however, I find it highly desirable to make a personal survey of the plants and districts which I have been studying. I hope to come to , in a short time, and trust that you will give me an opportunity to discuss with you the local situation, and to visit your plant, etc. It may be well to state in this connection that I represent no special interests in this matter, and am wholly free from prejudice either for or against municipal ownership. As a student of public IN MASSACHUSETTS 295 affairs I simply wish to find out as nearly as possible the actual conditions, in so far as they have a bearing upon the general problem. All information of v a private nature will be treated as strictly confidential, and, should I eventually decide to publish the results of this study, the condition of individual plants will not be disclosed. Hoping to have the pleasure of meeting you soon, Yours very truly After these preliminaries there remained simply the task of getting in touch with the local parties. When it did not seem necessary to visit a purchasing plant because of its smallness, or when it was impossible to do so, a schedule was enclosed to be filled out by the different parties in so far as it might be applicable and so far as their knowledge of the situation might go. In the case of the centrally controlled companies schedules were also filled out at the general office. It must not be inferred, however, that the writer merely visited these plants and discussed the general situation with the officials and with the municipal authorities. In addition, whenever there seemed to be any reasonable chance for error, or when the facts were still in doubt, and sometimes mainly with a view to satisfying a pardon- able curiosity regarding diverse opinions, other parties were consulted, including the employees, business men, representative citizens, officials of competing gas com- panies, and central station men in adjoining territories. Finally, it was often instructive to discuss such matters with officials of neighboring municipalities and with public utility men who had business interests in the various localities. The information thus secured through different chan- nels, properly analyzed, duly tested according to the source of the evidence, and interpreted in the light of the already known data, in the most important particulars affords highly significant and really dependable confirma- 296 MUNICIPAL ELECTRIC LIGHTING tion of the tentative conclusions which had previously been reached by the writer. All of the eighteen municipal plants which were in 1915 generating some current were visited, together with ten of the more important generating companies. For four other companies of this group carefully filled schedules were secured, either locally or from the central office. Thus definite and dependable information was obtained regarding thirty-two of the thirty-five generating plants studied. Though it did not seem necessary to make so careful a survey of those plants which are merely distributing their current, yet the writer visited five or six of the larger mu- nicipal plants, and has secured schedules or other definite information from the majority of those remaining. In most cases also the local situation was carefully discussed with men who had been on the ground, so that there seems to be little opportunity for error in drawing conclusions. Beyond a doubt, however, it was more difficult to ob- tain the desired data regarding these little plants than in the case of the corresponding group of companies. Of the latter, two of the larger were visited, and the territory served by several of the others was passed through, while schedules and other satisfactory informa- tion were secured for fifteen out of the sixteen plants in this group. In this connection it is but just for the writer to state that he was highly gratified by the candor and considera- tion with which he was received by all while making this survey. Each municipal lighting manager was uniformly courteous, giving generously of his time whenever it was asked for, placing absolute confidence in the integrity of the writer, and frequently revealing facts regarding the conduct of his plant, which, though most useful to the investigator, might have proved somewhat disastrous if divulged. ' IN MASSACHUSETTS 297 As the present study has to do primarily, not with pub- lic utilities in general, but merely with those which are municipally owned, it was to be expected that the com- panies would exercise some degree of caution before giving a warm welcome to an investigator who was not at the time connected with any business enterprise. It must also be remembered that the first duty of the officials of a cor- poration is to guard well the interests of its owners — the stockholders. And, finally, no individual connected with a privately owned plant occupies the unique position of almost absolute authority enjoyed by the manager of a municipal plant; hence, it would naturally be more diffi- cult to get in touch with the inner conditions of the for- mer, particularly during the present unsettled times. Yet the greatest consideration was constantly manifested by officials of the various companies, who afforded the writer every facility, permitting him not only to inspect their plants, but also their records if he so desired. In only one instance was he refused admission to a generating plant, and that refusal was due to a misunderstanding rather than to any active antagonism. Upon the whole, the writer was delightfully surprised at the unusual interest displayed in this survey when its purpose was explained. Particular mention should also be made of the management of the numerous centrally controlled companies, who almost invariably showed a more intelligent and helpful appreciation of the present work and its difficulties than was manifested by some of the officials of locally owned companies. The gen- eral spirit which prevailed may best be indicated by the three letters following, one from the mayor of a city, the second from the manager of a municipal plant, and the last one from the president of a number of companies: 298 MUNICIPAL ELECTRIC LIGHTING July 20, 1917 Dear Sir: Your communication of is at hand. We are always glad to discuss our municipal plant with anybody. The Manager will extend to you every courtesy on your visit here, and I shall be glad to have you call upon me. Very truly yours Mayor July 24, 1917 Dear Sib: Yours of is at hand. I desire to say in reply thereto that it will give me a great deal of pleasure to have you examine our plants at any time that is convenient for you, and to give you any information that you may desire. ... If you will kindly ad- vise a day or two in advance of your coming, I will arrange to meet you and spend as much of the day with you as you may require. Yours very truly Manager AuguM % 1917 My dear Sib: I have your letter of in regard to the investigation which you are making of municipally owned electric light plants in the state. We shall be very glad to have you inspect the property of the Company, and we are ready to place at your disposal all the records of the company and such books and accounts as you care to consult. The subject of municipal ownership is one in which every manager of a privately owned company should be keenly inter- ested. I shall be very grateful to you for any light which you may be able to throw upon the subject, and shall be glad to cooper- ate with you in every way to make your investigation as search- ing as possible. If, when your investigation is completed, the results of it are to be published, I should like to have a copy. Yours very truly President CHAPTER XI THE LOCAL BACKGROUND : GENERATING PLANTS Feom time to time, whenever it served to clear up ob- scure or doubtful points and usually whenever it was rela- vant, reference has been made in the preceding chapters to certain portions of the information secured in the local survey. This part of the work, however, was done last in point of time, as logically it should be, and we are here primarily concerned with a less readily measurable kind of material than that which has been handled in the earlier stages. Hence, not only does clearness of presentation demand that these different data be kept separate, but also the writer feels that by so doing he can put his case more strongly and can best appeal to the sense of fairness of his readers. The writer was in no way influenced by his previous findings during this aspect of the investigation. On the contrary, he merely made use, when necessary, of certain undoubted facts with which he was already familiar, for- getting for the time being any tentative conclusions which he might have reached. And now, when all of these addi- tional data are assembled, they can be the more readily interpreted because of the previous studies, and, inasmuch as they point to similar conclusions, the reader can rest assured that he has not been led astray by the statistical analyses. Needless to state, it will not be necessary to discuss all of the questions appearing upon the schedule, as many of them overlap and some are of slight impor- tance when considered alone. Also, to avoid confusion, an effort will be made to adhere to the order of treatment followed in the earlier chapters rather than to the arrange- ment given in the schedule. As all information was im- 300 MUNICIPAL ELECTRIC LIGHTING parted in confidence, the names of individual plants will not be disclosed in this connection. The plants generat- ing current in 1915 will accordingly be discussed first. 1. The Central Station It is rather difficult to make brief comparisons of the central stations and their equipment which will not prove misleading. What is suitable in one place may not be suitable in another. Circumstances frequently alter cases. Accordingly, depending as much as possible upon the state- ments of local officials rather than attempting to set up any arbitrary standards of his own, the writer has endeavored to pass upon each case as nearly as may be separately and to consider it in relation to the local conditions. In the case of plants which have ceased to generate current, the equipment will be discussed as it was in 1915, provided it has not already been removed. In general it appeared that the boiler rooms of the com- panies were kept in better order and the steam pipes in a more satisfactory state of repair. They also in many cases provided more convenient facilities for receiving and handling coal, though but a few plants in either group were equipped with automatic stokers. The companies further had more adequate boiler capacity, whereas a very frequent complaint of the public plants was that they had reached their limit and that service would have to be suspended if any accident should occur. The em- ployees of the latter also reported many boiler troubles, and the chimneys were frequently too small to give ade- quate draft. COg recorders and economizers were for both groups usually conspicuous by reason of their absence. The earlier statement to the effect that the units of the municipal plants are noticeably older than those of the companies was very evident upon examination. It was also discovered that this difference, particularly in so far as the engines and dynamos are concerned, is frequently IN MASSACHUSETTS 301 much greater even than the returns would seem to indi- cate, for in many instances they have installed second-hand apparatus — a fact which is naturally not disclosed in the records. The most extreme case of this sort which came to the notice of the writer was one in which an en- gine that had been scrapped by an adjoining company about fifteen years earlier, was recently installed in a municipal plant, having been purchased practically at its junk value. Thus the capital account was kept down and a good investment showing made for the year. An obvious advantage seemed to lie with the compa- nies in the matter of generating equipment, which, in all cases except one (out of fourteen), might be rated as "ex- cellent," "good," or "fair," whereas for the municipal plants at least eight would have to be referred to as "poor" or "very old." In justice, however, it must be stated that some of the latter had purposely refrained from renewing or replacing their equipment because they were merely waiting for a good opportunity to purchase current. On the other hand, several have undoubtedly been forced to stop generating because their equipment had become so run down and antiquated that an entire new investment would have been necessary. Of this more mention will be made shortly. As to whether the stations in general are "up-to-date," the answer would be "yes" or "fair" for most 6f the companies and decidedly "no" for at least half of the other group. One of the municipal plants is operating single-phase and three or four still use the two-; phase system. Regarding the testing of station meters, it was found that while practically all of the companies had regular tests at intervals varying from three months to one year, half of the public plants reported "indefinite" or "when needed," and one frankly stated "never." One of the latter, and until recently one of the former, has no means whatever of determining the station output. As the chief 302 MUNICIPAL ELECTRIC LIGHTING engineer says, they make their current "by guess and by God." It was also noticeable, and to be expected, that those municipalities which are purchasing their current from private concerns, are considerably more careful in this matter than they were while producing their own current. Practically none of the municipal plants and comparatively few of the others were equipped with maxi- mum demand indicators, and many of the switchboards of the former were antiquated, inconveniently placed, and even dangerous. A good many improvements had been made by both groups since 1915, a number of new turbines having been installed, while one of the companies has constructed a magnificent new station, which, of its size, is undoubtedly the best in the State. While it is difficult to make comparisons of what may be termed the "housekeeping" of the plants, due in some measure to the fact that considerations of space may affect the situation, yet the writer ended his investigation with a distinct impression that in general the conditions were appreciably better in the companies, in several of which the only proper designation would be "excellent." There was little to criticize as to the ventilation of the private stations, but at least half of the other group must be said to have "poor," or at most only "fair " ventila- tion. While it might be expected that the State inspec- tors would see to it that adequate provisions are made for the safety of employees, yet the writer was somewhat surprised to find that in many of the municipal plants the switchboards are unprotected, and in some cases crowded so close to the wall that there is scarcely room for the operator to pass. Much of the apparatus in the older and more crowded plants of this group is a constant source of danger to the employees. The companies almost without exception have roomy stations and plenty of office space. Of the municipal IN MASSACHUSETTS 303 plants, however, several stations are so small and con- gested that conditions are highly unpleasant for the employees, nor are they large enough to permit the in- stallation of much needed equipment. There is absurdly insufficient office room in six or seven of the latter, and in several cases the office is located at the station itself in a place highly inconvenient for the public. So far as the location of the central station is concerned, itis "unsatisfactory" or "doubtful" in three of the ten com- panies visited, while for the other group it is obviously "unsatisfactory" in at least five cases and "doubtful" in several more. This state of affairs is in some measure accounted for by the fact that most of the five munic- ipalities operating their water system in connection with their lighting plants, had, for the sake of economy in in- vestment, installed the latter in the premises occupied by the former, with no thought of the inconveniences, diffi- culties, or increased operating expenses which might thereby be involved. The answers to the question regarding the adequacy of plant for the present and the immediate future, fur- nish a highly significant commentary upon some of the problems of public ownership. Taking both groups as they were in 1915, it appears that at least three of the companies were inadequate and as many more in a doubtful condition. But of the municipal plants at least ten were obviously inadequate, whether because of antiquated equipment or by reason of insufficient capacity, while three or four others occupied a doubtful position. Hence it is not strange to find that some two years later three private plants and seven public plants have ceased to generate their current — though some of them are keeping their equipment in condition to use in case of emergencies. Two other municipal plants are at pres- ent seriously considering the same step, while two addi- 804 MUNICIPAL ELECTRIC LIGHTING tional ones which were on the point of buying all of their current, have, in the one case because of a false local pride, and in the other because of unbusinesslike methods fol- lowed in attempting to negotiate a contract for the pur- chase of current, been compelled to continue the business of generation. Of the remaining plants of each group only five or six in either case assert definitely that it is desir- able to continue to produce current, the reason given in some instances being that they are not at present within reach of a selling company. The recent rapid develop- ment of hydro-electric plants has, however, marked the end of profitable steam generation by any but the largest plants. Of the companies ceasing to make their current, one obviously did so because of the great investment which would have been necessary to put the plant in proper shape, another because of the high cost of coal, and the third largely because its owners were also interested in some water-power development which they wished to utilize. Four or five of the other group ceased generating for the most part because of the greatly increased invest- ment which would have been necessary to enable them to give satisfactory service, while the others seem to have been influenced most by the high cost of fuel. All of the companies and three of the municipalities are buying current generated by water power. Four or five of the remaining municipal plants will be- fore long be forced to double their investment in order to give the service which the people are demanding and have a right to expect. In fact the largest plant of this group in the State is seriously considering the advisabil- ity of installing a thoroughly new station at a cost of probably more than $3,000,000. The development of the territory is such that this step will soon be necessary un- less current is to be purchased from one of the hydro- electric companies; for the original station, taken over IN MASSACHUSETTS 305 from a private concern, is from nearly every point of view at present highly unsatisfactory. That so many public plants are scrapping their station equipment is by no means a sufficient reason for condemn- ing the proposition of municipal ownership in general. Rather, the management is probably displaying excellent judgment in ceasing to do what can be more cheaply done by private enterprise. Whether under public or under private ownership, the day of the small generating plant is passed. But the rather unpleasant fact remains, that the progress of the art, making possible the satisfactory transmission of current over long distances, has brought it about that the municipal plants of Massachusetts will be burdened with hundreds of thousands of dollars of investment in dead assets, upon which they will in most cases continue to pay interest for many years. This in- vestment, together with the interest paid thereon, should be compounded regularly, divided by the number of years during which a given plant was operated, and then appor- tioned to the annual amount of current used for street lighting, — or also added to the commercial rates, if they were lower than those which would have been charged by a private plant, — provided one really wishes to know something about the cost of service under municipal owner- ship. The "long run" must always be considered when large issues are studied. 2. DlSTKEBTTTION While an attempt was made to select plants which are operating as nearly as may be under topographically simi- lar conditions, yet it was found upon actual visitation that in a large number of cases the companies are located in places where the surface is hilly, the streets irregular, the soil rocky, and the foliage unusually abundant, where- as the conditions existing in the other group were gener- ally decidedly more favorable. The rocky or excessively S06 MUNICIPAL ELECTRIC LIGHTING irregular condition of the ground makes the installation of poles a more expensive undertaking, and with a greater amount of foliage the cost of upkeep of lines is much in- creased as well as the difficulty of lighting the streets. In these regards, accordingly, the public plants would seem to have a considerable advantage. (The reader will also recall that, as shown in an earlier chapter, the companies are serving a much more scattered population than are the municipal plants, and that they are reaching for the most part a greater proportion of the inhabitants.) In dealing with the distributing system it was a diffi- cult matter to discover how* many poles are owned out- right and how many are jointly owned or merely used for attachments, for not until the present year did the annual returns made to the State Board definitely require such information. However, as it has been suggested in the chapter on physical statistics, the companies appear to own a much larger proportion than do the municipal plants. Joint ownership is common to both groups, and some rentals are paid by both — more frequently by the companies. There are other arrangements of joint or com- plete maintenance, and sometimes municipalities seem to regard and use as public property any poles which have been placed in the streets by private concerns. Upon the whole the public plants have a decided advantage over private plants in this matter, for under the police powers of municipal corporations they can do what they please with the poles for which a location has been granted, or, on the other hand, the authorities may refuse to grant locations until they have secured the concessions which they may wish. In general the managers of municipal plants seem to endeavor to keep on good terms with the other public utilities in this matter, but the fact still re- mains that they desire to avoid expense under this head. It is unnecessary to weary the reader further with the de- tails of the various forms of agreement which are entered IN MASSACHUSETTS S07 into, except to say that nearly every plant handles the problem in a different way. 1 Only three of the municipal plants state that they feel practically certain of the length of their lines, having actu- ally measured them. Four others report that they have merely scaled the "streets with overhead" from blue- prints of the city engineer, without attempting anything further; while the remainder simply indicate that the "length of street lines" returned is built up upon the earlier estimates and records, and that it is beyond a doubt no more than a rough approximation. Practically all of the companies report that the length of their lines is deter- mined by actual measurement. Only eight of the eighteen municipal plants appear to have more or less satisfactory maps of their distributing systems, but almost all of the private plants seem to be reasonably well equipped in this regard. As to the condition of the distributing system in gen- eral, it appeared to be for the most part "good," though in a few cases only "reasonably satisfactory," for all of the companies from which information was secured. Sev- eral of the municipal plants have line construction much below the standard both in the size and quality of poles and in the size of wire, while the condition of the rest is about equally divided between "good" and "fair." In five or six of this group the original construction was 1 Naturally many of the agreements are so vague that much confu- sion might result. Among other amusing instances occurring in this con- nection, the writer was told of a case in which the town was supposed to own the alternate poles, the rest belonging to the street railway com- pany. On one occasion a valuable horse ran away and killed himself by bumping into one of the poles which was not properly located on the street. The owner sued the town for damages. Then the question arose as to whose pole it really was that killed the animal. The company began to count in one place and maintained that the town owned the guilty pole; the town began its count elsewhere, and accused the company's pole. Finally, after much litigation, the matter was compromised by each party paying half of the damages. 308 MUNICIPAL ELECTRIC LIGHTING dearly unsatisfactory; but, so far as could be ascertained there had been no particular complaint about this point in the case of the companies. In the matter of line in- spection, according to the statement, of officials, there seems to be little to choose between the two groups, ex- cept that four public plants report no definite or regular inspection. The others for the most part report "con- stant" inspection, and in some instances "monthly," "semi-yearly," "yearly," or "after storms." The connected lighting load in both cases seemed to be more or less roughly estimated, though some take the trouble to make frequent house inspections in order to determine the customer's maximum demand. The com- panies apparently exercised the greater care in keeping track of their power load. There seems to have been some reduction in the amount of "current unaccounted for" since 1915, though in sev- eral of the municipal plants it was still very high. Part of the difference between the two groups can be accounted for by the use of too small wire, tree contacts, old meters and transformers, and small transformers. (As stated in an earlier chapter, the transformers of the companies aver- age about 8 per cent larger than those of the municipal plants.) It was also significant to learn that some of the companies which of necessity used numerous small trans- formers because of their large lighting business occasioned by summer customers, follow the practice of "cutting out" these transformers during the winter months when they are not needed, thus preventing a very considerable loss of current. 1 Furthermore, the irregularity with which the station meters of the municipal plants are tested may account for part of the apparent loss. Also, in two rather impor- tant cases the writer was surprised to be told on good authority that there had been an actual "rigging" of the 1 For a fuller discussion of this subject, see ch. iv, pp. 100-104. IN MASSACHUSETTS 309 transformers and meters in several instances, so that the customer was billed a much smaller amount of current than he had actually consumed; Finally, it is worthy of note that the public plants which have begun to buy their current have greatly reduced their "unaccounted for." When there is a direct outlay for every kilowatt hour used, some incentive is given to stop the more common sources of loss. For the most part the direct method of employment was followed by both groups in making extensions. The policy adopted in extending lines varies more or less ac-^ cording to the character of the district served. Yet six or seven public plants state that they do not extend accord- ing to the demand, and more than half of them consider chiefly the probable return on the investment necessi- tated, usually requiring a minimum guarantee of current consumed amounting to 20 or 25 per cent of the cost of making the extension. In several cases known to the writer political considerations have beyond a doubt caused long extensions to be made which were certainly not jus- tified. But, as a usual thing, the managers of municipal lighting, in order to make as good a showing for the year as possible, refuse to make extensions which will not be clearly profitable. And in this policy they are probably justified, for the aggrieved party can have the matter voted upon at the town meeting, or can refer it to the city government, in which case he may be sustained, if his cause is just, — or if he has sufficient "pull," — while otherwise he will be forced to go without service. The State law, as previously discussed, does not appear to exercise compulsion over municipalities in this matter. Again, the prospective customer may be charged part or all of the cost of making the extension, at any rate if on private land, and in case he refuses to bear this cost he ' can be denied service. While there is, of course, the re- mote possibility of securing action by the municipality, 310 MUNICIPAL ELECTRIC LIGHTING yet the outcome in either of these cases usually is that extensions are by no means promptly made and that small customers are discouraged unless they happen to be con- veniently located. The companies for the most part maintain that they make extensions according to the demand, though they try to secure a reasonable minimum guarantee whenever possible. This guarantee was usually found to be consid- erably lower than in the case of the public plants. They also sometimes charge up part of the cost of extension to the customer, or let him pay for the transformer or for his meter. But as a rule their policy is, and from the very nature of the case must be, more liberal than that of the other group, for there is no buffer between them and the consumer corresponding to the town meeting or the mu- nicipal government. Rather, they are put constantly on the defensive, and can at any time be forced by the State Board to furnish service, whether they will or no. Hence, in an effort to avoid the disagreeable publicity and the ensuing prejudice which result from an appeal to the Board, they usually endeavor to keep the people satisfied. Appeals for extensions have been comparatively few in recent years. 3. Consumption There will always be customers who are afraid that their meters are registering too much current, and who cause those in the lighting business a great amount of annoyance. In order to keep the peace, for according to law such persons can complain to the State Board, many companies find it desirable to do a good deal of really unnecessary testing of meters. It is also probable that a certain class of customers are naturally more suspicious of a private concern than of a municipality. At any rate, most of the companies report regular tests at reasonable intervals. The public plants, also, though seven report "no tests" or only "upon complaint," appear to be giving IN MASSACHUSETTS 311 more attention than formerly to this aspect of their serv- ice. As an example of the need for more care in this re- gard, the case of a large municipal plant may be cited, which, upon a change of management, tested all of the customers' meters, of which 47 per cent were found to be accurate, 7 per cent from 2 to 26 per cent fast, and the remaining 46 per cent from 2 to 100 per cent slow! Customers' complaints appear to be reasonably well attended to by both groups, though the municipal plants can be more independent in the matter, and the manager frequently can, if he wishes, hide behind the municipal light board or the municipal government. Overlapping jurisdiction in such cases sometimes causes unwarranted delay in attending to complaints. All of the companies report the sale of appliances, and several sell fixtures, while four or five public plants sell few appliances or none at all, and only one sells fixtures. The latter are much handicapped in this matter because they as a rule have" little or no display room. The terms are about the same in both cases — "at cost" or "near cost." Some of the companies, however, offer liberal credit in order to push the use of various devices, and thus increase the day load. The public plants, as might be expected, are not usually .so liberal in this regard, though the largest one of all maintains a little shop where house- hold appliances, such as irons, are repaired free of charge. The manager deems it more advantageous in this case to be constantly selling current than to secure the usual fees for re- pairs or to have the appliances discarded as so often happens. Deposits are usually required in both groups at the dis- cretion of the manager or from tenants. Accounts are always collected monthly by the companies; but, for the lighting customers in a few of the smaller municipal plants, at intervals of two or even three months. The latter in two cases also make large use of prepayment meters. In a few cases special rates are made to large consumers 312 MUNICIPAL ELECTRIC LIGHTING of power, but for the most part the usual schedules are followed. All of the municipalities report general satis- Table 56. Petitions op Municipal Government, Citizens, or Consumers regarding Price or Quality op Service since 1910, and action op State Board thereon ' Name Date Petition Action of board X. Private plants : A. Generating— 1910 Board does not sustain consumer's petition for reduction in price 1914 Petition of mayor for No action, but rate re- reduction in price duced in 1916 from 11* to 101 1910 Seduction in maximum net rate ordered from 15«t to 14* 1912 "| Petition of consumers 1 for reduction in price 1913 V do. ■No action 1914 1 do. 1915 ) do. 1910 Petition of consumers for reduction 1911 Reduction ordered from 13.5* to 12.5* 1913 Petition of mayor for reduction in price 1914 Reduction ordered from 14* to 9* 1910 Petition of selectmen / regarding quality and price 1911 Reduction ordered in 1913 1914 1915 1 Petition of Board of . Trade and citizens for reduction in J price price of street lights ■No action 1915 Petition of consumers for investigation of rates and service 1916 Board for most part B. Purchasing — sustains company Milford 1914 Petition of selectmen and consumers for reduction 1915 Reduction ordered from II. Municipal plants : 18* to 14* 1915 Petition of consumers for reduction in price No action; bnt rates re- duced in 1916 from and improvement in 20* and 15* to 17* and service 14* 1913 Petition of citizens for reduction in price No action; but rate re- duced in 1914 from 13* to 9.9* > Table includes only the groups of plants studied. IN MASSACHUSETTS 313 faction with the rates at present, while a few of the com- panies admit that their charges are considered high. Yet, within the last seven years, as shown by the accompany- ing table (56), there has been but little active agitation for reductions in price, and in only four cases out of the seven listed did the Board, after careful deliberation, sus- tain the petitioners. On the other hand, there have been within the period numerous voluntary reductions in price, Table 57. Voluntary Reductions in Maximum Net Com- mercial Lighting Rates since 1910 (cents per K.W.H.) Municipality 1910 1911 1912 1913 1914 1915 1916 I. Generating — Brain tree.... .... 12 to 10 Chicopee .... .... 12 to 9.6 9.6 to 9 Concord 10 to 9 .... .... Dan vera .... .... '. .. Holyoke .... .... 8 to 6 Hudson 15 to 10 .. .... Hull . 20to"l4 Ipswich .... .... .. 10.8 to 10 Mansfield .... .... .... 15to"li.7 . .. .... Marblehead .. .... ..... 12 to 11 .. .... Merrimac .... .... ,. .... .... Middlebor- ougfa .... .,.. . ... N. Attlebor- ^ough «... a .... .... 13.5 to 12 .... 12 to 10 Peabody 12.35 to 11.7 1278 to 10.8 11.7 toi0.8 Reading 10.8 to 9.9 .... Taunton. .... .... .... 13to9.9 .... Wakefield.... .... 15 to 12 Westfleld .... .-.. 10.8 to 10 .... ioto7 ; .... ....< U. Purchasing — Ash bur n ham. . 15 to 12 *•** Belmont 12 to 11.2 .... 11.2 to 10 Boylston .... .... Georgetown.. Groton .... 14.4 to 13.5 18.5 to 11.7 .... Groveland . . . 15 to 12 12 to 11 Hingham .... Holden .... .... .... .... .... Littleton .... .... .... .... Lunenburg. . . .... .... Middleton .... Norwood 15 toll lito9 .... Pax ton .... .... .... Princeton ..... .... .... .... Rowley .... .... 15 to 12.5 Shrewsbury . . .... 15 to 13 13 to 1*0.8 .... South Hadley 13.5 to 11.7 -Sterling .... .... .... Templeton.. . . lStoll .... Wellesley.. .. 10.8 to 10 10 to 9- 9 to 8.5 West Boylston • ••• .... > Increased in 1917 to 9 cents. 314 MUNICIPAL ELECTRIC LIGHTING amounting to twenty-four instances in fourteen different generating plants. The writer has also been informed of two or three additional reductions which have taken effect recently. Thus the total number of price reductions ap- pears to have been at least thirty. The corresponding group of municipal plants have in the same period also made twenty voluntary reductions in price in fifteen dif- ferent plants, while two, at least, have been forced from financial reasons to increase their rates. There were a few complaints about the quality of ser- vice rendered by the municipal plants, and there would probably have been more had they not been publicly Table 58. Voluntary Reductions in Maximum Net Com- mercial Lighting Rates since 1910 (cents per K.W.H.) Company 1910 1911 1912 1913 1914 1915 1916 I. Generating — Ameabury 18 to 16 .... .... Attleborough. , 15 to 14 14 to 13 13 to 12 12 to 11 .... .... Beverly .... 12 to 11 • ••* .... .... 11 to 10 Buzzard's Bay. 27 to 17.6 .... .... .. .. .... Citizens 1 .... .... .... ..... .... Gloucester .... .... 18 to 14 .... 14 to 10 .... • ■■• Great Barring- ton .... • ••■ .... .... 14. 4 to 14 Lee .. .. .... .... .... .... Leominster.,.. IS to 16 16 to 16 16 to 14 .... 14 to 12 ..... .... Newburyport.. .... .... ..., 14 to 13 .... North Adams.. .... ■ ■■• 12.5 to 11 .... Northampton.. 15 to 14 .... .... .... .... Plymouth .... .... 16.2 to 14.4 .... .... .... 14.4 to 13.5 17 to 16 15 to 13.5 .... .... .... Vineyard 27 to 17.6 .... .... 'Weymouth.... .... .... .... .... Winchendon. . . .... .... 20 to 12 .... •••-* II. Purchasing — Ayer .... .... .... 18 to 17 17 to 15 .... Blackstone .... .... ■ *■• 15 to 14 .... 14 to 13.5 Franklin .... • ■•■ 12 to 9.9 .... .... .... Harvard .... .... .... .... Ludlow .... .... ■ •*■ *"V .... .... Manchester.. .. .... .... .... Milford 19 to 18 .... .... 14 to 10 Mill River .... .... .... .... .... North Brook- fleld .... .... .... .... 15.3 to 15 .... .... Provincetown.. .... .... .... .... .... Randolph .... .... .... .... .... Shirley .... .... .... .... .... Spencer .... .... .... .... Sunderland.... .... 20 to 13.5 .... .... Ware .... .... 20 to 15.3 .... 15.3 to 15 .... .... Williamatown. . .... 13.6 to 13 .... 13 to 12 IN MASSACHUSETTS 315 owned, for people usually complain less about inconven- iences of their own making than about those which are imposed upon them by others. With one or two excep- tions there seemed to be little complaint regarding the service furnished by the companies, and in many cases it was spoken of in the most appreciative terms. Finally, it is interesting to note that while the private plants usually watch their street lights carefully, gener- ally keeping a man on inspection duty or on call every night, the public plants seem for the most part to depend upon citizens or policemen to report outages, etc., and then attend to the matter when circumstances render it convenient. This, again, is explained by the fact that one who serves himself is naturally less particular than one who hires the service of others. 4. Financial Matters As a large number of the questions on the schedule under the head of "Financial and Miscellaneous" apply solely to municipal plants, these will be first discussed. It was found to be necessary to ask very specifically re- garding the various kinds of free service received, because the managers of municipal plants seemed to regard as their rightful prerogatives any free services which they had customarily received from the municipality, even though the electric plant rendered no service in return. Aside from street lighting, there were only one or two instances worth noting of free service furnished to the municipality, and this was in connection with the fire alarm. It was, however, true in several cases that the rates charged for lighting public buildings and for public power are somewhat lower than in fairness to the other consumers they should be. But the writer was gratified to find that in at least seven cases the public plants are now charging to the municipality at a fixed rate per lamp or per kilowatt hour the cost of street lighting; and all of 316 MUNICIPAL ELECTRIC LIGHTING the managers expressed themselves as favoring this pol- icy. In all cases, current which is charged against the public authorities is regularly billed and paid for. , In two or three cases the city water used was not paid for at all, and in a few others it was secured at a special low rate. Telephone and transportation service appeared to be always properly charged up to the department, though the matter remains doubtful in some instances where the office is located in the town hall. Only one plant pays a part of the salary of the town or city treasurer, though all must utilize this department to a greater or less extent. Two plants report that the services of the solicitor are paid for if needed. Most managers, however, affirm that if they must have legal assistance they prefer to put their case in the hands of a real lawyer rather than to take a chance on the city solicitor, who is often a man of little experience or ability. Half of the plants of this group occupy of &jjjp frjn^ the town hall for which they pay no rent, while i^.^Bhe or two other cases a portion of the operating expe^Mklf the hall is shared by the electric light departmentt^Pour or five report the use of public land rent free. When the help of employees of other municipal departments is used, the usual rates of wages are paid according to the statement of the managers. In two or three cases the town, under a blanket policy, pays the premiums on all or practically all of the insurance carried by the plant. In one town the salaries of the municipal light board 1 are paid by the municipality, and in the thirteen instances in which the accounts are audited by the public auditor, the town and not the lighting department bears the expense. The po- lice and fire-alarm service is in practically every instance at present operated as a separate undertaking. The total amount of free service rendered by the mu- nicipal plants, if street lighting be excepted, appeared to 1 Under the name of the "Commissioners of Public Works." IN MASSACHUSETTS S17 amount to little more than $500 annually, and probably an equal amount is given in various ways by the com- panies to the municipalities in which they are located. If Holyoke be excluded, the free service received would probably amount to somewhat more than $5,000 for the seventeen plants, or, including the cost of auditing, which it is rather difficult to estimate, from $7,000 to $8,000. In addition, if the salary of the town and city treasurers could be fairly apportioned to the lighting departments accord- ing to the services which they perform, — the work of well-paid officers in all private plants, — we would have to add at least a few thousand dollars more to this esti- mate. 1 (The case of Holyoke is somewhat different from that of the other plants, because the extensive offices used, covering an entire floor of the large city hall, were fitted up at the expense of the lighting department. The mana- ger accordingly maintains that the reasonable allowance for this free service would be simply the interest on the investment made by the plant, or about $1,000. The writer views the case somewhat differently, however, and feels that a reasonable allowance should also be made for the quarters themselves, even though they were unsatis- factory before the department had expended money on them. In view of all the circumstances, $4,000 would seem to be a fair estimate.) When the municipal plant is operated in connection with a water-supply system, an attempt seems to be made to keep the operating accounts fairly divided, except that the water used is rarely paid for. So far as the capital ac- count is concerned, the theory usually held is that, pro- vided the building was already erected for the use of the water department, none of its cost should be charged up 1 This, of course, does not include the taxes foregone by the commun- ity, and no allowance is made for the assessment of a portion of the sal- ary and expenses of the Board of Gas and Electric Light Commissioners as first provided for in sections 3 and 4 of chapter 205 of the General Acts (1917). 318 MUNICIPAL ELECTRIC LIGHTING to the lighting department. No companies were being operated under these conditions. In only two or three cases in each group does there appear to have been any conspicuous waste or extravagance in operation. Nor do the instances of extravagance or carelessness in investment seem to have been more numer- ous, though it must be admitted, after examination, that at least two municipalities obviously paid too much for the property which they were compelled by law to take over from private concerns. On the other hand, nearly half of the municipal plants were candid enough to admit that their financial policy, for reasons more or less beyond their control, had probably been too conservative for their own good and for the best interests of the public. Most of the companies seemed to feel that they had been sufficiently liberal in this regard. The private plants in the main assert that their con- struction accounts are reasonably correct, though the writer is pretty certain that in a few cases they are surely too high. Nearly half of the public plants, however, ad- mitted that their accounts are probably too low, inas- much as many renewals in the nature of improvements are charged up to operation, when logically a part should be charged to the capital account, as would be done in the case of most companies. Some even stated that they fol- low the practice of including the cost of the smaller ex- tensions in the maintenance expenses, in order to keep the apparent investment as low as possible. Further, many of the expenses of labor and superintendence during construction and extensions have at one time and an- other been met out of operation cash. Finally, additions from depreciation fund or from income have frequently not been properly accounted for. Upon the whole, the aim of the managers of municipal plants seems to be to keep the investment account as low as possible because of the psychological effect which this IN MASSACHUSETTS 319 apparent economy has upon the citizens. Many a one has stated to the writer that he is not free to use his own judgment in the matter, as the public will not stand for it — a fact which also explains the failure, in many in- stances, to replace antiquated equipment, or, on the other hand, the purchase of second-rate equipment. In accord- ance with the requirements of the State law, the ac- counts are kept in such a way that the most intelligent taxpayer scarcely knows whether the plant is making or losing money in operation from year to year. Under these circumstances, it is comparatively easy for a manager to secure a sufficiently large annual appropriation to cover the cost of "street lighting," which may also cover an inexcusably large operating deficit. There is more than one road to Rome! It is much more difficult, however, to persuade the people in a town meeting that it is necessary to issue more bonds or notes, for that is something tan- gible and understandable, and such funded debt saddles the municipality with a constant and definite outlay for interest and maturing principal. In the matter of depreciation all of the municipal plants but two go through the formality of having a real fund as the law requires, usually investing it annually in the plant for renewals and improvements or extensions. The com- panies, however, are, as suggested in another connection, very irregular in this regard, most admitting that depre- ciation to the extent of at least 5 per cent annually should be carefully taken care of, but maintaining that the de- vice of a depreciation fund is somewhat of an anomaly. The usual policy is to write off the books at indefinite intervals when the earnings have been unusually good, and to endeavor to keep the plant in first-class operat- ing condition, without following any definite theory. In view of the present trend of regulation of public utility rates, they are, from a private point of view, probably jus- tified in keeping the capital account as large as possible. 320 MUNICIPAL ELECTRIC LIGHTING A publicly owned plant occupies a somewhat unique position in this respect. Naturally, a company may cease to generate current and even let its equipment run down without impairing in any direct way the interests of the stockholders, even though the tangible assets become of small value, provided the earnings continue to be at the same old level; for the market value of the stock is for the most part merely an index of the rate of dividends paid. A municipal plant, on the other hand, which has suffered its equipment to deteriorate or has abandoned its generating station, may, if it has not built up a large reserve, — in- vested in the plant, if you will, — be left with a large debt on its hands which will be a burden to the taxpayers or consumers long after the tangible property and the equity in the plant are destroyed. To be sure, the rates may be made high enough to cover all of the fixed charges for principal and interest, until the debt is wiped out. But if this is done, should we not expect the municipal plants in the future to be compelled to charge considerably higher rates than the companies, which do not have such heavy, fixed charges to carry, and which can, without impairing their own earnings, give the public the benefit of the de- creased costs resulting from extensive hydro-electric gen- eration? The S per cent rate of depreciation, legally re- quired to be written off in the case of municipal plants, is ridiculously small in view of the rapid depreciation from obsolescence which has characterized and still marks the electric light and power business. Would it not have been wiser for public plants to provide for this inevitable de- preciation by charging somewhat higher rates in the past, rather than, by postponing it, to keep up the rates in the years to come when the charges logically should be lower? But the people at a given time would hardly stand for such a far-sighted policy, and the next generation cannot well dictate what shall be its inheritance. x As nearly as can be estimated, the investment in equip- IN MASSACHUSETTS 321 ment which is no longer needed by the seven municipal plants which now purchase their current would amount to between $400,000 and $500,000. The plants themselves do not place the figure so high, because they consider that, so long as they still make use of the original station to receive and distribute their purchased current, only the machinery itself should be regarded as "not in use." They further maintain that if the equipment is being kept in readiness for emergency generation it is still "in use." However, having made ample allowance for the sort of stations and equipment that would be needed had cur- rent never been generated, and having deducted the prob- able scrap value, the writer feels that his estimate, based upon the depreciated plant accounts, is a very fair one. Were the actual construction accounts used as a basis of calculation, the amount would be considerably higher. A similar method of estimating would put the investment in dead assets of the three companies at between $300,000 and $400,000. The accounts kept by the public plants are as a rule much simpler than those of the centrally controlled com- panies. All of the accounts appear to be audited, at in- tervals varying from one month to a year. The former are in most cases audited by the public accountant, though in five instances outside parties are called in to do the work. Their usual audit is frequently of a superficial, perfunctory sort. The books of the companies, when under group control, are examined by representatives of the central office; otherwise certified public accountants usually do the work. The usual precautions against financial dishonesty are the audit and the bonding of responsible employees. Five managers of public generating plants, however, and six of the group of purchasing plants were not under bond in 1915, despite the requirements of the law, 1 and in many 1 Mass., 1914, ch. 742, sect. 113. 322 MUNICIPAL ELECTRIC LIGHTING cases the amount of the bond is low in comparison with the amount of money handled. There is also frequently an additional check by means of the fact that at one time or another practically all money passes through the hands of the town or city treasurer. Though in cases where the manager is a member of the municipal light board or one of the selectmen, as occasionally happens, it might be comparatively easy to introduce dishonest practices, the writer has no reason for thinking that there have been any serious misappropriations of funds in either group of plants. In fact the conduct and regulation of the business is for the most part such that this would scarcely be pos- sible on any large scale. Whatever dishonesty there may be usually comes about in another way, which will pres- ently be mentioned. StTMMABY Some of the important findings thus far gained by means of the local survey, may be briefly stated as follows: 1. The municipal plants very frequently complained of inadequate boiler capacity. 2. There was a conspicuous absence of the various eco- nomic appliances in both groups, but this lack was more pronounced in the public plants. 3. The generating equipment of the municipal plants was frequently in far worse condition than would have been expected; in numerous instances second-hand appa- ratus had been originally installed. 4. The station meters appear to be regularly tested by the companies, but in the main very irregularly tested by the other group. 5. The "housekeeping" of the companies was usually better than that of the municipal plants. 6. The stations of a large number of the public plants were too small, badly ventilated, or much out of date. The companies, on the other hand, usually presented a satisfactory condition in this regard. IN MASSACHUSETTS 323 7. While most of the private plants had, in 1915, made adequate preparation for the present and the near future, most of the municipal plants were decidedly unequal to the demands which might reasonably have been made upon them. 8. The investment of the public plants would have been markedly increased had not a large number (7 out of 18) ceased generating current between 1915 and 1917. Many were decidedly "at the end of their string" in a physical way. 9. Many of the remaining municipal plants will soon be compelled greatly to increase their station investment unless they decide to purchase their current for the future. 10. The topographical conditions seem to be decidedly favorable to the public plants. 11. The companies usually appear to have a more satis- factory line construction, and they have a more accurate record of the length of their lines, their poles, etc. 12. In the matter of making extensions for new busi- ness, the private plants, being more subject to. adverse public opinion and legal pressure, seem to be more liberal than the other group. 13. Much more attention is given to the sale of appli- ances of all kinds by the companies. 14. There appears to be more careful attention paid to the street lighting service by the companies, and usu- ally a more expeditious method of handling customers' complaints. 15. There have been more numerous voluntary reduc- tions in rates by the companies than by the municipal plants. 16. While practically no free service is now rendered by the 'public plants to their communities, a good deal of unpaid service of various kinds is still furnished by the 324 MUNICIPAL ELECTRIC LIGHTING municipalities to their plants, the actual value of which it is very difficult to estimate. 17. The financial policy of the municipal plants, accord- ing to their own admission, has in numerous cases been too conservative. 18. A large proportion of the public plants admit that their construction accounts are too low, as they pur- posely follow the policy of keeping them down, because of the effect which this apparent economy has upon the citizens. Often capital charges have been included in the operating accounts, which otherwise have usually tended to be relatively low> 19. There is probably an investment of about $500,000 in the "dead assets" of municipal plants which have ceased to generate current. This fact should not be over- looked if we wish to know the real financial results of public ownership. CHAPTER XII THE LOCAL BACKGROUND : GENERATING PLANTS (concluded) B. The Management Prom the very nature of the survey the questions listed under this head refer only incidentally to the manage- ment of private plants. Hence, unless specifically indi- cated otherwise, the discussion will apply to the public plants. There are no municipal light boards in the cities, with the exception of Chicopee, which has secured one through special legislation. In Hull the selectmen serve as a board, and in Hudson the commissioners of public works. While members of the board frequently hold other public offices, politics do not seem to have been much consid- ered in their election. In only about a third of the cases did one or more of the members appear to have what might be called a technical knowledge of the electric light and power business. The remainder are for the most part business men. In some instances the boards take a very active interest in the department, even more than would seem to be warranted; but for the most part the manager is left in practically full control. The law is not altogether specific as to how the division of responsibility should be made. 1 In three cases the manager is also a member of the board (1915). One of the managers (Holyoke) is under the civil serv- ice, two are appointed by the mayor, and the remaining by the municipal light boards, if there are such. The term of appointment seems actually to be indefinite in 1 On this point the reader is referred to chapter n, supra, and to Mass., 1914, ch. 74.2, sects. 112, 113. 326 MUNICIPAL ELECTRIC LIGHTING about half the cases; in six or seven others it is definitely only one year; while in two of the cities the manager holds for three years. With few exceptions it seems to be the policy to retain the manager for a considerable length of time. The period of service for the present managers varies from one to nearly twenty years; while the aver- age length of service of all is from eight to ten years. The basis of selection appears in most cases to be general fit- ness for the work, rather than any political considerations. In some cases, however, particularly in the past, politics have played a part, leading to the appointment of wholly incompetent men, and in one or two instances religious considerations were apparently involved. It is interesting to note the technical qualifications of these managers. Two in the smaller plants appear to have no training of any sort which would fit them for the work, and some years ago such cases were by no means uncom- mon. Four have secured all of their training in the plant itself, having worked up from the lowest positions. The remaining two thirds began their career in the service of private concerns, usually in electric light and power plants in the State; but one had been with the Commonwealth Edison Company of Chicago, and two or three with the General Electric Company. The writer was highly gratified to find, in addition, that five 1 managers of municipal plants are graduates of the Massachusetts Institute of Technology, one of the Engineering Department of Tufts College, while a sev- enth had completed most of the work for a degree in engineering at McGill University. Still another has had about two years of college work along other lines. Most of the remaining have had high-school educations, and a few have endeavored in addition to improve themselves along technical lines by means of correspondence courses. In the group of companies, on the other hand, only two 1 Including one manager of a plant which pin-chases current. or three local managers or superintendents were found who are technical graduates, though all have evidently had a reasonably satisfactory general education and are first-class practical men, having spent most of their lives in the business. These facts would seem to indicate that the position of manager of municipal electric lighting is not unattractive to men of some education, and that, contrary to the common assertion, the larger municipal plants probably now have fully as intelligent management as have the private plants, except in so far as the latter may gain by central control. Only six out of eighteen municipal managers are mem- bers of one or more technical societies, such as the Ameri- can Institute of Electrical Engineers* while eight out of ten managers or superintendents of companies have such affilia- tions. The reasons for the poor showing made by the for- mer in this regard are numerous. In the first place, they are not allowed by the by-laws of the organization to be- come members of the National Electric Light Associa- tion, though the New England Section is well disposed toward them and invites them regularly to its meetings - — a courtesy of which a few avail themselves. Again, many feel that their salaries are not sufficient to justify their incurring the expense of dues and annual meetings of such societies, for while companies commonly them- selves bear this charge, municipalities follow no such practice. In the third place, most of them feel that there is a decided antagonism on the part of the citizens against any affiliations with interests which are naturally op- posed to the principle of public ownership. Many, also, find that the public do not look with approval upon their being absent for a short time in order to attend such meet- ings — the feeling being that they are merely away "having a good time" instead of attending to business. And, finally, some of the managers, very conscientious in the performance of their duties and feeling their re- 328 MUNICIPAL ELECTRIC LIGHTING sponsibilities keenly, do not consider that they should spare the time or run the risk of having some accident happen during their absence. Hence, it is not surprising that so few belong to scientific societies. There is, how- ever, a State Association of Managers of Municipal Light- ing, which has one or two informal outings each year at which views can be interchanged, and where, the writer is pleased to state, much real good cheer is in evidence. As to the political activities of the managers of public plants the writer is not in a position to speak with abso- lute proof as to the conditions in the past. It appears, however, that there is less undesirable manifestation of this sort now than formerly, though in two cases recently the manager has beyond a doubt dabbled in the game, and in three or four others there is ground for suspicion. More than half of them state definitely that they have not been interfered with for political reasons. Three admit that politics at present make the work very unpleasant; while three others affirm that they were formerly thus troubled. The nature of this interference would be rather hard to define. In some cases it takes the form of an at- tempt at favoritism, and in others it is marked by an effort, for ulterior motives, to limit the manager in the use of his judgment as to the proper operating or financial policy. Frequently, also, he is hampered more by the ignorance of the citizens regarding technical matters, than by any sinister political manipulation. Managers of private plants have their difficulties as well, though usu- ally of a different sort. The chief weapons to be used against a company are complaints about price or quality of service. Three or four cases were found in which the municipal manager does not give all of his time to the work, and in a number of cases he also performs the duty of inspector of wires, thus somewhat increasing his salary. It seems rather anomalous, however, for him to hold this post- tion. In several cases he also has charge of the water sys- tem, for which he receives additional compensation. The salary of two or three of the municipal managers is ridiculously low, while in one or two other cases it ap- pears to be disproportionately high. 1 Upon the whole, however, the writer does not feel that at present, a num- ber of increases having been made since 1915, the salaries are unreasonably low, considering the qualifications and abilities of the men and the work which they are expected to do. No attempt was made to secure definite figures regarding the salaries paid by all of the companies, though they seem to run slightly higher than in the municipal plants. But it must be remembered in this connection that the local manager of a company, particularly of one which is centrally controlled, is relieved of many of the annoying responsibilities which are imposed upon a mana- ger of municipal lighting, nor does he need to be so sensi- tive to the popular will. Ten managers state that they are given practically full authority (as previously indicated), while the others to a greater or less degree are controlled by the mayor or by the municipal light board. With a few exceptions an honest attempt seems to have been made to use wisely the authority granted. Materials are for the most part purchased directly by the manager, though it is not un- common for the board's approval to be required for ex- penditures above a certain amount — usually five hundred dollars. For the large purchases the practice of securing competitive bids is usually followed. Local dealers do not seem to be favored ordinarily unless the difference in price is slight or the deliveries much more prompt. In most cases, however, the question does not arise. Many managers complain that they are prevented from secur- 1 Cf. Mass., 1914, ch. 742, sect. 113. The amount of compensation, as well as the term of office, is to be fixed by the city council or by the selectmen or municipal light board or similar body. 330 MUNICIPAL ELECTRIC LIGHTING ing material when it might be bought to best advantage, because of the fact that the appropriations do not come at the right time and there is no surplus fund to draw upon. For the companies which are centrally controlled, as well as for some of the remaining, material is bought by a purchasing agent, who is usually given wide discretion. They also customarily place their contracts through com- petitive bidding. Some years ago, however, it was com- mon for a number of companies on the list to purchase material from a supply company, which was owned by those having the chief interest in the lighting plant. This practice seems now to have been effectively frowned down by the Board of Gas and Electric Light Commissioners. To some it may seem extremely futile for one in the position of the writer to ask a manager whether any one has ever tried to corrupt him, or in lieu of that to en- deavor to discover the fault from other dependable sources. There are, however, more ways than one of finding out pretty accurately whether one holding a responsible posi- tion is gifted with an itching palm, though it is practi- cally impossible to prove a case of this sort. At any rate, about half of the municipal managers either admitted that some time during their tenure they had been offered graft of one sort or another, or they sug- gested that they knew of managers who had been dis- honest. Naturally no one could be expected to incrimi- nate himself and the practice is surely not so common as it used to be. Yet one man stated that he received the "usual discounts" when purchasing certain material. Another volunteered that, in making a sale of a lot of wire which had been scrapped, he had been offered one thousand dollars if he would permit the purchaser to do the weigh- ing. Others have spoken of the offer of certain percentages on the cost of installation of some particular type of machinery — though it is practically certain that none of the standard concerns would use such tactics. IN MASSACHUSETTS 331 The commonest method of approach, however, is the offer of a "rake-off" on coal purchased, which usually amounts to billing a certain grade and substituting an inferior grade. Several managers stated that they had been offered such inducements, and that they well knew cases in which the graft had been accepted. The most patent case of dishonesty brought to the writer's atten- tion was that practiced by a manager who was also inter- ested in a coal yard. He is said to have been able to re- tire with a considerable fortune after a few years. In one case, also, and that a very important one, as nearly as can be ascertained without having been a party to the trans- action, it has been customary for the manager to pay roundly in order to secure his position, which carries an absurdly low salary, and then to piece out his stipend and earn back his purchase money by the usual graft. It is said that an honest dealer had no opportunity to sell his goods to this pliant, and the present unsatisfactory con- dition of comparatively new equipment, as well as the formerly excessively high operating expenses, appear to bear witness to the truth of the charges which have been made by numerous creditable persons who were in a posi- tion to know. The condition of affairs in this particular place was and is practically an open secret. Here the lighting plant has almost always been regarded as the football of the municipal government. Conditions are still unspeakably rotten, though little if any of the blame at present rests upon the manager. So far as concerns the municipal light boards or other municipal authorities which ultimately control the light- ing situation, the writer knows that in several cases their integrity has been by no means unimpeachable. In one instance a board is said on good authority to have re- fused to install a certain excellent piece of equipment be- cause the dealer would not give the bribe which they rather naively asserted they were in the habit of receiving. 332 MUNICIPAL ELECTRIC LIGHTING In another case some members of a board, who were secur- ing bids for an important piece of extension, won heavily at poker one night from one of the agents who was eager to put through a deal for his house. As might be sup- posed, that sealed the contract; but as a sequel it should be stated that the work when completed was far from satisfactory to the public. Other cases of crookedness might be mentioned. Yet it is needless to multiply these examples, for probably most of them could be duplicated under private manage- ment if the proper channels of information were sounded. As a general proposition, however, it would seem that, excepting Holyoke and one or two other cases, the larger the municipality which has a plant of its own, the greater are the opportunities for dishonesty and the more fre- quently is it practiced. The town, with its old-fashioned methods and meetings, is evidently much freer from graft than the city. Something more should be said, in conclusion, regard- ing the municipal managers. The writer was, in most cases, struck by the earnestness and conscientiousness with which they now perform their duties, some never giving themselves even a brief vacation. In most cases they seem to feel a sort of proprietorship in their plants, and they accordingly exert themselves to the utmost to make as good a showing as possible. To do this they must familiarize themselves with all aspects of the work, and must themselves often perform service which under pri* vate ownership would ordinarily be done by specialists. With few exceptions, however, they feel that their posi- tion is an almost intolerably difficult one. On the one hand they have the public to satisfy — a public which believes that the manager is its property, which demands twenty-four hours of cheerful service each day, which all too readily criticizes the management if things go wrong and complacently accepts the credit for any success that IN MASSACHUSETTS 333 may be attained. On the other hand they have their ideals of the correct policy which should be followed for the present as well as for the future. In too many in- stances they are absolutely prevented from doing what they know should be done, either by the lighting board or the municipal government or by the adverse vote of a town meeting. They suffer most because of the ignorance of those who strive to direct their policy, i.e., the people, whose knowledge of the business, even among the more intelligent, rarely goes so far as the ability to read their own meters and to remember the price which they pay per kilowatt hour. They frequently grow discouraged and say, "What's the use?" — but still, with almost no exceptions, they keep everlastingly at it, making the best of bad circumstances and hoping for a better future. By these words of appreciation the writer means to make no invidious comparisons with the managers of pri- vate plants. But he does wish to assert, and assert strongly, that, in spite of the mistakes of the past, the municipal managers as a class are at present striving for the same ends that are sought for in private business, and that if these ends are not attained, it is, with few exceptions, be- cause of the inhibitions almost unavoidably set up by municipal ownership, rather than because they them- selves are incompetent to perform the tasks which they have undertaken. If this be the case, the reader may well ask why the managers remain in such an unsatisfactory position. Why do they not seek employment elsewhere? To this question the writer would reply that, in the first place, there is a certain satisfaction in wielding such outwardly full author- ity as is usually granted to the manager, and there is also a certain degree of prestige connected with the position. These facts have induced a number of reasonably good men to enter the municipal service because they grew tired of holding a more subordinate position under pri- S34 MUNICIPAL ELECTRIC LIGHTING vate employ. Then, once having gotten into public serv- ice of this kind, it seems to be very difficult to go back into a private position. The managers themselves have constantly stated that a prejudice exists against them, and the writer has ascertained the truth of this claim by discussing the matter with many responsible men who are engaged in private business. They maintain that one who has grown accustomed to the public way of doing things, is as a result largely unfitted for usefulness in corporation work, in which the methods and the point of view have ordinarily been so very different. Perhaps this prejudice is ungrounded, though the writer knows of only one or two cases in the State in which a man has stepped from the managership of a municipal plant to the employ of an electric company. Yet many managers with whom the matter has been discussed in confidence, have said that they are merely waiting to find a favorable opening in some private enterprise, and prac- tically all say without hesitation that they would prefer to work for private interests. Their general feeling may be aptly summed up by saying, "It is hard to serve many masters." 6. The Employees As was suggested in an earlier chapter, there is no uni- formity followed in the method of returning the average number of laborers employed. Some give only the number regularly employed, while others list all who are employed, even though for only a portion of the year. In practically all instances the manager is supposed to hire the employ- ees, though in one or two cases in each group the matter is left to the superintendents or foremen, who are sub- ordinate to the manager. In the four cities having public plants, all except the laborers are under the civil service. 1 There seems to be no particular discrimination against 1 Cf. Mass. R.L., ch. 19, sect. 36, and Mass., 1902, ch. 544, sect. 13. IN MASSACHUSETTS S35 foreigners, though practically all of the companies em- ploy them and scarcely half of the municipal plants do so. 1 In about two thirds of the municipalities in this group it does not appear, recently at any rate, that political con- siderations have influenced the appointment of employees. In four or five cases it is certain, however, that politics have played a more or less important part, while in one or two cases religious considerations have had some in- fluence. In an equal number of instances, naturally, the employees have dabbled somewhat too freely in politics. Here, again, the larger plants have been troubled most. Six employees of municipal plants were found, in addi- tion to the managers, who have had what might be called a technical training, more or less complete. These, how- ever, were confined to only two of the larger plants. About the same number of technically trained men were found in the private plants visited. Seven of the former group of employees, representing three different plants, are members of some State or National technical organization, while from twenty to twenty-five were found in the ten companies visited. The eight-hour day is supposed to be in force in all of this group of public plants. In the companies, also, the majority are on the eight-hour shift, though two still have the nine-hour day, one, the ten-hour, and in two cases there is a twelve-hour shift for certain employees. There seems to be no noticeable difference in the rate of wages paid by the two groups. A few of the companies pay lower than the usual rate, and a few pay higher, while the municipal plants seem to adhere closely to the stand- ard schedule. It must also be remembered that the pri- vate station employees have a far pleasanter place in which to work than have the corresponding public em- 1 This is as would be expected as a result of the laws requiring prefer- ence to be given to citizens of the Commonwealth. Cf. Mass., 1914, ch. 600, sect. 1. 336 MUNICIPAL ELECTRIC LIGHTING ployees. It is scarcely worth while to discuss the average rate of wages paid, beyond what has already been said in a preceding chapter, for during these abnormal times wages are being rapidly though irregularly increased by both groups. The usual rate paid for overtime work is time and a half, though in both cases there are plants which make no extra allowance, and one or two seem to pay nothing at all. 1 According to the statements of the managers of munic- ipal lighting, the services of employees of other municipal departments, such as the highway or water department, are utilized in only four or five cases, and then rarely. It is customary to pay for such labor at the usual rate. For the most part the employees appear to be retained in both groups as long as they care to stay, provided, of course, that they do satisfactory work. As might be sup- posed, however, the firemen and common laborers are usually a rapidly changing lot. The power of discharge rests in practically all cases with the manager, though in two instances in municipal plants the authority is lodged in the hands of the superintendents or foremen. There is frequently an appeal from the decision of the manager to the municipal light board or the municipal government. There seems to be no appeal from the decision of a com- pany's manager or superintendent. The ground for dis- charge commonly given is incompetency. In scattering instances, however, other reasons were stated as follows: "Negligence," "drunkenness," "sleeping on watch," "in- subordination," " agitation for higher wages " (sic), and " politics." 1 The writer is not certain that the plants in municipalities which have adopted the eight-hour day always adhere to the law. He knows of one instance in which the chief engineer, who has been with the plant almost from its beginning, has worked a total of two years' overtime within the last five years, but has never received one cent therefor. The law, with its penalties, may also be a dead letter in other cases. Cf . Mass., 1911, ch. 494, sects. 1 and 3. IN MASSACHUSETTS 337 In the majority of cases in both groups a two weeks' annual vacation is allowed with pay, as well as the cus- tomary holidays. Saturday half-holidays are more com- mon among the public plants; but, on the other hand, two or three of these allow no regular vacations of any kind. Upon the whole, there seems to be little to choose between the two groups in this regard. In the matter of sick leave with pay all of the com- panies appear to follow a liberal policy, laying down no specific rules, but providing particularly for their old em- ployees, at the discretion of the manager or of the direc- tors. Several cases were brought to the writer's attention in which faithful employees, unable to do their custom- ary work, were kept on the pay-roll for a year or even longer. The fact that the returns made to the State Board do not disclose individual wages makes it possible to fol- low this practice without incurring the criticism which might otherwise arise, for there are always people who are suspicious and who would fear that wages paid to an employee, supposedly unable to work, might be a mere padding of the pay-roll for private purposes. The municipal plants, on the contrary, are much less human in this regard. Three or four state definitely that they allow no sick leave with pay, five give two weeks, one a month, while the remainder follow no fixed policy, but leave the matter largely to the discretion of the mana- ger, who is constantly under pressure to effect economies. 1 Without discussing at length the outcome of this policy, the following reasons, suggested by the managers them- 1 The writer knows personally of one of these cases, "left to the dis- cretion of the manager," in which an unusually faithful employee, who had served for about twenty-five years, having contracted a serious ill- ness, which compelled him to lose three months' time, received not a cent of pay for the period of his sickness. This, to be sure, is an extreme case; but for personal or political reasons, it is possible for the matter of sick leave to be handled in a most arbitrary fashion by the manager of a municipal plant, or by the manager of a private plant as well. 338 MUNICIPAL ELECTRIC LIGHTING selves, may be cited as explaining in large measure the illiberal attitude of public plants. In the first place, the manager, who is constantly under the public eye, is made to feel that his tenure of office de- pends largely upon his making a good financial showing. He must by every means keep down expenses. Again, every one knows when a public employee is not working, and if the pay still goes on, thai also is known. Hence, every opportunity arises for suspicion and false accusa- tion. Finally, a conscientious manager, in order to avoid any appearance of favoritism, frequently carries himself so straight that he leans over backward. He may even work great injustice in an attempt to appear absolutely just. A company can do largely as it pleases in questions such as this, while in a municipal plant everybody's fin- ger, directly or indirectly, sticks itself into the pie. Half of the companies give some sort of present to their men at Christmas or Thanksgiving time, while this practice does not appear to exist in the public plants. With two or three exceptions, no well-defined attempt at welfare work was found in either group — in fact, one would hardly expect this in establishments which employ so few men. From the nature of the work unionization is not com- mon among the employees of the small electric plants. Yet in several instances in both groups it was found that the firemen's, engineers', or linemen's unions are in evi- dence. Though there does not appear to be any general opposition to union labor on the part of the management in either case, yet the employees are somewhat more highly organized in the municipal plants than in the com- panies. It hardly seemed worth while, for the purposes of this study, to endeavor to secure the exact number of union members. In five or six municipal plants there have been recently some slight labor troubles, occasioned in the main by an agitation for higher wages. The management of the com- IN MASSACHUSETTS 339 parties did not admit that they had experienced any diffi- culty on this score. But several in each group stated that their employees were not altogether satisfied with their wages or the conditions of employment. 7. General Considerations It was rather interesting, at this date to make an at- tempt to discover why these municipalities of Massachu- setts had originally entered upon the business of electric lighting. The general answer seems to be that they simply had a desire for municipal ownership, hoping to secure financial gains or better service therefrom. Of other spe- cific answers given to this question the following may be suggested, together with the number of plants to which they in each case apply: "Unsatisfactory service of local company," four; "Private plant stopped generating," one; "The people needed electric service and there was no other way to obtain it," four; "Private lighting serv- ice had purposely been kept out of the territory," two; "Politics," one; influenced by the "General movement for municipal ownership," three. In the case of the public plants the attitude of the municipal government seems to be favorable in all but three or four cases; nor does there appear to be any fric- tion with other municipal departments. Only one case of direct hostility of the local government was found among the private plants, and in many instances the service of the companies was spoken of in terms of highest praise. In several places business men in general were evidently somewhat dissatisfied with municipal ownership; but no noticeable dissatisfaction was found so far as the other group is concerned, except that in two or three cases the prices were considered too high. The citizens as a body, so far as could be ascertained, are, with probably four or five exceptions, favorable toward public ownership where it now exists. Only two cases were found in which the 340 MUNICIPAL ELECTRIC LIGHTING general attitude toward the private plants was either unfavorable or doubtful. Politics, at one time or other, have interfered seriously in at least four municipal plants, and probably to some extent in as many more. In three or four cases also the companies have been troubled by politics. While there is in almost all cases a gas company pres- ent in the territory, the relations appear to be for the most part pleasant, though the gas people are frequently much more active in pushing their business than are the electric light plants; and in some instances the former actually seem to have been gaining in the amount of house lighting done. In the case of the private plants, however, in eight instances out of thirteen the gas is supplied either by the electric plants studied, which are composite, or by companies which are under the same ownership. Under such circumstances there is not much opportunity for real competition. All of the companies heard from in any way, except one, make a systematic effort to get new business, by means of soliciting, advertising, and campaigns of various sorts. Every one of the ten actually visited has a show- room with adequate facilities. Of the municipal plants, however, half admit that they make no effort whatever to secure new business, usually because they are not able to take care of what business they already have in a wholly satisfactory manner. Some rather naively state that they do not have to look for new business because the territory is already fully developed, or because their good service and low rates are a sufficient advertisement. Only three or four of this group have anything which even approaches a show-room. The remainder either keep no appliances on hand or have then! hidden away in some corner of their crowded offices. In comparatively few cases do the public plants fur- nish the major portion of the power used by factories in IN MASSACHUSETTS S41 their territory. As nearly as can be determined, however, the companies make a somewhat better showing. In view of the fact that many of the manufacturing concerns started business before the local lighting plants were installed, or before the commercial possibilities of central station generation were fully realized, it is not strange that many factories in either case are not supplied with power, par- ticularly in those instances in which the demand is very large. There are also perfectly good reasons why it may not be financially expedient for an electric plant to in- crease its equipment sufficiently to take on very large power customers unless there is a definite guarantee for a period of years which will be high enough to enable a large part of the additional investment to be amortized. This is especially true in the case of new and untried en- terprises or in the case of those factories the demand for whose product is occasioned by abnormal conditions, such as war, or is subject to the vagaries of fashion, or is dependent upon the good-will of a comparatively small group of consumers. Yet it is very evident that the public plants have been much more cautious than the companies in this regard, demanding in many cases un- reasonably high guarantees, and upon the whole fre- quently assuming an attitude of careless indifference. In several instances it was clearly demonstrated that valu- able business has been kept away through this policy. Probably the same thing has happened in other cases, though it is sometimes difficult to prove the actual occur- rence. At any rate, in many instances, the public plants could now rapidly extend their power business if they had the facilities for doing so. No doubt a municipal plant is justified in running no risks; but the customary policy is an exceedingly short-sighted one, if the welfare of all the people is to be considered. As to the future development of business in their terri- tory, all except one or two of the companies appear to have 342 MUNICIPAL ELECTRIC LIGHTING made reasonably adequate preparation; while in only two or three instances have the public plants which are still gen- erating current sufficiently provided for the future. In at least half of the plants in this group the answer must be decidedly "No" and in several others' it is very doubtful. So far as concerns the objections to the present system and the suggestion of needed changes, practically all of the private plants answer "None," though one (the small- est of all) mentions that twenty-four-hour service is needed, and another admits the desirability of a general improvement in service. Only a third of the municipal plants, however, answer "None" to this question. The remainder admit that the objections and needed changes are manifold, among which may be listed the following: "More capacity needed," "Additional lines necessary," "Larger units," "Entire system should be renewed," "Too numerous to mention," "Administrative changes," "General objections," "More liberal financial policy," "Less cumbersome financial policy," "Do away with politics, y ' "Street lights should be paid for." Probably these complaints of the managers speak for themselves. The reader might object that the municipal managers may have been more frank in their admissions than the managers of the companies. This is a reasonable infer- ence. But it must be remembered that the writer most carefully reviewed the entire situation from all angles and secured confirmatory proof of all statements before drawing any conclusions. Hence, in view of the fact that he has been on the ground personally and has inspected the plants and systems which are here discussed, he be- lieves that the picture painted is as accurate as a reason- able, unbiased judgment can make it. In several instances the writer discovered a well-marked desire for a change from public to private ownership, though the recently passed law * and the local pride « Mass., 1917, ch, 205, sect. 1. IN MASSACHUSETTS 343 Would probably prevent any transfer being made. In two cases the writer knows personally of negotiations which have been entered into for the purpose of taking over large municipal plants by private interests, having seen some of the estimates which had been drawn up in connection therewith. In both cases the incipient nego- tiations fell through — in one instance because it was found that no deal could be made without the payment of a large "sweetener" to the municipal authorities by way of graft. This, however, happened before the^ law was passed requiring the same sort of vote to be taken for abandoning a municipal plant as for acquiring it. In about two thirds of the cases in this group municipal own- ership in a general way is termed a success by the managers, and in the others the answer 'is "Not a success " or "Doubt- ful." The reader can form his own opinion as to the ade- quacy of this judgment. Most of the companies definitely state that there is no noticeable desire for a change to public ownership in their territory. As nearly as can be ascertained by care- ful inquiry, they have put the case correctly, though there are one or two reasonably doubtful cases. The accom- panying table indicates that there has been practically no serious agitation for municipal ownership in the com- panies studied at any time. Accordingly, we may nat- urally expect that private ownership in these cases has been reasonably successful from a public point of view. Only one or two suggestions to the contrary were re- ceived; while frequently the warmest commendation was volunteered by wholly disinterested parties. The follow- ing extracts from a letter received by the writer from the mayor of one of the cities in which is located a company under consideration, is typical. The reference is to one of a group of centrally owned plants. Although I have no connection, financial or otherwise, with any of the companies (beyond being a private consumer in my own house), I am very familiar with their organization .... I? IS*. IS to 1 I* im :■:■:: irM i m «H • : 3 : ii il, E>lJ£ H r W H « •"" gsiss ■IS .oS si "lis 1 - 51 ■88 "** -«T © v< MS 5 r sas.'SS ;!§; si II I S o* as* 5-2 •S 5 •'§> I §2 131 -•MM Si o « S w a 5 MUNICIPAL ELECTRIC LIGHTING 345 The arrangement has met with general approval, I think, in all of the municipalities served. The rates are fair, and low. There is no 'doubt that the companies have made a good deal of money. But there can be no objection to this, because they have thoroughly modernized all of their plant with the money they have made from the consumers, and their service has been of a very high order. They have not mixed in politics in any way. Their local manager was for some time interested in local politics, he having served in our City Council; but his interest was en- tirely personal, and his service to the city was of value to it much more than to the company with which he was and is connected. He is a good business man, and as such gave freely of his brains and time to his city. . . . The quality of service is first-class. Every complaint is promptly taken up, and remedied if possible. For instance, if a police officer reports a street light not burning, a man is at once sent to the spot and the trouble taken care of. It is the same with private complaints of private services. SUMMABY We may conclude our summing-up of the more impor- tant evidence secured in the local survey as follows: 1. The managers of municipal electric lighting at pres- ent seem to be in most cases well qualified for their work, and their appointment appears to have been usually based upon their general fitness. 2. Few of these managers belong to technical societies of any sort. 3. With a few exceptions, there is no evidence that they dabble unduly in politics, though frequently they are somewhat interfered with for political reasons. 4. The salaries of the managers of municipal plants have recently been considerably increased, and in the main now seem to compare favorably with those paid to the managers of companies. 5. Numerous traces of dishonesty on the part of munic- ipal managers or municipal lighting boards can be found, though probably the situation is not much worse, with a few exceptions, than might be expected under private ownership. 346 MUNICIPAL ELECTRIC LIGHTING 6. The managers of municipal lighting in general admit that they are highly dissatisfied with the conditions which they are forced to put up with under public employment. 7. The larger the municipality owning its plant, Hol- yoke excepted, the more numerous in general are the evi- dences of corruption and political interference. 8. Wages and hours of labor (usually eight) appear to be about the same in both cases, the public plants having in a few cases shorter hours. 9. The conditions of employment are frequently more pleasant in the companies, and they, in the main, seem to take better care of their labor. 10. The reasons given by municipalities for acquiring their plants are numerous, but most of them seem to have been moved by the hope of financial gains of some sort. 11. Practically all of the companies make an active attempt to get new business, while the majority of the public plants frankly admit that they make no such effort. They let business come to them. Though few of the latter do any advertising or make use of show-rooms, the former do so almost without exception. 12. In a number of cases the available evidence points to the fact that desirable business has been kept away from municipalities because of the failure of their pub- licly owned plants to offer adequate facilities for the sup- ply of power. Many of these plants could also greatly in- crease their power business at the present time if they cared to do so. 13. In many regards a number of the municipal plants were laboring under serious difficulties at the time of this survey, and several would probably have been glad to change to private ownership had it not been for the legal complications. On the other hand, there seems to be at present little serious dissatisfaction with private owner- ship in the places served by the companies. IN MASSACHUSETTS 347 Brief Conclusion Practically all of the data secured in this local survey of the generating plants (as outlined in this and the pre- ceding chapter) amply confirm the tentative conclusions reached as a result of our careful analyses of the statisti- cal material given in the annual returns. In many instances Very valuable additional information has been collected. In general, the findings for this group of plants would seem to indicate clearly that public ownership, as com- pared with private management of the lighting business in Massachusetts, leaves much to be desired. It may be true, however, that at times certain not readily calculable gains have resulted. CHAPTER Xni THE LOCAL BACKGKOUND : PURCHASING PLANTS The purchasing plants furnish little additional mate- rial of interest; but, consistent with our earlier treatment, it has seemed desirable to keep the results of the local survey of these plants separate from those of the generat- ing plants. Accordingly, in the present chapter a very brief account will be given of this group in so far as the schedule applies or as it may seem necessary. As none of the municipal plants under consideration have ever generated current, and as all of the companies which for- merly generated have definitely stopped this activity, many having disposed of their equipment, there is nothing to say regarding the central station. 1. Distribution In the matter of topography and geography it appears that there is little difference in the conditions surrounding the two groups of plants. In practically all cases the con- ditions would be considered normal. Half of the companies claim to extend their lines accord- ing to the demand, and about half say that they think first of financial considerations. Some of the public plants also make extensions to meet the demand; but the an- swers usually given to this question are, "By vote of the town," "Board decides," "For a reasonable return," etc. Probably neither group takes on unprofitable customers when it can be avoided. Extensions, when finally decided upon, are, so far as known, made with reasonable prompt- ness in both cases, though there is some evidence to point to the presumption that the municipal plants do not over- exert themselves. In a considerable number of the latter, MUNICIPAL ELECTRIC LIGHTING 349 and in one or two cases in the companies, the customers bear a part of the cost of extension, particularly on pri- vate land. The construction thus paid for does not in many cases appear to be charged to the capital account. A large proportion of the companies let out their exten- sion work to contractors, while the municipal plants usu- ally do the work themselves. This probably accounts in no small measure for the somewhat lower construction accounts of the latter, for not only is the total cost of a piece of work thus done frequently lower, but often, as indicated in an earlier chapter, the labor used in new con- struction is charged up to operating expenses. It was difficult in this case, as in the generating plants, to find out with accuracy how many poles are actually owned and how many foreign poles are used. It appears, however, that the writer was partially wrong in his earlier inference from the returns to the effect that the public purchasing plants own practically all of the poles which they use. The proportion seems to be little higher than in the case of the generating plants, though the companies of this group own comparatively a larger number. Prac- tically none of the municipal plants pay any pole rent, while almost all of the companies must provide for this item of expense. The larger plants in each group have a fairly accurate knowledge of the length of their lines and streets with overhead lines, secured through actual measurement or by scaling from blue-prints of the town. For the smaller plants of recent installation the length given is also ap- proximately correct. Few in either case have a satisfac- tory map of the distributing system. Connected load is, as would be expected, merely a rough estimate in most cases. In general it is probably true that the distributing sys- tem of both groups is at present as good as would be ex- pected in plants of this size, though some of the very small public plants have installed slim and inferior poles and 350 MUNICIPAL ELECTRIC LIGHTING have used wire which is not up to standard. On the other hand, some of the companies had an unsatisfactory original installation. There is little uniformity in the practice of line inspection. Most of the private plants simply reply, "Constant." Answers from the other group are, "Con- stant," "Variable," "Very often," "Monthly," "Never." 2. Consumption Only one municipal plant appears to test customers' meters with any regularity, five out of ten answer, "No," while the remainder say, "When needed," or "On com- plaint." Five of the companies report regular tests, and regarding the others the writer has no definite informa- tion. Complaints are said to be handled with reasonable promptness in most cases. Practically all of the companies sell appliances, most having show-rooms of some sort in connection with their offices, and a number deal in fixtures. Only the larger public plants do a business of this sort. The usual sale price is at a slight advance over cost. Special rates to large consumers are made by two or three of the companies, but no such cases were found among the other group. All of the private plants except two report general satisfaction with rates. In two other cases, however, the matter is open to question. Of the municipal plants in only one case was it definitely sug- gested that the rates are too high. Among the plants here under consideration there has been since 1910 only one petition to the State Board for the reduction of prices, — in one of the companies, — and that was favorably acted upon. But there have been numerous voluntary reduc- tions in both groups, — for the companies, thirteen cases in eight different plants, and for the municipalities, seven- teen cases in ten different plants. In the companies all accounts, so far as ascertained, are collected monthly, as is also the case in all of the larger m MASSACHUSETTS 851 public plants. The writer has been indirectly informed, however, that in a number of the smaller municipal plants collections are bi-monthly or even quarterly. In all cases heard from, except one, the payments are made to the managers of the latter group, and not to the town treasurer as is sometimes suggested. It may well be that there are more exceptions of this kind. 3. Financial Considerations As most of the companies are under central control they have frequent and systematic audits. The municipal plants are audited for the most part annually, usually by the public auditor, the town bearing the charge. In two cases, however, a certified public accountant, paid by the department, does the work, and in one instance the manager himself secures and pays for an outside party. No important case of free service rendered to the mu- nicipality, aside from street lighting, was found, though in two instances a very low special rate is made to the town for power used in pumping water. Other current supplied is customarily paid for at the usual rates. Nor, in the plants from which data have been secured, does any con- siderable free service seem to be received from other municipal departments. With one exception, no portion of the salary of the town treasurer or the solicitor is paid for. In a few cases public land is used without payment of rental, and in numerous plants, probably in the ma- jority, free offices are enjoyed in the town hall. In at least half of this group of public plants, the town pays for part or all of the insurance carried. The customary policy seems to be to take out a blanket insurance on all public property. Under the circumstances it is hardly worth while to attempt an estimate of the value of the free serv- ice received, for it would certainly not amount to more than a few thousand dollars, provided the services fre- quently contributed by the manager be not included. 858 MUNICIPAL ELECTRIC LIGHTING None of the municipal plants are carrying any dead investment worth mentioning. But ten of the eleven com- panies which formerly generated current have amounts ranging in different cases from $1,000 to perhaps $70,000 invested in equipment or real estate which are now, and probably always will be, either useless or at least wholly unnecessary for the successful conduct of their business. The total amount thus carried is approximately between $175,000 and $200,000. With two or three exceptions in either case there does not appear to have been serious waste or extravagance in investment or operation, while the financial policy has doubtless been reasonably liberal in the majority of cases. Nothing is spent by any of the municipal plants for adver- tising or getting new business, and a comparatively small amount by the companies. The accounts of the small public plants are extremely simple, and the opportunities for dishonesty are practi- cally nil. In spite of the requirements of the State law, 1 according to the returns of 1915 there were six managers not under bond. 4. The Management The municipal light boards in a majority of the cases under consideration may be characterized as non-partisan, for no one ever seems to think of the political affiliations of the members. In two plants there is no board, and in several cases the manager is one of the members. In few instances is there any technical knowledge represented on the board. The manager is ordinarily appointed for a term of one year, but in most cases the tenure is in reality indefinite. A number have been with their plant since its installa- tion. There does not seem to be any fixed basis for select- ing a manager. While some suggest "ability" or "fitness 1 Mass., 1914, ch. 742, sect. 113. IN MASSACHUSETTS 353 for the work" as a criterion, others are apparently glad to secure the services of any citizen who is willing to do the work cheaply or even without compensation. One manager was discovered who is a technical grad- uate. The others have had a varied preparation, the an- swers to this question being, "No preparation," "Trained in the plant," "Business college," ''Private study of elec- tricity," "Training in a private plant," etc. So far as could be discovered there is only one manager of these municipal plants who belongs to a technical society, and the numbers among the companies are very few. The municipal managers of lighting are usually given a free hand so far as the actual operation of the plant goes; but they are carefully restricted by the municipal board in the purchasing of material. Only a few cases of probable dishonesty were found, and politics seem as a general thing to have been conspicuous by reason of their absence. As might be expected, the general run of managers of this group of public plants are men of small caliber, though there are a number of outstanding exceptions. As indicated by letters to the writer and to the Board of Gas and Electric Light Commissioners, many are wholly un- trained either for business or for anything else. Yet, due to the patient attention and assistance which has been given them by the State, they have managed to correct many of their earlier mistakes, so that now they get on reasonably well. In only four cases do the managers of municipal plants devote all of their time to the lighting department, while practically all of the managers of pri- vate plants must of necessity do so. Hence, it is not to be wondered at that the operating expenses of the com- panies tend to be relatively higher than those of the cither group, which frequently pay nothing at all for manage- ment. 854 MUNICIPAL ELECTRIC LIGHTING 5. The Employees In the average plant of the present group so few lab- orers are employed that it hardly seems worth while to devote any time to a discussion of this part of the schedule, for few of the questions really apply. In many instances, particularly in the public plants, the manager is the fac- totum, performing all the work that needs to be done in his spare time. Most of the other employees of the munic- ipal plants, at any rate, are little more than ordinary day laborers, and the wages paid are correspondingly low. In most cases they work only part time. Occasionally the services of employees of other municipal departments are utilized, as it is otherwise difficult to secure help when needed. In the majority of cases the usual working day is eight hours, though the question of the time worked is not of much consequence on account of the fragmentary charac- ter of the work. While in many cases the ordinary holi- days are allowed with pay, and frequently vacations are granted, it is not customary for the municipal plants, at any rate, to give pay to employees during periods of sick- ness* 6. General Considerations In thirteen cases out of twenty-one in this group the municipalities entered upon the lighting business because there was at the time no electric service in the territory. In some places, to be sure, companies which might have been glad to extend their services were kept out; but for the most part there was little in the situation to attract private enterprise, if five or six of the larger plants be barred. Of other answers gleaned from the survey, to the question regarding the reason for acquiring a plant, the following are suggestive: "To get satisfactory service," "To save money," "To secure good street lighting," IN MASSACHUSETTS 355 "Recommended by the investigating committee," "Desire for municipal ownership." At the present time there appears to be little opposition encountered by either group of plants from the municipal government, the business men, or the citizens in general. Formerly there was some dissatisfaction in two or three cases both for the companies and for the public plants. As stated in an earlier chapter there is no gas competi- tion in thirteen of the municipal plants, while there is gas in the territory of all but six of the companies. Practi- cally all of the latter make some effort to secure new business, by means of advertising, soliciting, and display of appliances. In no instance did the manager of a munic- ipal plant say that any definite attempt is made to push business, though where gas is present there is some rivalry. In a few cases the territory is already well developed, and usually the new customers seem to come as rapidly as the town is ready to take care of them. As long as the current is purchased, the question of the load factor — which, by the way, is never computed — rarely worries those in charge of municipal plants. As there are not many industries in the districts served by this group, and as the amount of power supplied by a purchasing plant depends pretty largely upon the con- ditions at the source of supply, i.e., the selling plant, the question of the discouragement of new enterprises be- cause of lack of facilities is not important. Also, for a similar reason, it can probably be said that the future development of business has been adequately provided for. The companies suggest little criticism of their present system, and only scattering complaints were received from the municipalities, though probably many of the suggestions made regarding the generating plants would apply here as well. Aside from the negligible cases indi- cated in a preceding table, there appears to be no notice- 356 MUNICIPAL ELECTRIC LIGHTING able dissatisfaction with the present state of affairs in either group and no desire for a change of ownership. Each community is either performing or having performed for itself that service which it desires, in a manner which meets with the general approval. No important issues seem to be involved in the case of these small plants other than those which have already been suggested. SUMMABY Little that is new can be gleaned from the local survey of these purchasing plants. In many regards there does not seem to be much to choose between the two groups. However, the following facts stand out: 1. The municipal plants now appear to be following in general a more cautious policy in making extensions, and they frequently put a good deal of the cost on the cus- tomer. 2. The public plants do not usually sell any appliances, and rarely make any attempts to get new business. Per- haps it has not till now been necessary to do so, though it will be remembered that their power load is much poorer than that of the private plants. 3. The general business and financial policy of the com- panies, due to the fact that they are centrally controlled, appears in most respects to be more systematic than that of the other group. 4. An appreciable amount of free service is received by the public plants from their municipalities. 5. The large investment in "dead assets" ($175,000 to $200,000) of the companies is for the most part a com- plete loss, and, from the nature of the case, could not well have been avoided. The public plants, due to their more recent installation, have been more fortunate in this re- gard. 6. The managers of these municipal plants, four or five of the larger ones excepted, are usually men of small IN MASSACHUSETTS S57 capacity who give their services to the public for an in- adequate compensation, or gratis. 7. The labor problem is insignificant, as the manager is frequently the only employee, and he rarely gives all of his time to the work. 8. In most cases the municipalities acquired their plants because otherwise they would have had no elec- trical service. In a few instances, however, on account of the excellence of the territory, there was probably a hope of financial gain of some kind. 9. Politics seem to have been conspicuously absent in these small public plants; and the two groups of communi- ties, barring one or two places served by companies, seem at present to be well satisfied with that form of ownership which they now chance to have. 10. The comparative success of this group of public plants is due in large measure to the attention given them by the State Board of Gas and Electric Light Commis- sioners, rather than to their own unaided efforts. The cor- responding companies, on the other hand, while they leave much to be desired, have probably been benefited by the systematization which has recently come from "central control"; and, economically, it would no doubt have been better had they never been carried on as separate concerns. CHAPTER XIV CONCLUSION The chief purpose of this, study has been, first, to inter- pret the data which appear in the annual returns of the two groups of electric plants under consideration, and, secondly, by means of carefully conducted local surveys to test the tentative conclusions reached by the first method as well as to collect additional information of a highly valuable sort not to be found in any written rec- ords, — all with a view to ascertaining, as nearly as a sci- entifically impartial yet wholly sympathetic investigation can reveal, how municipal electric lighting in Massachu- setts compares with private enterprise in the same field. It is hoped, however, that the methods of research herein developed and the conclusions thus cautiously arrived at, will be of more than passing value to the great group of thinking men, whether engaged in private business or in the public service, who really take an intelligent interest in the numerous problems of public industry. While throughout this study the writer has honestly endeavored to keep an open mind on the question, there remains, of course, some slight possibility of error, even when the local background is accurately known. Every attempt, however, has been made to eliminate the dis- turbing factors, to make reasonable allowances when necessary, and always to keep the data as nearly compar- able as circumstances will permit. The intangible items in such a problem as this are somewhat difficult to evalu- ate, even after they have been discovered. Yet it does not seem probable, in view of the double check that is afforded by the local survey and by the various methods of statisti- cal approach, that the findings herein outlined can be far MUNICIPAL ELECTRIC LIGHTING 359 wrong. It must also be recalled in this connection that, as was stated in the very beginning of our study, public busi- ness has been compared with private business at its worst in the State, from which fact the reader is at liberty to draw what inferences he may choose. Most of the conclusions reached have been from time to time suggested as the several items were under discus- sion. Accordingly, the reader should be permitted to de- cide for himself as to whether or not the conditions which have been indicated are such as to make out a clear case for or against municipal ownership in this particular in- dustry. Here, then, may be summed up briefly the results of the present investigation; and it will not be amiss for the writer to make certain suggestions which, as he be- lieves, might with profit be considered by the Massachu- setts Board of Gas and Electric Light Commissioners, by other State commissions, and by the municipalities them- selves. In the first place, it appears that the conditions under which the municipal generating plants are operating, both natural and artificial, are far more favorable to success than is the case in the corresponding group of companies. They serve a more densely populated territory, in which relatively more manufacturing is done than in the dis- tricts supplied by the other group. Nor does their history indicate that they have in general been instrumental in promoting the higher industrial development here found. When the pragmatic test is applied, it becomes evident that, from the physical, financial, and developmental point of view, when due allowances have been made, this group of public plants (Holyoke excepted), have, in the more im- portant respects, usually lagged somewhat behind the pri- vate plants studied. They seem not to be serving their more favorable territory so adequately as are the latter, nor have they made any attempt to develop new territory. They have probably tended to be too conservative in their 860 MUNICIPAL ELECTRIC LIGHTING extension policy, and, with a very few exceptions, have taken little thought regarding the future development of business, in so far as their station equipment is concerned. Their aim seems to have been to follow rather than to lead the growth of industry and the new demands for service. This, however, may be a far more correct policy for a public industry to pursue than one of reckless expansion which sometimes characterizes the conduct of private en- terprise. In a financial way they have recently, for the most part, been doing reasonably well — a condition of affairs due to over-conservatism rather than to superior efficiency. The operating accounts and balance sheets make a much better showing for municipal ownership than do the phys- ical features of the business, which are not so easily dis- covered, but which, when properly studied, furnish us with far more accurate tests than can be applied by means of a superficial survey of rates and balance sheets. Though the earlier deficits are generally being made good, the quality of the service rendered has, in many cases* ap- peared to suffer as a result. Upon the whole, while this group of plants have by no means been altogether failures, it cannot be truthfully asserted that, when all elements in the problem are con- sidered, they have been any conspicuous success. With one or two exceptions they seem simply to be performing for themselves, with little or no return except the satisfac- tion derived from their exertions, those services which might have been rendered equally well, if not better, by private enterprise. Fortunately these municipal plants have been in the main comparatively free from most of the sinister influ- ences which frequently beset public business of this kind. Yet, barring Holyoke, careful investigation has revealed the fact that the larger the city having its own plant, the greater is the danger from "politics" and "graft." In at IN MASSACHUSETTS 361 least one unusually important case the conditions have been disgusting beyond belief; while in two other large plants, in the past at any rate, the situation has been, to say the least, highly unpleasant. Nor is the outlook a propitious one. Not a municipal generating plant has been installed since 1904, though eighteen purchasing plants have begun operation since 1907. There is a marked tendency in both groups in favor of purchasing current from large private concerns and doing only a distributing business. Already three of the companies studied for the year 1914-15 have ceased the generation of current; but within the same time seven mu- nicipal plants have for the present, and probably for all time, stopped the production of current. And, in spite of the great loss which will result to the community if a pub- lic plant be "scrapped," and notwithstanding the greatly increased cost of street lighting which must be borne, it would probably be far more economical in many cases to follow this policy than to overhaul the old plants and equip them for future needs. In some respects a marked contrast is afforded by the municipal plants which operate only a distributing sys- tem. For them, the conditions seem to be in large measure reversed. They have, in many instances, commenced operation in districts which could offer small inducement to private concerns, and it might appear that they would accordingly have little possibility of success. Yet, as a result of the united public sentiment back of them, and by reason of the careful supervision of the Board in count- less details, they have made an unusually good showing as contrasted with the purchasing companies. As would naturally be the case by reason of their more recent installation, this group of public plants is burdened with a far lower investment than are the private plants. As they have never generated any current, they have had no opportunity to accumulate a larger proportion of "dead 362 MUNICIPAL ELECTRIC LIGHTING assets." In faet, the relations existing between the two, in this regard, are such that it seems almost futile to at- tempt comparisons. But, measured by the tests which it is customary to apply, they appear to have been mak- ing a better record, under less favorable geographical and business conditions, than have the other plants. To be sure, they have not really made anything in a financial way — they have, upon the whole, simply kept even with the game. They are still young, and in the years to come, when repairs and renewals become urgent, the operating ex- penses can be expected to mount rapidly. A good share of their success also is due to the fact that they are dependent upon private enterprise for that portion of the business which is most difficult to be handled by public officials and employees. All credit is due them, however, inasmuch as they have been rendering, at a comparatively low cost, service which would in many cases have been difficult if not impossible to secure from private concerns. Finally, the writer believes that, under such effective regulation of the electric light and power business as is found in Massachusetts at present, there is no reason whatever why a municipality should invest in an electric plant, certainly not in a generating plant. No real econo- mies are likely to be thereby effected, and the possibility of loss is great. There may be instances in which public ownership of merely a distributing system is highly desir- able. Yet, this form of ownership, also, from an economic point of view, is justified only when private business can- not be induced to enter the field except at prohibitive rates. The day has long passed when there is no alterna- tive between unrestricted private industry, on the one hand, and public ownership on the other. There now seems to be no valid reason for using the taxpayers' money for the sake of doing what can be as well done without adding to the ever-increasing municipal debt. The burden of proof clearly rests upon those who would, under the cir- IN MASSACHUSETTS 363 cumstances, advocate a further municipalization of the industry in this State. To be sure, there is another side to the problem, which must not be overlooked. While it may not be desirable as a general policy for municipalities to acquire their own plants, it is certainly beneficial for all concerned to have a State law enabling them to do so if they choose. The possibility of public ownership frequently "puts the fear of God" in the hearts of those who might otherwise at times forget that a public utility enjoys a certain monop- oly advantage, granted by the people, and for which, ac- cordingly, it owes much to the people in return. Further- more, a few examples of even reasonably successful public ownership may act somewhat as a spur to those in private business, causing them to put forth more effort to live up to their opportunities. Hence, while public ownership might be a questionable experiment to attempt on a larger scale, and while it has doubtless been, in many cases, wholly unnecessary in this State, yet the fact that both kinds of ownership haye existed side by side in the past, has probably been of considerable value to both public and private business. And, at any rate, the study of the situation in this State has afforded unusually valuable data, which may serve as a guide to those who in the fu- ture wish to municipalize or nationalize our public utili- ties. No attempt is made at this point to draw any conclu- sions regarding the private plants in the State, for two reasons: first, those companies studied are scarcely large enough to be typical of private electric light and power business in Massachusetts, and, secondly, this is meant to be a study of municipal ownership and not of private enter- prise. From the data which have been collected, presented, and discussed without prejudice, it is preferable for the reader to make his own judgments. It is fairly obvious, however, that, upon the whole, the 364 MUNICIPAL ELECTEIC LIGHTING larger companies studied, though they are often far from ideal, have made a considerably better showing than have the municipal plants. While there may have been some mismanagement and even exploitation in the past in one or two cases, there seems to be little real ground for com- plaint at present. It is also an open question whether the recent agitation by the Commissioners against the increas- ing central control of lighting companies, is now wholly justified by the facts, unless in the case of the purchasing plants. While there are doubtless exceptions, it may well be that the increased skill in operating, together with the superior guidance and more effective bargaining power which are thus secured, far outweighs the additional finan- cial burdens which such a policy entails. Frequently, also, the customary regulation may have induced horizontal combination in self-defense. At any rate, the writer's in- vestigations have led him to believe that, at present, the public can in general hope for more ready and intelligent service from the plants under group control, properly regu- lated, than from those independently owned and operated. This observation, however, is not in any sense intended to be more than a tentative conclusion on the matter, for it is not here possible to make a detailed analysis of all of the factors involved. In conclusion, it is not unfitting for the writer to make a few suggestions as to the policy which, in the light of this investigation, it appears might be profitably pursued in the future with respect to the conduct of municipal elec- tric lighting plants in the State. Two significant consid- erations present themselves, the first relating more directly to the returns required by the Board, and the second having to do largely with the municipalities themselves and with the laws relating thereto. In the first place, the returns should be made more de- finite. The Commissioners should prescribe exactly what information is to be given in such a way that misunder- IN MASSACHUSETTS 365 standings will be reduced to a minimum. Too frequently the inaccuracies which have constantly annoyed the writer have resulted from vagueness in the requirements, for which the reporting plant should not be held responsible. There should also be a more careful separation of some of the items in the returns, particularly in the case of out- lays for labor and materials which appear in the expense accounts. The companies as well as the public plants should be required to return the wages which they pay, together with the usual hours of labor. More attention should also be paid to an analysis of some of the simpler engineering features of the business, and the generating plants especially should be required to make more provi- sion for the accuracy of their records. A really uniform policy should be adopted regarding the capital accounts that are to be kept by the municipal plants, and the data should be so presented that valid comparisons can be made of the investment in the two groups. This amount should be published, instead of the incomparable, artificially depreciated "plant accounts" as at present given in the Annual Report. New construc- tion, from whatever source the funds may have been de-. rived, should be treated as such in the returns. All plants, both public and private, should be required to work out the more important relations between their individual data, physical and financial. From such a policy a twofold gain would result. In the first place, it would have a wholesome effect upon the plants them- selves, as their attention would thus be directed to many vital problems which are now overlooked; and in the sec- ond place, based on the information thus available, the Board might well incorporate in their Annual Report a few of the figures which would make it possible for an intelli- gent student of problems such as these to find out the more significant relations existing between the two classes of plants, without being compelled to wade through a mass 366 MUNICIPAL ELECTRIC LIGHTING of undigested and uncorrelated material in the separate returns. While all praise is due the Board for the effectiveness with which they have regulated the industry under dis- cussion, and while even greater credit should be given them when we know how "under-staffed" they have at times been for the performance of so important a work as they have to do, yet it does appear that their system of accounting has developed in a somewhat haphazard fashion — due to the impossibility, in many instances, of securing from the managers of municipal plants any usable records whatever. In the returns, perhaps the merely financial aspects of the problem have been over-empha- sized, while some of the more fundamental elements in the case have been lightly stressed. To be sure, there is the danger of losing sight of the underlying principles, as a result of giving too much attention to the statistical and accounting features of public regulation. When, however, such studies may throw light on these larger problems, the effort so expended is not in vain. Finally, and far more important from an economic point of view, the municipal plants should be required, by law if necessary, to be conducted exactly as if they were commercial enterprises. In no other way can the public be made to understand clearly what they are gaining or losing as a result of municipal ownership. Only by sub- jecting these publicly owned plants to the same tests that are applied to private business can we reach any definite conclusions as to their real efficiency. This means that they should sell street lighting service to their municipalities at what appears to be a fair price, and that they should in turn pay taxes at the usual rate. 1 1 Every manager of an important plant has agreed with the writer that it would be conducive to the best interests of all if the street lighting were put on a strictly commercial basis. Several have also assented to the proposition that taxes should be paid, when it was carefully explained to them. IN MASSACHUSETTS 367 They should either own all of their property, or, if munic- ipal real estate be utilized, they should pay an equitable rental therefor. Further, the services rendered by any public official should be estimated and charged at the true value of that service. Probably not a single appro- priation should be made from the tax levy for any purpose whatever in connection with a municipalized commercial enterprise, after it has become "seasoned." Such an in- dustry should be given every opportunity that is afforded to private business, and it would, in addition, have the advantage of securing its capital at a lower than usual rate of interest. But here the public financial responsibility should end. If publicly owned commercial business were carried on as here suggested, the writer will venture to predict that, while many municipalities would be dissuaded from plung- ing into ills that they know not of, those which have al- ready acquired an industry or which, under the new con- ditions, do make the experiment, will be encouraged to bring their business to the highest degree of efficiency. Whatever may be our conclusions regarding the desirabil- ity of public ownership for other than financial reasons, there seems to the writer to be no disputing the fact that if the attempt is made, it should be done in the most effective manner possible. Whether under private ownership or under public control, there probably never has been and never will be a time when the best results can be attained if those methods which make for efficiency, those stimuli to individual initiative which are the basis of industrial and social development, are cast into the discard. From an economic point of view, the more nearly public busi- ness conforms to the well-known canons of the best private enterprise, the more successful it is bound to be. In parting, what further light does the present study throw upon the broader problems of public ownership? 368 MUNICIPAL ELECTRIC LIGHTING The stress of the present war is greatly hastening a tend- ency which was already strongly pronounced in the elec- tric light and power business throughout the country, i.e., the shutting-down of small and wasteful generating plants, and the consequent development of a comparatively few large central stations — hydro-electric wherever possible — which can keep pace with the economic growth of the industry, and thereby conserve for other uses our supplies of fuel. The electrification of practically all means of transportation is probably not far distant; the use of electric current will eventually, no doubt, displace other methods of heating; our factories will depend for motive power almost solely upon central station generation. We are on the threshold of marvelous possibilities in the art. But in the meantime much experimentation will be necessary, great risks must be run, many failures will en- sue. The problem is fundamentally too vast to be bounded by the confines of any municipality, with its petty dema- goguery and the jealousy of its neighbors. No unit smaller than the State could possibly deal with the situation. 1 But would the State prove equal to the task? We fear not, so long as human nature remains as it now is. Under demo- cratic institutions, the larger the governmental body, the less economic and the more political it becomes, and the more energy is wasted in accomplishing little. To blaze the trail is the work of a select few, not of the people en masse. The electrical industry, as all industries which reach their perfection, will be developed by personal gen- ius and individual effort, urged on by the desire to serve, no doubt, but more potently stimulated by the prospect of material rewards. What part the State and the National Government 1 There is at present a bill before Congress to provide for the per- manent development by the Federal Government of the ' hydro-electric resources of the country. Some States also have discussed similar meas- IN MASSACHUSETTS 369 will play in our future industrial life, cannot well be fore- told. The more primitive stages of civilization were marked by minute regulation of private affairs. The indi- vidual was submerged, while the ruler, or his representa- tives, was the chief entrepreneur. Such an extension of state activity to commercial undertakings does not ap- pear to be compatible with freedom and growth. The most autocratic of civilized governments has until recently also been the most active in industrial enterprises. Could it be otherwise? The present world struggle is forcing others to follow suit. Will the coming of peace bring with it a fuller realization of the dreams of the socialist, or will the former conditions be restored? Public owner- ship of some producers' goods may eventually become more general. We must not, however, be unmindful of the fact that, when the war is over, people will again be actuated by the old individual motives; most of the exist- ing urgent incentives to unselfish group action will cease. Business now carried to a reasonable degree of perfection by the public powers, will, if retained in public hands, be in danger of rapid stagnation. Whatever the sequel may be, this modest study, as well as most careful and un- biased investigations, points to the conclusion that as a rule only the simplest and the "well-seasoned" enterprises are at all suitable for public operation; and even these are in grave danger of becoming less efficient than they would be in private hands. Though political expediency or social necessity may sometimes momentarily outweigh all eco- nomic considerations, it still seems inherent in the nature of things that private industry must continue to show the way. BIBLIOGRAPHY NOTE The purpose of this bibliography is to show what sort of material is available for a study of this kind, and to indicate some of the sources of information which the author has found it either necessary or desirable to look into. Few of the references specifically on the subject of public ownership have been of any direct benefit, though sometimes very use- ful suggestions have been discovered buried in a mass of trash. The sources which have proved most helpful have been clearly mentioned in the text. In addition, many letters and private documents have been of some value. In practically all respects, however, this study has neces- sarily been carried on along wholly independent lines, as it is built up out of the raw material. Frequently the publications here listed have been referred to in an abbreviated form in the test. Whenever such reference might' lead to confusion, the abbreviation is given after the entry. Titles are usually listed according to the author's name or according to political subdivi- sions. For the convenience of the reader the following classification has been made: — 1., Boohs and manuals; 2. Public documents and bulletins {national, state, and municipal), laws, and official reports; 3. Articles in periodicals; transactions and proceedings of technical socie- ties; i. Monographs, bulletins, miscellaneous reports, addresses, etc. CLASSIFIED LIST OP REFERENCES I. Books amt> Manuals American Handbook for Electrical Engineers. Edited by Harold Fender. New York, John Wiley & Sons, 1914; pp. 2023. Avebury, lit. Hon. Lord, P.C. (John Lubbock). On Municipal and National Trading. London, Macmillan & Co., 1907; pp.178. Public Utility Rates. New York, McGraw-Hill Book Co., 1917? pp. xiv, 387. Barrows, William Edwards, Jr. Electrical Illuminating Engineering. New York, McGraw Publish- ing Co., 1908; pp. v, 216. 374 BIBLIOGRAPHY Bemis, Edward W., editor. Municipal Monopolies. New York, Thomas Y. Crowell & Co., 1899; pp. 691. ("Mun. Monop.") Buckley, William Joy. Electric Lighting Plants: Their Cost and Operation. Chicago, 1894; pp. 275, 32 ill., 20 pi. Central Stations, List of, in United States, Canada, and Mexcio. New York, McGraw-Hill Book Co., 1916. (" McGraw Electrical Direc- tory"; published semi-annually.) Cleveland, Frederick A. Municipal Administration and Accounting. New York, Longmans, Green & Co., 1909; pp. xvi, 361. Cole, William Morse. Accounts: Their Construction and Interpretation. Boston, Hough- ton Mifflin Co., 1908; pp. 345. Cushing, H. C, and Harrison, Newton. Central Station Management. New York, D. Van Nostrand Co., 1916; pp.397. Darwin, Leonard. Municipal Ownership. (Four lectures delivered at Harvard Univer- sity.) New York, E. P. Dutton & Co., 1907; pp. 149. Darwin, Leonard. Municipal Trade: The Advantages and Disadvantages. New York, E. P. Dutton & Co., 1903; pp. 461. Davies, Emil. The Collectivist State in the Making. London, G. Bell & Sons, 1914; pp. 267. Dawson, William H. Municipal Life and Government in Germany. New York, Long- mans, Green & Co., 1914; pp. 507. (Cf. ch. ix, pp. 209-259, "Trad- —- ing Enterprises.") Edwards, H. M. Electric Light Accounts and Their Significance. New York, McGraw- Hill Book Co., 1914; pp. 172. Electrical Meterman's Handbook. 3d ed. National Electric Light Association. New York, 1912; pp. 1076. Fairlie, John A. Essays in Municipal Administration. New York, 1908; pp. 374. Floy, Henry. The Colorado Springs Lighting Controversy. New York, The Il- luminating Engineering Publishing Co,, 1908; pp. 327. Foster, Horatio A. Engineering Valuation of Public Utilities and Factories. New York, D. Van Nostrand Co., 1912; pp. 345. Francisco, M. J. Municipal Ownership t». Private Corporations. 5th (?) ed. Rut- land, Vt„ M. J. Francisco & Son, 1898; pp. 150. (Statistics to date.) BIBLIOGRAPHY 875 Garcke, Emilc. Manual of Electrical Undertakings. London, 1896 to date. (Pub- lished annually.) Gear, Harry Barnes, and Williams, Paul Francis. Electrical Central Station Distribution Systems. 2d ed. New York, D. Van Nostrand Co., 1916; pp. 457. Gessell, Gerhard A. Minnesota Public Utility Rates. Current Problems, No. 3. Bulle- tin of the University of Minnesota. Minneapolis, 1914; pp. 254. Grunsky, Carl Ewald, and Grunsky, Carl Ewald, Jr. Valuation, Depreciation, and the Rate-Base. New York, John Wiley & Sons, 1917; pp. 387. Guyot, Yves. Where and Why Public Ownership Has Failed. Tr. by H. F. Baker. New York, Macmillan Co., 1914; pp. 459. Hayes, Hammond V. Public Utilities: Their Cost New and Depreciation. New York, D. Van Nostrand Co., 1913; pp. 262. Hayes, Hammond V. Public Utilities: Their Fair Present Value and Return. New York, D. Van Nostrand Co., 1915; pp. 207. Holmes, F. L. Regulation of Railroads and Public Utilities in Wisconsin. New York, D. Appleton & Co., 1915; pp. 375. Howe, F. C. The British City. New York, Scribner's, 1907; pp. 370. (Cf. ch. ix, especially.) Jansky, Cyril M. Electrical Meters. New York, McGraw-Hill Book Co., 1913; pp. 370. Jevons, W. Stanley. The State in Relation to Labor. London, Macmillan & Co., 1894; pp. xxix, 171. Johnson, George. Electric Lighting Accounts. (Accountants' Library, vol. 29.) London, Gee & Co., 1904; pp. xv, 128. King, Clyde Lyndon, editor. The Regulation of Municipal Utilities. New York and London, D. Appleton Co., 1912; pp. ix, 404. (National Municipal League Series.) Knoop, Douglas. Principles and Methods of Municipal Trading. London, Macmillan & Co., 1912; pp. xvii, 409. Knox, Charles E., and Shaad, George E. Electric Wiring and Lighting. Chicago, American Technical Society, 1915; pp. 87, 94, vi. Kommunales Jahrbuch. Jena, G. Fischer, 1908 to date. 376 BIBLIOGRAPHY Marks, William D. The Finances of Gas and Electric Light and Power Industries. New York, 1907; pp. 540 and 27. Marks, William Dennis. Practical Rate Making and Appraisement. New York, Lyons Print- ing Co., 1914; pp. 269, diagrams. Matthews, Nathan. Municipal Charters. Cambridge, Harvard University Press, 1914; pp. 210. Meyer, H. R. Municipal Ownership in Great Britain. New York, Macmillan Co., 1906; pp. 340. (Cf. chs. xn-xvm.) Moody's Analyses of Investments. Part II. Public Utilities and In- dustrials. (Published annually.) Morgan, Joy E., and Bullock, Edna D. Selected Articles on Municipal Ownership. Minneapolis, The H. W. Wilson Co., 1911; pp. 219. Municipal Accounting. Handbook of New York Bureau of Municipal Research. New York, D. Appleton & Co., 1913; pp. 318. Municipal Monopolies. Edited by Bemis. New York, Thomas Y, Crowell & Co., 1899; pp. 691. ("Mun. Monop.") Municipal Year Book. London, Municipal Journal, 1897 to date. (Cf. vol. xvni, 1914, pp. 673-729; lists of accounts, pp. 1087- 1090.) Munro, William Bennett. Principles and Methods of Municipal Administration. New York, Macmillan Co., 1916; pp. 491. (Cf. ch. x, "Municipal Finance.") National Civic Federation. Commission Regulation of Public Utilities. New York, 1913; pp. 1284. (Analyses of Public Utility Laws of 43 States, and of Fed- eral Government.) National Civic Federation. Report. Municipal and Private Operation of Public Utilities. 3 vols: New York, 1907; pp. 489, 1230, 768. National Electric Light Association. Standard Classification of Accounts. New York, The James Kemp- ster Printing Co., 1914; pp. 115. Parsons, Frank. The City for the People. Philadelphia, C. W. Taylor, 1901 ; pp. 704. Poor's Manual of Public Utilities. New York, 1913, to date. (Pub- lished annually.) Porter, Robert P. The Dangers of Municipal Ownership. New York, Century Co., 1907; pp. 356. (Cf. particularly ch. xm.) Public Utility Economics. A Series of Ten Lectures Delivered before the West Side Young Men's Christian Association. New York, The Finance Forum, 1914; pp.195. BIBLIOGRAPHY 377 Pond, Oscar Lewis. Municipal Control of Public Utilities. Ph.D. Thesis, Columbia University, 1906; pp. 117. Raymond, William L. American and Foreign Investment Bonds. Boston, Houghton Mifflin Co., 1916; pp. 324. (Cf. ch. yi.) Saliers, Earl A. Principles of Depreciation. New York, The Ronald Press, 1915; pp. 200. Seabrook, A. Hugh. The Management of Public Electricity Supply Undertakings. New York, McGraw-Hill Book Co., 1918; pp. 192, xx. Shaw, Bernard. The Common Sense of Municipal Trading. London, A. C. Fifield, 1908; pp. 120. (Fabian Socialist Series, No. 5.) Whinery, S. Municipal Public Works. New York, Macmillan Co., 1903; pp. 241. (Cf. chs. xra-xrv.) Whitten, R. H. Valuation of Public Service Corporations. New York, Banks Law Publishing Co., 1912; pp. 798. (Cf. ch. xxxn. pp. 721-745, "Bibliography of Valuation and Depreciation.") Supplement to above. New York, 1914; pp. 799-1443. Wilcox, Delos F. The American City: a Problem in Democracy. New York, Macmil- lan Co., 1904; pp. 423. The Citizen's Library. ("The Control of Public Utilities," pp. 52-90.) Wilcox, Delos F. Municipal Franchises. Vol. x, pp. 710. Rochester, N.Y., The Ger- vaise Press, 1910. Vol. n, pp. 885. New York, The Engineering News, 1911. Williams, Arthur, and Tweedy, Edmund F. Commercial Engineering for Central Stations. New York, McGraw- Hill Book Co., 1912; pp.142. Wyer, Samuel S. Regulation, Valuation, and Depreciation of Public Utilities. Colum- bus, Sears & Simpson Co., 1913; pp. 313. Zueblin, Charles. American Municipal Progress. (Rev. Ed.) New York,' Macmillan • Co., 1916; pp. 522. II. Public Documents and Bulletins (National, State, and Municipal), Laws, and Official Reports Adams, Alton D. Municipal Electric Plants in Massachusetts. Testimony before the United States Industrial Commission. Washington, 1901. Re- ports, vol. rx, pp. 275-285. 378 BIBLIOGEAPHY Cleveland. The Cleveland Municipal Lighting Plant. Bulletin No. 1, April, 1915; pp. 26. Bulletin No. 2, September, 1915; pp. 96. Light Plant Audit for 1915, in the City Record, March 7, 1917; pp. 3-28 (253-278). Connecticut. Bureau of Labor Statistics. 15th Annual Report, 1899. Hartford, 1899; pp. 15-88. (Private and Municipal Ownership. 1. Electric Light and Power Plants. 2. Gas Works. 3. Water Works.) Holyoke Water Power Company v. City of Holyoke, vol. xvi. Brief for the Respondent; by Nathan Matthews, Jr., Addison L. Green, of Counsel; Nathan P. Avery (City Solicitor). Submitted Dec. 26, 1901. Boston, 1902; pp. 526. Indiana. Bureau Of Statistics. Electric Light and Power, Gas and Water Plants of Indiana. Indian- apolis, 1899; pp. 41. Kansas. Bureau of Labor and Industrial Statistics. 13th Annual Report, 1897. Topeka, 1898; pp. 91-98. (Water, Electric Light, and Gas Plants.) Maltbie, M. R. The Indeterminate Franchise for Public Utilities, or Tenure during Good Behavior. Annual Report, New York Public Service Com- mission, First District, 1908, vol. I, Appendix A (pp. 175-208). Massachusetts. Aggregates of Polls, Property, Taxes, etc. Public Document No. Pq 19. Compiled hi Office of Tax Commissioner. Boston. (Published annually.) Massachusetts. Board of Gas and Electric Light Commissioners. Annual Reports. 1886 to date. ("Mass. G. & E.") Massachusetts. Board qf Gas and Electric Light Commissioners. The Annual Returns of practically all electric plants in the State have been used for the years, 1905-1915, inclusive. Massachusetts. Board of Harbor and Land Commissioners. Annual Report for 1915. Area of Counties, Cities, and Towns of Massa- chusetts, as of Nov. 30, 1915. (Reprint, pp. 7.) Massachusetts. Bureau of Labor Statistics. Census of 1905. Part IV : Agriculture, the Fisheries, and Commerce. Boston, 1909; pp. 598. Massachusetts. Bureau of Statistics. Twenty-ninth Annual Report of the Statistics of Manufacture for the Year 1914. Public Document, No. 36. Boston, 1916; pp. liii, 114. Massachusetts. Bureau of Statistics. Annual Report of the Statistics of Municipal Finances. Public Docu- ment, No 79. Boston, 1911 to date. Massachusetts. Bureau of Statistics. Sixth Annual Report on Union Scale of Wages and Hours of Labor in Massachusetts (1915). Labor Bulletin, No 114. Boston, 1916; pp. 103. BIBLIOGRAPHY 379 Massachusetts. Bureau of Statistics. A Uniform Classification of Municipal Receipts and Expenditures. Municipal Bulletin, No. 1. Boston, 1910; pp. 64. Massachusetts. Bureau of Statistics. The Issue and Certification of Town Notes. Municipal Bulletin, No. 3. Boston, 1911; pp. 11. Massachusetts. Bureau of Statistics. Laws Relating to Municipal Finances. Municipal Bulletin, No. 7. Boston, 1915; pp. 49. Massachusetts. Bureau of Statistics. Report of the Special Investigation Relative to the Indebtedness of the Cities and Towns of the Commonwealth. Boston, 1912; pp. 2S6. Massachusetts. Bureau of Statistics. Report of the Special Investigation Relative to the Sinking Funds and Serial Loans of the Cities and Towns of the Commonwealth. Bos- ton, 1913; pp. 25. Massachusetts. Bureau of Statistics. Return of the Director of the Bureau of Statistics of the Number of Inhabitants and Legal Voters as Determined by the Decennial Census of 1915. House Document, No. 1169. Boston, 1916; pp. 18. Massachusetts. Highway Commission. Twenty-second Annual Report. (For fiscal year ending November 30,1914.) Boston, 1915; pp. 206. Massachusetts. Laws. Acts and Resolves. 1885-1914. Particularly ch. 742 of the Acts of 1914. General Acts. 1915-1917. Special Acts. 1915-1917. Revised Laws of 1902; cf. chiefly: — Ch. 84. "Of the Manufacture and Distribution of Gas and Elec- tricity by Cities and Towns." Ch. 110. "Of Manufacturing and Other Corporations." Ch. 121. "Of Gas and Electric Light Companies." Supplement to the Revised Laws, 1902-1908. Massachusetts. State Forester. The Forests of Worcester County. 1916. Boston, 1917; pp. 88. Massachusetts. State Tax Commissioner. Annual Reports since 1890. Boston. Michigan. Bureau of Labor and Industrial Statistics. 15th Annual Report. Lansing, 1898; pp. 183-198. (Statistics of Electric Lighting, Gas, and Water Plants in Michigan.) Municipalities owning electric lighting plants. The Annual Reports of public plants both in Massachusetts and in other States have been referred to. Nebraska. Bureau of Labor and Industrial Statistics. Sixth Biennial Report. 1897-98. Lincoln, 1898; pp. 366-371. (Private and Municipal Ownership of Waterworks, Electric Light and Power Plants, and Gas Works.) 380 BIBLIOGRAPHY New York. Bureau of Labor Statistics. Fifteenth Annual Report. 1897. New York and Albany, 1898; pp. 497-601. (The Ownership and Operation of Electric Light and Power, Gas and Water Plants.) New York. Public Service Commission of the First District. Annual Reports, 1907 to date. (Cf . particularly vol. in.) New York. Public Service Commission of the Second District. Annual Reports, 1907 to date. (Cf. particularly vol. in.) New York. Public Service Commission of the First District. Uniform System of Accounts for Electrical Corporations as Prescribed by the Public Service Commission for the First District. New York, 1914; pp.68. Pasadena. Annual Reports of Municipal Lighting Works Department. 1907 to date. St. Louis. Report of Public Service Commission to Municipal Assembly on Rates for Electric Lights and Power. St. Louis, 1911. Uniform Accounting. Return forms prescribed by the following states have been examined: California, Connecticut, Idaho, Indiana, Illinois, Maryland, Mis- souri, New Hampshire, New Jersey, New York, Nevada, Ohio, Oklahoma, Vermont, Wisconsin. United States. Bureau of the Census. Eleventh Census. 1890. Report on Manufacturing Industries, Part m. Selected Industries. Electrical Industries in the State of New York (by Allen R. Foote); pp. 237-*65. ("Census, 1890.") United States. Bureau of the Census. Thirteenth Census. 1910. Abstract with Supplement for Massachu- setts, pp. 565-698. Washington, Government Printing Office, 1913; pp.703. United States. Bureau of the Census. Central Electric Light and Power Stations, 1902. Washington, Government Printing Office, 1905; pp. 175. ("Central, 1902.") United States. Bureau of the Census. Central Electric Light and Power Stations, 1907. Washington, Government Printing Office, 1910; pp. 197. ("Central, 1907.") United States. Bureau of the Census. Central Electric Light and Power Stations and Street and Electric Railways, 1912. Washington, Government Printing Office, 1915; pp. 440. ("Central, 1912.") United States. Bureau of the Census. Bulletin 124. Central Electric Light and Power Stations and Street and Electric Railways, 1912. Washington, Government Print- ing Office, 1914; pp. 113. United States. Bureau of the Census. Uniform Municipal Accounting. Washington, 1906; pp. 121, BIBLIOGRAPHY 381 United States. Department of Commerce. Circular of the Bureau of Standards, No. 56. Standards for Electric Service. Washington, 1916; pp. 261. United States. Department of Commerce and Labor. Bureau of Labor Bulletin, No. 62. January, 1906. Municipal Own- ership in Great Britain; pp. 1-123. By Frederic C. Howe. United States. Department of Commerce and Labor, Department of Municipal Ownership. Reports from United States Consular Officers. 1897-1905; pp. 55. United States. Department of Labor. Commissioner of Labor. Fourteenth Annual Report. House Docu- ment No. 713, 56th Congress, 1st Session. Water, Gas, and Electric Light Plants under Private and Municipal Ownership. Washington, Government Printing Office, 1900; pp. 963. ("U.S. Labor, xrv.") United States. Industrial Commission. Report, vol. rx. Washington, 1901; pp. ccciii, 1052 (pp. 275-285). United States. Library of Congress. List of References on Municipal Ownership. Wisconsin. Railroad Commission. Annual Reports. 1907 to date. (Particularly, vol. in.) Wisconsin. Railroad Commission. Rates of Public Utilities in Wisconsin. Part i. Electric Rates. Madi- son, 1912; pp. 234. Wisconsin. Railroad Commission. Uniform Classification of Accounts for Electrical Utilities. 3d ed. Madison, 1912; pp. 130. m. Articles in Periodicals; Transactions and Proceedings op Technical Societies Adams, Alton D. , Cost of Light in Municipal and Private Gas and Electric Plants. Municipal Engineering, vol. xxm (Sept., 1902), pp. 160-161. Adams, Alton D. , Costs and Prices of Gas and Electric Lighting by Municipal Plants. Municipal Engineering, vol. xxv (Oct., 1903), pp. 232-240. Adams, Alton D. Municipal Gas and Electric Plants in Massachusetts. Journal of Polit- ical Economy, vol. x (March, 1902), pp. 214-229. Adams, Alton D. Municipal Gas and Electric Plants in Massachusetts. Political Science Quarterly, vol. xvn (June, 1902), pp. 247-255. Adams, Alton D. The Holyoke Case. Quarterly Journal of Economics, vol. xvn (Aug., 1903), pp. 643-668. American Institute of Electrical Engineers. Transactions. Vol. xvin, Part n, p. 1482 (1909). (Chart showing in- vestment costs for steam-turbine plants, etc. By H. G. Stott.) 882 BIBLIOGRAPHY Annals of the American Academy of Political and Social Science. Municipal Ownership and Municipal Franchises. Vol. xxvn (Jan., 1906); pp.233. Annals of the American Academy of Political and Social Science. Control of Municipal Public Service Corporations. Vol. xxxi (May, 1908); pp. 201. Annals of the American Academy of Political and Social Science. State Regulation of Public Utilities. Vol. mi (May, 1914); pp.357. Annals of the American Academy of Political and Social Science. Conference of American Mayors on Public Policies as to Municipal Utilities. Vol. lvh (Jan., 1915); pp. 357. Arena. Opposing Views on Municipal Ownership. Vol. xxxvii (Feb., 1907), pp. 181-190. Bauer, John. Bases of Valuation in the Control of Return on Public Utility Invest- ments. American Economic Review, vol. VI (Sept., 1916), pp. 568=- 588. Bonbright, James C. Depreciation and Rate Control. Quarterly Journal of Economics, vol. xxx (May, 1916), pp. 546-558. Bowker, R. R. Public Control, Ownership, or Operation of Municipal Monopolies. Municipal Affairs, vol. I (Dec., 1897), pp. 605-630. Brooks, Robert C. Municipalization of the Berlin Electric Works. Quarterly Journal of Economics, vol. xxx (Nov., 1915); pp. 188-194. Burdett, E. W. Municipal Ownership in Great Britain. Journal of Political Economy, vol. xiv (May, 1906), pp. 257-314. Christie, A. G. Municipally Operated Industries of Western Canada. New Ydrk, 1916; pp. 289-343. (Paper presented at Fourth Midwinter Conven- tion of the American Institute of Electrical Engineers. Reprint.) Concerning Municipal Ownership. New York, 1906-1909 (June), 1913-1916 (October). (Published monthly till discontinued.) Commons, John R. Municipal Electric Lighting. Municipal Affairs, vol. I (Dec., 1897), pp. 631-673. Davis, Joseph S. Depreciation and Rate Control: a Criticism. Quarterly Journal of Economics, vol. xxix (Feb., 1915), pp. 362-378. Dickerman, J. C. Comparison of Electric Light Rates and Power Rates. Power, vol. xlii (July 6, 1915), pp. 8-15. Eastman, J. B. The Public Utility Commissions in Massachusetts; Proceedings, National Municipal League, 1908; pp. 288-307. BIBLIOGRAPHY S83 Electrical Times. London. Weekly. (Supplements on Cost of Elec- tric Service, etc.) ' Erickson, Halford. The Advantages, of State Regulation. Annals of the American Acad- emy of Political and Social Science, vol. lvii (Jan., 1915), pp. 123- 162. Erickson, Halford. Electric Lighting and Power Rates. Annals of the American Acad- emy of Political and Social Science, vol. un (May, 1914), pp. 238- 250. Foster, Horato A. Public Lighting by Municipal Plants. Electrical Engineer, vol. xvm (Sept. 5, 1894). pp. 181-189. Gray, J. H. The Gas Commission of Massachusetts. Quarterly Journal of Eco- nomics, vol. xiv (Aug., 1900), pp. 509-536. Gray, J. H. Competition and Capitalization as Controlled by the Massachusetts Gas Commission. Quarterly Journal of Economics, vol. xv (Feb., 1901), pp. 254-276. Heilman, R E. Development by Commissions of the Principles of Public Utility Valu- ation. Quarterly Journal of Economics, vol. xxvm (Feb., 1914), pp. 269-291. Howe, F. C. Case for Municipal Ownership. Publications of American Economic Association, 3d Series, vol. vn (Feb., 1906), pp. 113-133. Larson, C. M. State Regulation of Municipally Owned Plants. Journal of the American Waterworks Association, vol. n (Sept., 1915), pp. 515-587. Lincoln, Edmond E. Control of Return on Public Utility Investments. American Economic Review, vol. vi (Dec., 1916), pp. 869-873. Municipal Engineering. Municipal Electric Light Plants: Rates. Vol. iv (Feb., 1915), pp. 48, 111-112. Municipal Journal. Data concerning Street Illumination. Vol. xxxin (Nov. 7, 1912), pp. 685-696. Municipal Journal. Data concerning Municipal and Private Electric Light Plants. Vol. xxxv (Aug. 7, 1913), pp. 171-186. Municipal Journal. Lighting and Power Rates of Massachusetts Municipal Plants. Vol. xxxvn (Aug. 27, 1914); pp. 264-272, 274-279. Municipal Journal. Municipal Ownership Failures. Vol. xxiii (Oct. 2, 1907), pp. 378- 879. , 384 BIBLIOGRAPHY Municipal Journal. On Municipal Electric Lighting Rates in Massachusetts. Vol. xi (Jan. 6, 1916), p. 12; (Feb. 24, 1916), pp. 266-268. Nash, L. R. Depreciation Reserves as Affected by Property Growth. American Economic Review, vol. vi (March, 1916), pp. 69-89. Nash, L. R. The truth about the Cleveland Municipal Electric Plant. Reprint from Stone and Webster Journal (Feb., 1917), pp. 23. Nation. Municipal Ownership Investigations. Vol. Lxxxn (May 81, 1906),- pp. 441-442. National Electric Light Association. Report of Committee on Progress. (T. C. Martin.) New York, 1914. (Cf. pp. 44-19, on "Municipal Ownership.") National Electric Light Association. Report of Committee on Progress. (T. C. Martin.) New York, 1916; pp. 138. Palmer, Ray. Municipal Lighting Rates. Annals of the American Academy of Polit- ical and Social Science, vol. Lvn (Jan., 1915), pp. 83-44. Parsons, Frank H. The People's Lights. 1. Arena, vol. xm (June, 1895), pp. 118-180. 2. Arena, vol. xm (July, 1895), pp. 381-400. 8. Arena, vol. xrv (Sept, 1895), pp. 86-109. 4. Arena, vol. xrv (Nov., 1895), pp. 439-463. Parsons, Frank. Article on "Municipal Ownership." (In Bliss, New Encyclopedia of Social Reform, pp. 788-^795.) Public Service. Chicago, 1907, to date. (Published monthly.) Public Utility Reports. Annotated. Rochester, N. Y, Lawyers' Co5p- erative Publishing Co., 1915 to date. (Published bi-monthly.) Rate Research. National Electrical Light Association, Chicago, 1912 to date. (Published weekly.) Ripley, W. Z. Capitalization of Public Service Corporations. Quarterly Journal of Economics, vol. xv (Nov., 1900), pp. 106-137. Rosewater, Victor. The Case of Municipal Electric Lighting. Municipal Affairs, vol vi. New York, 1902-1903; pp. 622-635. Rowe, L. S. Municipal Ownership and Operation : The Value of Foreign Experience. National Municipal League: Proceedings, 1906, pp. 280-290; also in American Journal of Sociology, Sept., 1906. Sharfman, I. Leo. Commission Regulation of Public Utilities. A Survey of Legislation. Annals of (he American Academy of Political and Social Science, vol. Lin (May, 1914), pp. 1-18. BIBLIOGRAPHY 385 South Norwalk. Municipal Lighting Plant. National Electric Lignting Association, Report of Committee on Progress. (T. C. Martin.) New York 1914: pp. 45-17. South Norwalk. Municipal Electric Works. By Albert E. Winchester, Superintendent. Annals of the American Academy of Political and Social Science, vol. Lvn (Jan., 1915), pp. 228-245. Utilities Magazine. Utilities Bureau, Philadelphia. From July, 1915. (Bi-monthly; then monthly until Feb., 1918.) Watkins, G. P. Electrical Rates. The Load Factor and the Density Factor. Quar- terly Journal of Economics, vol. xxx (May, 1916), pp. 519-545. Watkins, G. P. The Theory of Differential Rates, Quarterly Journal of Economics, vol. xxx (Aug., 1516), pp. 682-703. Wilcox, D. F. Effects of State Regulation upon the Municipal Ownership Movement Annals of the American Academy of Political and Social Science, vol. Lin (May, 1914), pp. 71-84. Williams, Arthur. Municipal Ownership: Report for 28th Convention of the Electric Light Association at Denver, Colorado Springs, 1905. New York, New York Edison Co.; pp. 188. Young, A. A. Depreciation and Rate Control. Quarterly Journal of Economics, vol. xxvni (Aug., 1914), pp. 630-663. IV. Monographs, Bulletin's, Miscellaneous Reports, Addresses, etc. American Electrical Directory. E. L. Powers, Chicago, 1898. ("Am. El. D") Arnold, Bion Joseph. Report on Municipal Electric Street Lighting, City of Chicago. Chicago, 1908. Bound with appendix by Arthur Young & Co.; pp.19. Ballard, F. W. Operation of the Cleveland Municipal Light Plant and the 1915 Audit; pp. 27. (Paper read at a meeting of the Cleveland Engineering So- ciety, Jan. 23, 1917.) Bozell, Harold V., E. E. Municipal Plant Operation in Oklahoma. (Report on 26 towns.) New York, Municipal Ownership Publishing Co., 1916; pp. 85. Bryant, John Myron, and Hake, H. G. Street Lighting. Bulletin No. 51, University of Illinois. Urbana, 1911. Chicago. Report of Mr. Palmer, Commissioner of Gas and Electricity, in An- 886 BIBLIOGRAPHY swer to the Reports of W. G. Clark, G. W. Paullin, and Edward W. Berais, respecting the Cost of Electrical Energy for Street Lighting. Chicago, 1914; pp. 25. Erickson, Halford. Depreciation Problems. Madison, 1915; pp. 49. Erickson, Halford. Regulation of Public Utilities. Madison, 1911; pp. 66. General Electric Company. Bulletin No. 5112. Schenectady, 1897. Geneseo. Report of Committee Appointed by the City Council of Geneseo, 111., on the Investigation of Fifty-five Middle Western Municipal Light- ing Plants. (Comparative table of physical and financial data.) Re- printed by Municipal Ownership Publishing Co. Grant, A. H. A List of Defunct Municipal Lighting Plants. 10th ed. New York, The Municipal Ownership Publishing Co., 1916; pp. 94. Instill, Samuel. I. Public Control and Private Operation of Public Service Industries. II. Municipal Ownership. Chicago, The Other Side Publishing Co., 1899; pp. 64. Insull, Samuel. Some Advantages of Monopoly in Connection with the Manufacture and Distribution of Electric Energy; pp. 61. (Before the Engi- neers' Club of Dayton, Ohio, October 6, 1914.) Insull, Samuel. The Progress of Economic Power Generation and Distribution. Chi- cago, 1916; pp. 55. Iowa. Electric Central Station Operation in Iowa. By F. A. Fish and H. W. Wagner. Iowa State College of Agriculture and Mechanic Arts, Bulletin 33. Engineering Experiment Station. Ames, la., 1915; pp. 164. Los Angeles. Report on Government Ownership of Public Utility Service Under- takings; by Committee on Municipal Ownership of the City Club of Los Angeles, 1917; pp. 88. Marston, Glen. Facts on Municipal Ownership in 268 Towns and Cities. Chicago, Public Service Publishing Co., 1915; pp. 32. Matthews, Nathan, Jr. Municipal Lighting Argument for the Town of Brookline, March 12, 1896; pp. 46. (Revised and condensed.) Matthews, Nathan, Jr. Report to the Selectmen of Brookline on a Municipal Arc Light Plant, July 15, 1896; pp. 30. ("Matthews: Rept. Brook.") Matthews, Nathan, Jr. Report on Comparative Cost of Public Lighting in Boston and Other BIBLIOGRAPHY 387 Principal Cities of the Country. Boston, Municipal Printing Office, 1898; pp. 56. ("Matthews: Rept. Comp.") Milwaukee. Milwaukee Street Lighting Reports. Citizens' Bureau of Municipal Efficiency, 1916; pp. 136. Nash, L. R. Some Commercial Considerations in Central Station Rate Making: An Address, Harvard University, 1915; pp. 14. Newcomb, H. T. Public Ownership and the Wage-Earner. Washington, D.C. Press of George E. Howard, 1906; pp. 25. Ohio. Complete Reports on Municipally Owned Plants in the State of Ohio. Chicago, Public Service Publishing Co., 1915. (Eleven pamphlets, June, 1914, to April, 1915.) Plattner, William. Report to the Committee on the Investigation of the Milford Electric Light and Power Co. North Attleborough, 1915; pp. 62. Plattner, William. Report to the Board of Selectmen, etc., on the Investigation of the Spencer Gas Co. North Attleborough, 1914; pp. 48. South Hadley. Report of Special Committee Appointed June 2, 1913, to Investigate the Matter of Municipal Lighting for the Town of South Hadley, Mass. (Including Report made to said Committee by William Platt- ner, Consulting Engineer.) Holyoke, M. J. Doyle Co., 1913; pp. 40. Stone & Webster. Operation of Municipal Electric Lighting Plants in Massachusetts and in Lewiston and Bangor, Maine- Sullivan. J. W. Municipal and Private Operation of Public Utilities. New York, 123 Bible House, 1908; pp. 128. (Sullivan v. Commons.) Syracuse Lighting Committee. Cost of Residential Light and of Commercial Light and Power for Twenty-two Plants. Syracuse, 1907; pp. 44. (Cf . pp. 24-38.) Thompson, Carl D. Municipal Electric Light and Power Plants in the United States and Canada. Bulletin No. 1 of the Public Ownership League of America. Chicago, 1917; pp. 149. Wellesley. Report of Committee on Municipal Lighting Plant for Town of Wellesley. 1900; pp. 52. Whiting, C. W., M. E. Report of the Investigation of the Municipal Light Plant of the Town of Reading. Boston I?). 1917; ^pp. 29. Wisconsin. Legislative Reference Bulletins on Municipal Electric Lighting and on Municipal Gas Lighting By E. S. Bradford. STATISTICAL APPENDIX STATISTICAL APPENDIX NOTE The following statistical tables cover for the different plants the more important data which have been summarized in the text. They have been arranged with a view to presenting in a readily comparable form those relations which are ordinarily of most significance in a study of this kind. For the reader's convenience the order of the preceding chapters has usually been followed. The composite plants (gas and electric) have in practically all cases been kept separate from the other generating plants, so that individual differences can thus be more readily studied. Because of the relatively large size of Holyoke in the one group of municipal plants, and of Norwood in the other, it has been necessary to give the totals and averages both with and without these plants. The fully weighted arithmetical or "group" average is used in all cases. Accordingly, the unit cost and unit income are found by dividing the total cost or income of a particular sort, for the group of plants, by the total number of kilowatt hours generated or sold as the case may be. Other averages are found in a similar manner. For purposes of compari- son the current supplied by the public plants for street lighting is in- cluded with the current "sold," even though it is not actually paid for in the commercial sense. When, however, there might be any possibility of doubt as to the exact meaning, the term "delivered" or "supplied" is used in place of "sold." Furthermore, if plants fail to report items which it is clearly known should be reported, e.g., the connected load, the averages are naturally computed for the remaining plants only. Also, when the returns for 1910 were found to be incomplete in certain points, the data have in a few cases been taken for the following year. These and other irregularities are duly mentioned in the footnotes to the vari- ous tables. Finally, due to the difficult and complicated task of copying the basic figures from the returns and putting them through countless oper- ations in order to present them in their present form, it is inevitable that minor errors should have crept into the work. The process of printing has added to the possibility of mistakes. Great care, however, has been exercised at all stages, and every attempt has been made to verify the results by different methods, so that any discrepancies which remain will certainly be insignificant. For these, if such there be, the author craves the indulgence of those readers who are sufficiently interested to look carefully into this Appendix. Note. The footings of the various dollar columns will not always coincide with the sum found by adding the separate items, due to the fact that the latter are computed to the nearest dollar, whu> the former include the cents as well. A. 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Matthews, Nathan, studies in mu- nicipal street lighting, 19; on Holyoke Case, 71 (footnote). Maximum demand factor, 98. Maximum net rate, 202-205; in purchasing plants, 249. Merrimac, 71 (footnote), 74, 146. Meters, rental of, 45 (footnote), 202; at station, testing of, 301- 302; 308-309; customers', inac- curacy of, 310-311. Michigan, municipal plants in, 56 (footnote). Middleborough, 69 (footnote), 74. Middleton, 70 (footnote). . Miller's Falls, 72, 74. Minimum monthly charges, ap- proved by Commission in Massa- chusetts, 45; for light, 202; for power, 205. Motors, 115-116. Municipal Journal, favors public ownership, 32. Municipal light boards, legal pro- vision for, 42, 325; character of, 331-332. Municipal lighting plants, method of, acquiring in Massachusetts, 38-41. Municipal ownership, law provid- ing for, in Massachusetts, out- lined, 38-49; action taken by municipalities regarding, 72-73, 344; reasons for adoption of, 339, 354. National Civic Federation, Report on Municipal and Private Opera- tion of Public Utilities, men- tioned, 19; reviewed, 29—31; Re- port on Commission Regulation of Public Utilities, 34. National Electric Light Associa- INDEX tion, theory regarding deprecia- tion, 218; does not admit mana- gers of municipal lighting, 327. National Municipal League, pub- lications referred to, 31. Needham, 59, 74. New business, little effort to secure, on part of municipal plants, 340. Newburyport, 215. New York (State), 1890 census of electric plants in, 13. New York Public Service Commis- sion, 34, 237 (footnote). North Adams, 146. North Attleborough, 70, 71 (foot- note), 74, 146. North Brookfield, 242 (footnote) ,244. Norwood, 85, 136, 140, 151, 256. Note issues, of municipalities to be certified by the Director of the Bureau of Statistics, 41 (foot- note); of companies not regu- lated, 52; to cover losses, 155, 224; interest on, 212-213. Office room, frequently inadequate in public plants, 302. Ohio, reports on 78 public plants in, 32; rank in the electrical in- dustry, 56. Oklahoma, municipal plant opera- tion in, 33. Operating ratios compared, 207. Output of current, various analy- ses, 97-107; station use, 100; un- accounted for, 100-104; develop- ment of different classes of busi- ness, 105; per capita analyses, 106-107; sales per customer, 111- 112; in purchasing plants, 134- 136; reasons for purchasing, 303- 304. See also "Purchase of cur- rent." Parsons, Frank, articles favoring municipal ownership criticized, 17-19 ; referred to, 20, 29 ; quoted, 30. Pasadena, municipal plant, 31. Paxton, 245 (footnote). Peabody, 59, passim. Pensions for municipal employees, 265. Perrine, P. A. C, 20; quoted, 23-24. Pittsburgh, private plant, 29. Plant accounts, 154. Plant cost, depreciated, 156; gross, 156-158. Plymouth, 116, 164, 215. Plymouth County, 142. Poles, relative number of, 133-134; in purchasing plants, 139; cost of, 162. Politics underpublic ownership, 17— 18, 21 ; in connection with Mas- sachusetts plants, 281, 328, 331- 332, 360-361. Population, grouping of plants ac- cording to inhabitants of dis- tricts served, 64-66; growth of, 145-147; density of, 147. Porter, Robert P., opposes public ownership in England, 35. Power factor, 91 (footnote). Premium, stock, 58, 214. Price, regulations affecting changes of, by municipal plants, 44; by companies, 45. Prichard, Charles B., 30. Prime movers, 90-91, 93. Profit and loss, surplus, 58, 176- 177; income, 212. Provincetown, 242 (footnote). Public ownership, probable future of, 367-369. Public Service, opposes municipal ownership. Purchase of current, increasing, 62- 64; comparative data, 97. Purchase of materials, methods of, 329-330. Quincy, 116, 146, 191, 193, 204. Randolph, 242 (footnote). Rates, comparative, 15, 17, 22, 25; differential upheld, 53-54; in Massachusetts, 60-61; average, 197-200, 202-205; commercial lighting, 201; power, 201-202; street lighting, 205; maximum net, 202-205; in purchasing plants, 249-250; voluntary re- ductions in, 313^614, 350. Reading, 71 (footnote). Real estate, comparative value of, 167; in purchasing plants, 243- 244. See also "Valuation of es- tates." / Renewals, depreciation allowance expended for, 44, 217. Rent of offices, rarely paid by municipal plants, 192, 246. Repairs and renewals, comparative cost of, 190, 218-221. Roads, length of, in districts served, 143. Rosewater, Victor, on comparisons of public and private ownership, 26. Salaries, unit cost of, 191-192; average, 262. Sales of current. See "Output," and "Rates." Schaff, Morris, quoted, 54. 484 INDEX Schedule for local survey, outlined, 287-293. Seekonk, 146. Serial bonds only to be issued by municipal plants after 1913, 41. Shaw, Bernard, favors municipal ownership, 35. Show-rooms, few in municipal plants, 340, 350. Shrewsbury, 136. Sick leave, when granted, 337. Single-phase system, 301. Sinking funds, discussed for public plants, 22; none to be created by municipalities in Massachusetts after 1913 ; payments to, included in cost of service, 45; amount paid (1914-1915), 214; part of the cost of street lighting, 238. South Hadley, 70 (.footnote), 280- 281. South Norwalk, municipal plant, 29, 31; financial policy of, 238 (.footnote). Spencer, 84. Springfield (Mass.), report of spe- cial committee referred to, 19 (footnote), rate case (1893), 53. Stock, dividends of, not allowed in Massachusetts, 49; issues regu- lated by Commission, 49, 52-54; amount outstanding, 177; in- crease of, in 1914-1915,224. Street lamps, arcs and incandes- cents, 125; per oapita,A25; candle power of, 126; wattifee of, 126; number of hours' use per night and nights, use per month, 127. Street flighting, cost of, to munici- palities owning their generating plants, various analyses, 230-239 ; in purchasing plants, 251-253; quality of service, 312, 314-315. Streets with overhead lines, 130. Sunderland, 251 (footnote). Syracuse, 32. Taunton, 69 (footnote). Taxes, not paid by municipal plants, 15; Commons' views on loss of, by municipalities, 21; taxes lost are really a part of the expense, 24; increase in unit cost of, for companies, 182 (footnote), 193; amount lost under public ownership computed, 234-245. Tax rates, comparative (1910-1915), 267-268, 274-275, 278-279. Thompson, Carl £>., bulletin on municipal electric lighting criti- cized, 33 (footnote). Toledo, private plant, 29. Transformers, line, relative sizes of, 103; cost of, 103; other data, 134; in purchasing plants, 135. Two-phase system, in some muni- cipal plants, 301. Underground construction, devel- opment of, 67-68; extent of, in companies, 133; cost of, 161. Unionization of labor in Massachu- setts plants, 338. " Unit costs," total, 181-183, 193- 194; manufacturing, 184; fuel, 184-185; wages at station, 186- 187; distribution, 188-191; man- agement and miscellaneous, 191- 193; in purchasing plants, 246- 247. United Electric Company (Spring- field), 74. Urban population, 143-145. Use factor, 124. Utilities Magazine, favors public ownership, 32. Utilization of maximum demand, 124. Valuation, theory held by Massa- chusetts Commission, 52. Valuation of estates, comparative increase in, 267, 270-274, 276- 278; per capita, 267. Ventilation of stations, 302. Vineyard lighting Company, 97 (footnote), 204, 215. Voluntary associations, required to make annual returns to the Commission, 47; attitude toward, 53; extent of, in the lighting busi- ness, 62, 83, 84; other considera- tions, 223-224. Wages, relative, 262-264. See "Labor," and "Employees." Wakefield, 63 (footnote), 69, 74, 158,206. Wellesley, report, 32, 59, 70, 136, 146. Westfield, 69 (footnote), 101. West Springfield, 74 (footnote). Weymouth, 164, 215. Williamstown, 84. Winchendon, 165 (footnote), 166, 193, 215. Wisconsin, public plants in, 56 (.footnote). Wisconsin Railroad Commission, 34, 237, 284. Worcester County, 84, 142. Working capital, 154 (footnote). Workmen's Compensation Act, 265-266.