Factors determining a reasonable charge for public utility service

The paper considers the relations of the public to public service corporations and analyzes the construction and operating costs of the public utility plant upon which the rates for service should be equitably based. The hostility which frequently exists between the public and the officials of such corporations has been due largely to the past attitude of the officials of these corporations; who have frequently ignored the fact that they are doing business under a grant from the public which gives them a practical monopoly of such service, and that they should therefore be restricted to a reasonable amount of profit. There is considerable ignorance on the part of the public in regard to the total elements of cost which enter into the construction and operation of a public utility plant, and all of these costs must be taken into account in establishing a rate which will give a fair return on the investment and at the same time the best service possible under existing conditions. The various items of expense which make up the total value of the property as a going concern, the cost of operation, depreciation, discount on bonds, etc., are all considered, their total forming the basis upon which the rates for service must be figured.