Rates of charge for electricity and their effect on cost

In considering the question of rates for the sale of electric light and power from a central station, one of the most important things to bear in mind is that only a small part of the cost of production is proportional to the output of the station. The bulk of the cost is independent of the output and consists of interest, depreciation, taxes, and insurance on real estate, generating apparatus and distributing system; the managerial, office and miscellaneous expenses, as well as the greater part of the wages, and even a small part of the coal, since frequently coal is consumed merely to keep up steam or to run engines with little or no load.