ROSA: REGULATION OF NATURAL MONOPOLIES 205 



5. To fulfill its duties to its stockholders honestly and effi- 

 ciently.^ 



Regulation of a gas company. For example, a gas company 

 receives a franchise to manufacture and sell gas for light, heat 

 and power in a given city, for a term of years, the city perhaps 

 to have the right of purchasing the plant at the end of the fran- 

 chise period. The quality of gas and the character of the ser- 

 vice furnished, and the prices charged, are to be fixed by the pub- 

 lic service commission. 



The commission must see that the company runs its mains into 

 all the streets of the city ; so as to give service to all, that uniform 

 rates are charged and no rebates are allowed to favored custom- 

 ers ; that service charges if made are reasonable ; that the gas is 

 of good quality, and as free from impurities as possible; that its 

 heating value and candle power are kept up to the standard 

 specified; that the methods of testing and the instruments em- 

 ployed are up to date and satisfactory, and the persons doing 

 the testing are competent; that the pressure of the gas is sufficient 

 and not too great and does not vary enough to be dangerous; 

 that gas appliances used are as safe as can be obtained, and con- 

 nected in an approved manner; that the mains are properly 

 located and properly protected from extremes of heat and cold ; 

 that the meters are kept in good order and tested from time to 

 time as to their accuracy; that the prices charged are as low as 

 possible, consistent with a reasonable dividend to the stockholders; 

 that the books are kept in an approved form, so that the state of 

 the business can readily be determined by the commission ; that 

 proper allowances are made for plant depreciation, or proper 

 sums expended for upkeep; that no new stock is sold without 

 approval by the commission, and that all dividends shall be from 

 actual earnings, but that if actual net earnings are more than 

 necessary to pay a reasonable dividend, the price of gas shall be 



^ This of course supposes that the commission has been given the necessary au- 

 thority by the state legislature. Many of the public service commissions were 

 created as railroad commissions; and of these, s^me have had their functions 

 extended to cover only a part of the duties mentioned above. 





