242 ACTUAL COSTS AND CAPACITY OF GASWORKS. 



free fittings cannot be indulged in in country districts 

 without adding enormously to the capital costs of the 

 undertaking. The meter and fittings have cost, per con- 

 sumer, ^3, 6s. id. Based upon a sale of 10,000 cubic 

 feet, this means a capital expenditure of 6s. yjd. per 

 thousand, and unless provision is made for depreciation, it 

 means a permanent addition to the cost of gas of 8d., on a 

 10 per cent, basis. The most rational way of treating such 

 expenditure is, obviously, to apply the extra amount charged 

 for slot installations to the liquidation of the capital 

 expenditure. 



Notwithstanding the cost imposed by fitting up con- 

 sumers' residences free, the above summary shows that, 

 even for small works, the capital must be considered inflated 

 if it exceeds ;i,ooo per million cubic feet of gas sold. 

 Generally speaking, that figure should be the crucial test of 

 works valuation. No one would think of taking coal 

 stocks at 153. per ton, even if they were stored at that 

 figure, if the value had declined to los. There a>e many 

 companies, some of them fairly large, that have capital 

 accounts which are too large as compared with modern 

 costs of erection, but statutory undertakings are not 

 allowed to reduce the amount, except by doing it out of 

 divisible profits. Although the consumers may have got 

 the benefit of past inflation, gas being sold cheaper than it 

 should have been, no allocation can be made to writing off 

 capital unless for works actually dismantled. Some legis- 

 lative provision is necessary to enable companies to legiti- 

 mately wipe out over-capitalization without being taxed, 

 since such a procedure means gas at a more reasonable 

 price in the future. 



The tenders. A word or two may be added on the 

 tendeis received for the works which have been described. 

 The distance of a contractor's works from the site of a gas- 

 works has, naturally, a bearing upon the price at which 

 work can be executed. Even so, the tenders for gasworks 

 plant almost always vary to an extent out of all proportion 

 to the consideration of distance. In the case of the works 

 under notice, the highest tender was higher than the lowest 

 by the following percentages : 





