20 FORMS OF METER RATES NOW IN USE 



Periodic Revision of Meter Rates. The water-works busi- 

 ness is a growing business and the conditions in it are constantly 

 changing. In addition to the changes in relative prices of labor 

 and supplies, there are the changes that grow out of constantly 

 increasing business and of the additional investments that are 

 needed to meet the added business. 



The additional investments to meet growing business may be 

 divided broadly into two classes: 



First, the additions to the distribution system, which ordi- 

 narily go forward approximately in proportion to the increased 

 business, so that the investment always bears a relation to the 

 business done that changes only slowly and gradually, and 



Second, investment in the supply works, which is ordinarily 

 made in a series of steps of considerable size, because it is not 

 ordinarily feasible to add small units to the supply works. 



For instance, if the supply works have a capacity of 10 million 

 gallons per day and the business grows so that this amount 

 is no longer adequate, an addition must be built, and as a 

 practical matter it would not ordinarily be possible to add 

 reservoirs, pipes, pumps, niters and other facilities to take care 

 of an additional two million gallons per day that would meet 

 the requirements of the next few years. Instead, as a practical 

 matter of economical development, the new works must antici- 

 pate the probable growth of at least ten or fifteen years, and 

 sometimes of twenty to thirty years. The new works will 

 almost always add 50 per cent and often 100 per cent or more 

 to the whole investment in supply works. This is a matter of 

 broad practical experience and rests on the underlying conditions 

 of the business. 



The effect of this condition upon water rates must be taken 

 into account. If water rates were fixed each year to yield exactly 

 operating expenses, depreciation and a fixed return upon the 

 investment, there would normally be a reduction in the water 

 rates so fixed every year during the period for which a given 

 outfit of supply works was adequate, because as the years went 

 by each year would show more business, and with fixed or prac- 

 tically fixed investment in supply works the same charges would 



