REVISING METER RATES 21 



be distributed over a greater volume of water, and the cost per 

 looo gallons would decrease. This would continue until an 

 addition was made to the supply works and at that time, with 

 the new investment, a substantial addition would have to be 

 made to the water rates. 



As a practical business proposition, it is not feasible to let 

 water rates fluctuate in this manner from year to year, and, by 

 common consent, they are fixed at rates which are allowed to run 

 through a term of years. Under these conditions the rates 

 should be fixed with reference to the average conditions through a 

 term of years and not alone with reference to the conditions of a 

 particular year. Under such a system the surplus to be accumu- 

 lated during the years just before constructing new supply 

 works, and when the load factor of the old works is high, should 

 theoretically be sufficient to meet the deficits in the years of and 

 following the construction of new works when the load factor 

 is low. 



Unfortunately there is no system or regularity in the manner 

 of fixing or revising water rates at the present time. The two 

 conditions that principally lead to changes in water rates are 

 these: 



First, the need of an increase in water rates in connection 

 with additions to the plant, which is necessary because old rates 

 are too low to carry the plant financially through a period of 

 enlargement and improvement. 



Second, a reduction in water rates, which is most likely to 

 be made toward the end of a period following one enlargement of 

 the supply works and before the next one is required. At such 

 a time the works are operated on a load factor that is higher than 

 can be maintained as an average through a term of years, and 

 this tends to produce a surplus of revenue. 



Under the second of these conditions there is apt to be court 

 action to compel a company to reduce its rates, or with a munic- 

 ipally owned plant there is opportunity for a new administra- 

 tion to make political capital out of a reduction in water rates. 

 These reductions may be brought about even though the removal 

 of the surplus handicaps or makes impossible the financing of 



