CLASSIFYING THE COST 155 



scale that originated in the way that has just been illustrated 

 and which was undoubtedly necessary for early conditions, has 

 outlived its usefulness and should be discarded and be replaced 

 by the uniform rate. 



The writer has been trying to think out the answer to this 

 question. In doing this, he has taken from his office files records 

 of a number of water works plants that have been valued and 

 for which full statistics of operation are available. A number 

 of representative plants have been selected from different parts 

 of the country. In each case the gross income for the plant for 

 the year in which the study is made is taken as a starting point. 

 The question as to whether that gross income was too much 

 or too little need not be considered at this time. The only ques- 

 tion considered is the distribution of it equitably among the dif- 

 ferent classes of takers. 



There are various ways in which the cost of maintaining a 

 water works plant may be classified. Several systems of dis- 

 tribution have been presented to the water works associations 

 in recent years. It cannot be said that one way is right and that 

 other ways are wrong, but it is now suggested that the following 

 classification which is a little different from those which have been 

 proposed may be helpful in this connection. Under it the 

 whole annual budget is divided into three parts, as follows: 



First, the cost of supplying water, including all the costs that there are 

 up to the point where the water is delivered under pressure at a reasonably 

 central point. This includes interest (or a proportional part of the net 

 profits) on the whole investment or worth of the supply works and of the 

 land held for use in connection with the supply; the depreciation on those 

 works, all operating expenses, and taxes and a pro rata division of general 

 expenses of all kinds than cannot otherwise be assigned to a part of the 

 service. 



Second, the cost of distribution made up in the same way and including 

 all the costs that there are for pipes in the streets and distributing reser- 

 voirs, and the care of the pipes and the work that is done to prevent and stop 

 leakage, and the value of whatever water may be lost as leakage from the 

 pipes in the streets. 



Third, the service cost, including the costs of service pipes and meters as 

 far as they are borne by the water works department, and all the costs 

 of reading meters, billing, collecting and general office expenses, and the value 



