CHAPTER XV 

 THE THREE-CHARGE RATE 



Theoretically this is the most complete and satisfactory type of rate, 

 but it involves so many practical difficulties in application that it has been 

 adopted by comparatively few companies. Thos. W. D. Worthen, Jour. 

 N.E.W.W. Assn., Vol. XXXI, p. 177, 1917. 



The form of rate adopted by the New England Water Works 

 Association, which has been under discussion in the preceding 

 chapters, is sometimes called a two-charge rate, that is to say, 

 each bill is made up of two parts; first, a service charge and, 

 second, a charge for water. This is distinguished from the 

 old or one-charge rate in which the charge for water only 

 constituted the whole bill. In distinction to these we have now 

 to consider the Three-charge Rate. 



Under this system the costs of maintaining the water service 

 are classified under three heads instead of under two. In dis- 

 cussing this matter before the American Water Works Associa- 

 tion, Mr. Halford Erickson, Chairman of the Wisconsin Rail- 

 road Commission * after developing at considerable length the 

 conditions to be met, stated: 



The operating expense of a water utility, then, may be said to be in- 

 fluenced by three principal elements: the demand which the plant must 

 meet, or the capacity which is required; the amount of water pumped, or 

 the output, and the number of consumers supplied. For the sake of con- 

 venience these may be referred to as capacity, output and consumer costs. 



Mr. Erickson, after discussing the classification, further 

 suggests that for a typical water works plant, the capacity 

 expense would amount to about 38 per cent; the consumer 

 expense to about 18 per cent; and the output expense to about 

 44 per cent of the total operating expenses. 



* Proc. Am. W.W. Assn., p. 56, 1913. 

 165 



