190 FIXING METER RATES 



Rate for a Partially Metered System. It is difficult to dis- 

 cuss rates for a partially metered system. The only basis that 

 can always be used with safety, and that is always fair, starts 

 with the assumption that a meter rate that is fair for a com- 

 pletely metered system is also fair in a partially metered system. 

 All the estimates and calculations are made for the probable 

 results as they would be if the system were completely 

 metered. 



Margin of Safety. As this calculation is at best an uncertain 

 one, in making it a margin of safety should always be allowed; 

 that is to say, when the rates are fixed they should be fixed to 

 produce a somewhat greater amount of revenue than is indi- 

 cated by the estimates. 



The amount of margin depends upon the exigencies of the 

 case, but in a general way a 5 to 10 per cent margin will be con- 

 sidered as a reasonable one. If the estimates prove to be sound, 

 the revenue will exceed expectations by 5 to 10 per cent, and 

 as soon as that fact is sufficiently ascertained by experience, 

 the rates, or some of them, may be reduced. If the sales of 

 water fall below expectations, no harm will be done up to the 

 point where the deficiency in sales cuts out the margin that 

 is allowed. If, on the other hand, the rates prove more produc- 

 tive than is expected, the reduction in rates may come sooner 

 and may be greater. 



Too much revenue means a relatively light hardship on the 

 takers for a few years. Too little revenue may mean disaster to 

 the system. It is much easier to reduce rates than to increase 

 them, and a fair margin of safety to cover the uncertainties in 

 the calculation is essential. 



Basis of Estimate. The number of live services in every 

 water-works system is known This is the starting point. The 

 amount of water that can be sold to them must first be estimated. 



Statistics were collected by the Committee on Meter Rates 



for thirty-five completely metered systems.* Some of the data 



are to be found on page 120. From these it appears that the 



average sales per service were 359 gallons daily, but amounts 



* Jour. N.E.W.W. Assn., Vol. XXX, p. 453, 1916. 



