698 ECONOMICAL ASPECTS 



plant it is usually preferable to operate the auxiliary steam plant 

 continuously, the water power then being supplemental to the 

 steam power. Low operating costs are essential for this type of 

 plant and, as far as the operation is concerned, the recommenda- 

 tions given for the low-water plants also apply in this case. 



INTERCONNECTION OF SYSTEMS 



The interconnection of hydro-electric transmission systems 

 is also a step in the right direction, as demonstrated in our South- 

 ern States, where not less than seven large systems are tied to- 

 gether, furnishing power to each other on an " interchange " con- 

 tract basis. The advantages of this are obvious. The peak loads 

 of the different systems may not coincide, the minimum stream- 

 flow may occur at different times on the different watersheds, 

 common steam reserve stations may be used, and, in general, 

 the operation may be so improved that a most efficient and re- 

 liable service can be rendered to the customers of all the systems 

 so tied together. 



In some cases groups of established systems although located 

 in vastly different localities may be brought together under one 

 holding company, and to the creation of such companies may, 

 in many instances, be attributed the high-class service and finan- 

 cial success of our small and medium-size light and power systems. 

 The economies due to a central management, the benefits* of the 

 be^t technical and expert advice applied even to the smallest 

 ceLtral station, the cumulative effect of active, up-to-date new- 

 bus, ness campaigns at every point, all have contributed to an 

 impirwed and cheaper service to the consumer, and without the 

 faciliti3s of such a control they could exist only in the larger com- 

 munities. Another very important advantage is the great prob- 

 lem of financing all these undertakings and providing funds for 

 extensions to meet the ever-growing demand of the public for 

 electric service. It is possibly in providing ready financial facil- 

 ities for these purposes that the holding company performs its 

 most important function. 



In order to give the people the best service and the lowest rates 

 all public utilities must, of necessity, be natural monopolies, and 

 the public-service regulation is a recognition by the State of the 

 essentially monopolistic character of these enterprises. The 

 favorable showing of virtual monopolies in reducing the cost of 



