18 Second Annual Eepokt of the 



On the same basis for lighting, and with approximately 50 per 

 cent reduction on charges for power, the municipal distribution 

 system of Toronto has earned a surplus in the quarter ending 

 November 30, 1912. 



The sales of current have so constantly and steadily increased 

 that the prices to the municipalities have been continually reduced. 



The municipalities and private consumers are getting light and 

 power for half what they paid private corporations. 



As has already been said, previous to the distribution of current 

 by the Hydro-Electric Power Commission, the private companies 

 had based their rates upon the principle of charging "what the 

 traffic would bear." The basis of the rates made by the Hydro- 

 Electric Power Commission is " cost of service," and the rates 

 thus made were necessarily adopted by private companies. This 

 fact has led to a minute and thorough study by all the companies, 

 of all the elements of cost entering into the production, distribu- 

 tion and sale of electric current. Such analysis is bound to result 

 in very substantial changes and economies in the cost of operation, 

 and also in the elimination of discriminatory sales. 



A second elemental cause contributing to this result is the verv 

 great increase in the market for electric current. It has been 

 found that the entrance of governmental competition caused no 

 loss to those companies which were under proper management. On 

 the contrary, their growth continued at the normal rate, or better. 



The third contributing cause has been the injection of competi- 

 tion, which has proved to be a spur to the private company. It has 

 too often been found that the size of the dividend has primarily 

 determined the rate which the consuming public has been willing 

 to tolerate. So long as the desired dividend can be earned the rate 

 is not diminished, and economies of operation and management are 

 a matter of little concern to the private company. Competition 

 has created a new condition, with the result that it has been found 

 entirely feasible to earn the customary dividend at a lower price 

 per unit of energy. 



The economic welfare of a people depends upon the intelligence 

 with which it utilizes its natural and human resources. Labor, 

 and natural resources in use, are the elemental constituents of pro- 

 duction of all kinds. It is one of the most beneficent functions of 



