pays more for coal than we do, so that the figures 571 are possible, with coal at $4 or $5 a ton. On that basis, if they pay $4 a ton for coal, I think the figures are correct. It costs them more for coal at Budapest than it does at our best American stations. If they pay $3 a ton for coal it costs them more than it does in the best American station.

MR. Dow: With all due respect to the Budapest statements, I do not think they are correct. The main engines alone might accomplish that result; it is possible to get them down to about one and fourtenths pounds of coal; but to get get the whole plant down to such a figure, seems to be out of the question. There is a mistake of about two hundred

watts.

MR. CREDEN: Some of the figures presented in Mr. Rice's paper are indeed extraordinary, and even the best engines constructed could not produce sufficient steam economy to substantiate such low coal consumption per watt-hour of output. Suppose the highest grade of anthracite coal were used, coal evaporating, say, 11.5 pounds of water from and at 212° Fahrenheit, equivalent, let us say, for sake of argument, to 10.5 pounds, from the usual conditions of feed-water temperature and steam pressure met with in electric light plants; and, further, suppose the engines were of such type of multiple expansion with condensers, with the dynamos direct-connected to the shafts of the engines, and such engines used only twelve pounds of steam per indicated horse-power hour, then the watts produced per pound of coal consumed would not exceed 560. These figures are far more economical than any engines we have in this country will produce, and do not represent the average twenty-four hours' run of an electric-light plant, since

no allowances are considered for the consumption of steam in auxiliaries, such as pumps of all kinds used in electric-light stations, nor for the large radiation and condensation losses, which frequently run to twentyfive per cent and more, so that the 560 watt-hours per pound of coal is a very remote figure.

The Chicago-Edison company's Harrison street station, representing the very highest type of electriclight plant, with a load curve such as few stations have, produces a kilowatt-hour at its switchboard from a consumption of about thirty pounds of steam averaged during a day's run of twenty-four hours. If we used the best grade of coal known, we should require, therefore, about three pounds of coal per kilowatt-hour, and hence produce about three hundred and fifty watt-hours per pound of coal."

(The president here requested

Stetson to take the chair.)

Vice-President

MR. INSULL: I have here a chart that shows the average cost of various operations in connection with our operating expenses, and the interest portion of the operating expenses. The columns here show the interest charges with different character of load-factors. I present this to you now, as it is a matter bearing, not only on my own remarks, made a short time since on the question of cost and selling price, but also upon the paper just read. These figures are taken from our actual balance sheet of the year. The largest amount of expense of any particular character is general expense. The reason for this is that one-third of the expense is in getting new business; one-third administrative expenses and the balance insurance, taxes and similar items. For instance, take the question of street repairing; that item will go down continuously as your load increases.

The biggest item of expense, apart from general expense, is lamp renewals, as Mr. Rice indicated when he referred to the question of regulation being more important than the question of economy. This column refers to lamp renewals, and the last one to fuel; the latter being about twenty-five per cent of the former. The important point that the chart brings out is the interest cost. You might have all of your operating expenses presented to you, outside of interest, and then you could lose money; it would be possible to do such a thing if your selling price were not on the right basis. Here is a case of a 3.7 load-factor. It is an office building; an actual case, not an extreme case. I could show you cases where the load-factor would be much poorer than that, but in that case the interest charge is eighty per cent of the total operating charge. Here is a case of an ordinary fancy store-these cases are taken from the actual bills-and you see there that the interest charge is a little less. The importance of the interest charge in this case will be brought home to you when I tell you that the difference between six and five per cent in the price you pay for your money, and whether you sell your bonds at ninety per cent or sell them at par, makes a difference of sixteen to twenty per cent in the cost of operating expenses. That statement alone will show you that the general public is more interested than we are in the question of protecting us in our right to do business.

Now we come to the all-night restaurant, where the load-factor is forty-eight per cent; the interest charge is only twenty-six per cent of the total expenses. These are the two extreme cases I mentioned to you in my opening remarks. In this case [indicating]

you could sell current to a man at about a quarter of what you could sell it to this man, and make more money out of the former than out of the latter. You will find that the same relation goes all the way through with the different classes of business. Power business is not quite so good as all-night lighting business; the load-factor is about thirty-five per cent, and the interest expense thirty-two per cent. With a dry-goods store the interest is about forty per cent; with a small lunch counter the interest is forty-five per cent, and with a saloon the interest is fifty-two per cent.

It is generally supposed that the best business is the power business. I remember in the early days, when the rates were established to foster the power business of the Edison Electric Illuminating Company of New York, the claim was made that you could afford to sell power at one-half the price if your current was going to be used for power when it was not going to be used for light. We have found that the power curve and the light curve cross each other for sixty days during the winter, and the claim that was made for the power business has proved a fallacy.

In your lighting business--I am talking to people using large stations-you can get a class of business that will yield you a bigger return on your investment from lighting customers than from power customers at a low rate, because the interest cost, if you have a fifty per cent load factor, is only twenty-five per cent of the total cost; whereas, with power customers the interest is about thirty-five per cent. This chart, properly studied, should enable a man running the Chicago Edison company to make a price list that would fit all kinds of customers. If we can do that in our business, surely you people can do it in your business.

You will find, too, that the adoption of a system of rates that will take care of these different conditions, will affect these items very materially. It will not affect lamp renewals, of course. It will certainly affect station repairs, general supervision, station labor, fuel, and also general expenses. In other words, it will affect by far the greater proportion of your expenses outside of interest charges; besides very materially affecting your interest charges, by putting your revenue on such a basis that it is in proportion to the interest you have to pay to take care of the customer whom you are supplying with current. Your business should be on such a basis that you get a return on the investment that you have to provide for each separate customer. This subject came up for discussion last year, at Niagara Falls. One gentleman, who, I am sorry to say, is not here to-day, took the ground that we had to sell the product at the same price to everybody. If you do, you are selling your product at different prices to everybody, because your cost varies according to conditions. Take, for instance, this case: That office-building customer won't enable you to pay interest and depreciation on the investment. You may have to take him as good business policy, but do not fool yourselves, when you put on 5,000 lights in an office building, that you are going to make any money on them. We do the largest office-building business in the country, and I am perfectly willing to say to you that I do not believe we make any money on it; we take it as a matter of policy. If the expenses of a station are followed out in this way, you can get a great deal more out of the method by which you sell than you can out of the method by which you produce.

MR. ARMSTRONG: What would you call your standard rate? What would be your base rate?