centage is much higher. It should be noted, however, that the Wisconsin commission has never fixed rates for a plant serving a population greater than one-third of that served by the Citizens company. Even the Queens company, at higher rates, gets only about two-thirds as much revenue as this company, and has only about one-half as many taps in service. Yet it is a fair inference from the above table, which shows that the Citizens company now receives less than nine per cent of its total revenues from public fire service, that it is not being adequately compensated for the cost of this service. At any rate, the company received from the city of New York for fire protection rendered in 1915 only a trifle over 18 cents per capita of the population of the Second Ward. The company, naturally, is not much concerned as to the sources from which its revenues are derived, provided they are in the aggregate what it conceives to be adequate. Mr. Meyer has stated in my presence that the company would be perfectly satisfied if for the next ten years it could maintain its present rates for domestic consumption and at the same time have its hydrant rental rate increased 25 per cent, that is, to $25 per hydrant per annum. Yet in the estimate he submitted to Chief Engineer de Varona in March, 1914, he figured out a cost of $49.40 per hydrant without counting in anything at all for interest on some $840,000 of investment, exclusive of the hydrants themselves, which he attributed to fire protection. It seems clear that at least in those sections of the city where private consumers are paying higher rates for water service than their fellow taxpayers in districts supplied by the municipal plant, the fairest way of apportioning the necessary costs of water service is by following the method adopted in the Queens company case, and outlined in a preceding paragraph of this report. In this way the actual cost of the fire protection rendered, up to its reasonable value, will be charged to the city irrespective of previous hydrant rental rates paid by the city, demanded by the company or estimated by engineers as sufficient to induce the company to make the additional investments needed. This question, therefore, will be disposed of along these lines in a later portion of this report following a determination of the value of the company's property useful and necessary in its water business, and a discussion of its operating expenses.2 1 2 Ante, p. 102. See chapter XIII, post, pp. 255-258; chapter XV, post, pp. 275-277; and chapter XVI, post, pp. 278-280. CHAPTER VII HISTORY OF THE COMPANY'S RATES FOR PRIVATE CONSUMERS, AND OF ITS RULES AND REGULATIONS, AND COMPARISON OF ITS RATES WITH CITY FRONTAGE RATES AND CITY METER RATES (a) Original rates and regulations, 1894 to 1905. This company from the commencement of its business required the installation of meters upon substantially all services. It furnished the meter but compelled the property owner to pay for it. The original charges for connecting with the water mains were as follows: For inserting 2-inch tap and furnishing 2-inch meter and curb stop. These prices applied where the mains were already in the streets; but elsewhere special prices were charged to cover in whole or in part the cost of laying the mains. Special rates were also charged for larger sizes of taps and meters. The company's rules and regulations provided that "all water passing through the meter, whether consumed or wasted through leaks or defective fixtures," should be paid for at the following rates: For the first 1,000 cubic feet consumed in each six months, 30 cents per 100 cubic feet (or 750 gallons). For the second 1,000 cubic feet consumed in the same period, 20 cents per 100 cubic feet (or 750 gallons). For quantities in excess of 2,000 cubic feet up to 98,000 cubic feet in the same period, 10 cents per 100 cubic feet (or 750 gallons). It was stipulated that no consumer would be supplied with water for less than $6 per annum irrespective of the amount used, and that taps would be inserted only with this understanding. All water rates were payable at the company's office within fifteen days from the date of the bill, and if not paid within thirty days from the date of the bill, the company might discontinue the service on twenty-four hours' notice. In case of discontinuance the service would not be resumed except upon payment of all arrearages plus $5 for the cost of turning the water off and on. Charges for water supplied were made against the owners of the premises, who were held responsible for all amounts due for water so supplied. It was stipulated that no part of the water supplied to premises for which application had been made should be sold or supplied to other premises or parties, except upon a written permit from the company. Upon the payment of the tapping, meter and curb stop charges in advance, the company agreed to insert the tap and furnish the necessary connections when notified that the excavation was ready. The consumer was required to connect to the curb stop by means of a lead goose neck not less than 18 inches long with a wave of at least six inches. No black iron pipe was to be used between the curb stop and the meter. Wherever lead pipe was used on the street side of the meter it was to be not less than two pounds to the foot for 2-inch pipe; 234 pounds to the foot for 5%-inch pipe; 31⁄2 pounds to the foot for 34-inch pipe, or 6 pounds to the foot for 1-inch pipe. A stop of suitable pattern was to be set by the consumer on the service pipe within the building between the meter and the street. A check valve of suitable pattern was also to be set by the consumer on the service pipe between the meter and the hot water or steam boiler to protect the pipe system from siphoning out in case the water was shut off from the main pipe in the street. Whenever a meter had to be set out of doors it was to be set in a pit not less than 21⁄2 feet wide by 4 feet long, suitably lined to prevent the earth from caving in. Provision for the meter was to be made at the end of the pit nearest the house, and the company's stop was to be set within the pit at the street end. These meter pits were to be kept dry and clean by the consumers. By-passes around meters were strictly forbidden and provision was to be made for setting the meter so that it would be readily accessible for inspection and repairs. A meter once set was not to be disconnected except by an employee of the company. The company agreed to keep the meter in repair so far as ordinary wear and tear was concerned for the period of five years from the time of its purchase, but all damages to the meter through frost, heat, accident or design were to be repaired by the company at the expense of the consumer. In case of a dispute as to the accuracy of the meter the company agreed to test it upon application of the consumer, and if it was not found to register against the consumer the latter was to pay a testing fee of $1.50. The company reserved the right to take out and test meters without cost to the consumers whenever doubt existed on the part of the company as to the accuracy of the meters. In case a meter failed to register properly, the charge for water was to be based on the average consumption either prior or subsequent to the failure of the meter. The authorized agents of the company were to have access to the premises supplied during any reasonable hour of the day for the purpose of examining the meter, fixtures and appliances connected with the water service. The tap inserted in the main was declared to be the property of the company and was not to be interfered with by the consumer. All repairs to the water service from the main in the street to the premises of the consumer were to be made at the latter's expense, and if repairs were not made promptly the service would be shut off. For violation of any of these rules the company reserved the right to discontinue the service upon three days' notice. Either the company or the consumer had the right to terminate the contract upon thirty days' notice in writing, but no such termination was to be effective on behalf of the consumer unless all charges against him had been paid. The company reserved the right to discontinue the service temporarily in case of emergency or accident. In the Ridgewood section, the company still has about 107 services on frontage rates. It appears that these services were originally connected with the mains of one or two local companies which had private developments. These concerns bought water from Brooklyn or from the Citizens company through meters attached to the delivery mains. Later, the Citizens company took over the individual services but it has never required them to be metered. (b) Adoption of city frontage rates as minimum rates, 1905. Reference has already been made in the section giving the history of the company's hydrant rental contracts to the fact that in 1897, when the question of extending the original contract was under consideration, the company's board of directors adopted a resolution not to raise the water rates to private consumers "in the event of the resolution being carried at the coming town election," and to the fact that the extension of the hydrant rental contract for a period of ten years was approved at the town meeting in April, 1897. Notwithstanding its promise, the company, in 1905, reached the conclusion that instead of continuing to charge a minimum rate of $6 per annum on every service, irrespective of the number of families connected therewith, it would substitute as minimum charges the regular schedule of city frontage rates. Accordingly, on June 15, 1905, the following notice was issued to water consumers in the Second Ward: "The Citizens Water Supply Company of Newtown hereby gives notice that it will terminate its contract for the supply of water to these premises on August 1, 1905, at 12 o'clock noon; in accordance with the terms of said contract. The company is now prepared to execute new contracts with its consumers on the basis of minimum charges equivalent to the fixed frontage rates charged by the city of New York, regardless of meter readings. The new rate will take effect August 1, 1905." The new. form of contract put into effect at this time made certain changes in the rules. In the "charges for connecting with the water mains" two new lines were set up as follows: "For inserting 34-inch tap and furnishing 3/4-inch meter and curb stop, $28. "For inserting 1-inch tap and furnishing 1-inch meter and curb stop, $37. The rule relating to the shutting off and resumption of service was changed so as to provide that a consumer should pay not only $5 for turning the water off and on, but also the "cost of replacing pavement." The provision for the discontinuance of service for the violation of rules. was changed so as to provide that service should not be restored until all arrears had been paid, plus $5 for turning the water off and on and the cost of replacing pavement; nor until assurances satisfactory to the company had been given that the rules would be strictly complied with. The first part of the rule in regard to the voluntary termination of the contract was changed to read as follows: "Either party to this agreement may terminate it upon thirty (30) days' written or printed notice addressed to the consumer and left at or mailed to the above premises." The most important change, however, in the contract was that relating to the minimum charge. In place of the $6 minimum rate, the following was inserted: Ante, p. 87. "The minimum annual charge shall be the same as the annual rates charged by the city of New York as follows (but bills shall be rendered semi-annually) : "The apportionment of the regular frontage rates upon dwelling houses is on the basis that only one family occupies the same. For each additional family one dollar will be added to above minimum charge. "The following charges additional to the minimum will be made: "For each bath in excess of one, three dollars: "For each water closet or urinal in excess of one, two dollars; "For stores, stables, etc., the New York City rate. "All charges not herein mentioned or fixed are reserved for special contract." revenues. The substitution of city frontage rates for the original $6 rate as the minimum charge undoubtedly resulted in a large increase in the company's A comparison of the gross revenues from private consumers in 1904 with those in 1906 shows an increase of 102.7 per cent, while the number of taps increased only 63.4 per cent. This would seem to indicate an increase in revenues of about 24 per cent as a result of the change in the rates. In view of the present average low consumption of water on residential premises in the Second Ward, it appears that an even greater percentage of increase in the rates would be shown if the revenues from strictly domestic or residential use could be segregated for the years. 1904 and 1906. (c) Complaints of consumers, and rate case of 1911. The change in the minimum rates in 1905 caused great dissatisfaction. to the company's consumers and has been a bone of contention ever since. The consumers even went so far as to make formal complaint to the Attorney General, who personally held hearings on the matter in 1906. But after oral arguments had been submitted, he denied the application of the complainants and upheld the company's new form of contract. Subsequently, on December 1, 1908, a resolution was adopted by the board of aldermen requesting the commissioner of water supply, gas and electricity, in pursuance of the authority conferred upon him by section 472 of the Greater New York Charter, to make an immediate investigation of complaints of inadequate fire service and alleged overcharges made by the residents and taxpayers of the Ridgewood Heights section, and to report thereon to the board at the earliest possible moment. Thereupon, Commissioner John H. O'Brien on December 23, 1908, conducted a public |