per day, and at the city meter rate would cost about $5 a year. When we consider that at this rate the consumer gets 75 gallons of pure water for one cent, it will readily be admitted that those who really need more than the minimum allowance are not likely to stop using it when the minimum has been consumed. This will apply both to large families with a moderate per capita consumption and to small families of luxurious habits with a large per capita consumption. On the other hand, it is important to keep the minimum charge down to a figure that will cause no serious hardship in the case of poor people living in their own modest houses and maintaining themselves with difficulty. After careful consideration, I have reached the conclusion that the department ought to recommend the establishment of a minimum charge of $5 per annum on every metered service used for business purposes alone, and of $5 per family on every metered service used for domestic purposes. With this readjustment of the city rates in prospect, I am satisfied that we would not be justified in cutting the Citizens company's net return to four and one-half per cent by insisting on the adoption of the straight city meter rate without a minimum charge, although, as I have shown, it would be possible for the company to earn a return of about six and one-half per cent without the minimum charge, if it were not for the Urban company's competition.

In order to determine what effect a minimum charge of a given amount per family would have upon the Citizens company's revenues, we arranged with the company to have Mr. Wolff, our accountant, make a transcript and an analysis of a portion of the data contained in the company's meter books, in which the original records of metered consumption, frontage measurements, fixtures, number of families and the existing minimum rates are kept. This was a long and tedious undertaking, but the results were important. Mr. Wolff and his assistants found by analyzing 14,349 active meter accounts on residential or partly residential premises housing 31,755 families, for which good readings were obtainable for a full year's use of water, that the average annual consumption as registered by the meters was 4,620 cubic feet per family, which at the 10-cent meter rate would make a water bill of $4.62 per family per annum. They found that in the case of 71 per cent of all these residential accounts, the consumption of water was less than the 5,000 cubic feet per family per annum which would be allowed at the city meter rate with a $5 minimum charge per family. In only 29 per cent. of the houses would the total charge for water used exceed the minimum. These figures show an astonishingly low consumption. Some allowance should doubtless be made for slippage of the meters, which in New Orleans is estimated at 20 per cent and in Cleveland, another universally metered city, at only three per cent. Our tests of certain specimen meters taken off the Citizens company's services would indicate a probable average under-registration of not more than five or ten per cent. Even after this allowance is made, the remarkably low metered consumption in the Second Ward seems to indicate that the people there have learned generally not to waste water and not to let leaks go unmended. Protected by its present high minimum rates, the company has not felt compelled to pay the same close attention to its meters which otherwise would have been necessary. When a meter has been out of order, it has been customary for the company to charge the frontage rates and let the account go on that basis. until it was convenient to get the meter repaired and in place again.

On the 14,349 active residential meter accounts analyzed, the charges would be as follows:

At the 10-cent meter rate..

At the $5 per family minimum rate.

At the combined 10-cent meter rate and the $5 minimum rate..

Total "salvage" to the company on account of the minimum rate
Average "salvage" per family...

Estimated total revenues from the 10-cent meter rate for the year beginning
May 1, 1916, on all residential premises, with 6 per cent increase assumed,
36,971 families at $4.62..

Estimated "salvage" from the same consumers for the same period on account of the $5 minimum rate, $1.39 per family...

$146,882.00

158,775.00 191,005.00

44,123.00 1.39

170,808.00

51,390.00

If these estimates are correct, the $5 minimum charge would bring in to the company $51,390, which it would lose at the straight meter rate, and aggregate residential rates for water in the Second Ward of Queens would be about $40,000 less than they would be at city frontage rates. This difference is just about taken up by the service charge for the meters, which for the most part takes the place of charges now borne by the property owners on metered premises, whether on the city service or on the company's service. In other words, the meter system as applied to the Second Ward of Queens will show enough saving to the property owners below the city frontage rates to pay the additional costs of administering it, and the ultimate saving through the conservation of the water supply cannot easily be calculated.

The estimates of revenues shown above come within $797 of the estimated amount required to give the company a seven per cent return, even without the business lost a few years ago to the Urban company.

(j) Effect of proposed readjustment of rates.

The readjustment proposed will mean a substantial decrease in the company's gross revenues as compared with what they would be under the old rates, a moderate increase in the city's payments for fire protection based upon a conservative estimate of cost, a very striking decrease in the water rates of most one-family houses and a moderate reduction in the total water charges on multiple-family houses. In place of the heavy tapping and meter charges when connections are made and the subsequent annoyance of the property owner in connection with the repair and replacement of the meters after the five-year guaranty of the company has expired, there will be a very reasonable initial charge for tapping and a moderate annual charge for the care and renewal of the meter, in regard to which the property owner will be relieved of further responsibility, except. as to providing a safe place for it where it will be protected from frost, hot water, accident or malicious damage.

(k) Collection dates and penalties.

Under the existing rates no penalty is provided for delinquents. On the city service a penalty of 5 per cent is added at the expiration of a three months' period after the frontage rates are due, and in the case of meter rates at the expiration of the quarter succeeding the quarter during which the bill was rendered. In both cases an additional penalty of ten per cent is added at the end of three months' additional delinquency. In the case of the Queens County Water Company, the rate order put into effect on June 1, 1915, established similar penalties, except that the five per cent penalty was to be imposed at the end of thirty days after bills become due. The shorter time was fixed for the first penalty because of the peculiar rature of the water business in the Fifth Ward, where many of the con

sumers are summer transients. In the Second Ward this special reason for imposing penalties sooner than they would be imposed on the city service does not exist, but another reason exists in the fact that the company will collect no rates until after the service has been rendered. The imposition of penalties on delinquents is justified not only by the city's own practice, but also by the common and authorized practice of public service corporations. Some companies give a discount for prompt payment; while others impose a penalty for slow payment. In the case of this company, where the service is rendered before the bills are made out, there certainly can be no reasonable excuse for consumers who let their water bills run for a long time and put the company to extra expense of collection and to the expense of borrowing money to pay its own bills in the meantime. Under the new legislation passed at the 1916 session of the legislature, service charges when established on metered services supplied by the city will be annual charges and will be payable in advance, as city frontage rates are. In the case of the Citizens company, however, I have made an allowance for working capital, and I am satisfied that it would be unwise, pending the taking over of the Second Ward service by the city, for us to attempt to change the company's collection periods or make the service charges payable in advance. The company now collects monthly from a few large consumers, and semi-annually on May I and November I from all the rest. I am of the opinion that this practice should remain undisturbed. The five per cent penalty should be imposed on all unpaid semi-annual bills on June 1 and December 1, respectively, and an additional penalty of ten per cent, figured on the original amount of the bill, should be imposed in every case where a semi-annual bill remains unpaid until the next billing period. On monthly bills the penalties should be imposed at the end of one month and six months, respectively, from the first day of the month succeeding the month in which the bills were rendered. The company as an additional remedy should be allowed to shut off the water for non-payment of charges at the expiration of three months after the bill has been rendered, but not earlier except in extraordinary cases, with the approval of the commissioner in each case. When the water is shut off for non-payment of lawful water charges, the company should not be required to turn it on again until the property owner has paid all back charges, together with the cost of restoring the pavement, and a fee of $5 for turning the water off and on.

I have not figured the possible revenues from these penalties in my estimate of the company's probable gross earnings. It is believed that the right to impose the penalties will stimulate prompt payment and that the gross amount of the penalties will be small, but probably sufficient to offset the company's losses from uncollectible accounts.

(1) The schedule.

The following schedule of rates and practices would be a proper one to be put into effect:

CLASS A DOMESTIC AND BUSINESS SERVICE, IN WHICH TERM IS INCLUDED ALL KINDS OF WATER SUPPLY SERVICE OTHER THAN THAT RENDERED THROUGH HYDRANTS, AS DESCRIBED IN CLASS B.

1. Tapping charges.

Upon proper application for connections with the mains, the company shall insert taps of the sizes approved by it, or, in case of dispute, of sizes

approved by the commissioner of water supply, gas and electricity of the city of New York (hereinafter referred to as the commissioner) as adequate for the uses to which the connections are to be put, according to the following scale of charges:

For inserting single tap up to one inch in size.

For inserting additional taps up to one inch in size, at same location, each.
For inserting single tap larger than one inch, other than a wet connection..

$2.00 1.00

4.00

For inserting additional taps larger than one inch other than wet connections, at same location, each.

For making a wet connection.

2.00 12.00

The taps and wet connections shall be furnished by and remain the property of the company.

2. Meters and their maintenance.

All services connected with the company's mains shall be metered, if practicable, and such metering shall not be considered impracticable unless the company shall file with the commissioner a complete list of such services or of such classes of services where metering is not considered practicable, and shall have secured his approval thereof. Meters with the necessary couplings shall be furnished, installed, maintained and renewed by the company at its own expense, provided that the property owner shall be required to furnish a safe and convenient location for the placing of the meter, and to make any changes in the plumbing of his building which may be necessary reasonably to facilitate the setting of the meter, and may be held responsible by the company for any damage to the meter while it remains on his premises, due to frost or hot water or accidental or malicious breakage or interference not chargeable to any employee or servant of the company. Bills for damages to meters shall be rendered as soon as practicable after the extent of such damage has been ascertained and the necessary repairs or replacements made. The company shall forthwith acquire as of May 1, 1916, or in case of meters set subsequent to said date, as of the date of setting, all meters now on the company's service in the Second Ward of Queens, and shall set up on its books credits to the present owners of such meters to the amounts representing the present value of such meters in place, as determined by the following schedule:

For sizes larger than 3 inches the company may agree with the owner in each case as to the value of the meter, but a complete list of such meters

and their locations and the values agreed upon shall be filed with the commissioner, and shall receive his approval before the company shall set up on its books the credits therefor, and in any case where the company and the owner of any such meter shall be unable to agree as to the present value of such meter, the value to be allowed shall forthwith be determined by said commissioner.

The credits set up as herein provided shall bear interest at six per cent per annum, to be entered semi-annually on the consumers' accounts. Every such credit shall be decreased from time to time by the amounts due from the property owner on account of the service charges hereinafter established, and, in the discretion of the company, may also be decreased by the amounts of the minimum and meter rate charges due from the property owner, but no service charges shall be collected on any given account until the credit established on that account with its interest accumulations has been exhausted. In case two or more metered services enter the same premises, they shall, for the purposes of this order, be included in one account. In case of the transfer of title of any real property in connection with which any such credit has been established, the credit shall remain with the property for the benefit of the new owner.

In case any property owner shall refuse to surrender his meter or meters to the company in accordance with the procedure herein set forth, the company shall forthwith require such meter or meters to be removed from the services upon which they are installed, and shall thereupon install another meter or meters at its own expense, and the property owner shall be entitled to no credit for the meter or meters so removed. All meters hereafter installed by the company shall be of a pattern which may at the time be lawfully installed upon a New York City service.

In all cases where taps have been installed subsequent to May 1, 1911, the property owners' credits above referred to shall be increased by the amounts paid in advance for meter maintenance to the extent that such amounts represent an obligation assumed by the company and not liquidated prior to May 1, 1916, as determined by the following schedule:

to

Date of Installation and Credit to be Allowed

to

to

to

to

Size of Meter May 1, 1911 May 1, 1912 May 1, 1913 May 1, 1914 May 1, 1915 After May 1, May 1, 1912 May 1, 1913 May 1, 1914 May 1, 1915 May 1, 1916 1916

As to all cases where taps for meters larger than 11⁄2 inches have been installed subsequent to May 1, 1911, the company shall file with the commissioner a complete list of such taps and the dates of their installation, with a statement of the charge there for and of the net cost as nearly as may be of all the labor and materials furnished to the property owner in each case at the time of such installation, and the commissioner shall thereupon determine and certify to the company the credit to be allowed the property owner in each case on account of meter maintenance charges paid in advance which still represent an obligation on the part of the company. The credits set up on the company's books on account of advance payments for meter maintenance shall be added to the meter purchase credits, where such exist, and shall be liquidated in the same manner.