These two divisions are:—
One: the demand or capital charge covering those costs which are fixed and are dependent upon the capacity of the plant installed as distinct from two: the running charge which varies with the usage of that plant.
"Tt was soon recognized, however, that the two-division allocation did not fully meet the requirements as there were some costs which could not be classed as either demand or running. These were the consumer or customer charges which had previously been lumped into the demand portion of the two-charge system."
"The main headings in the three-charge method are:
The capital portion, that is, all charges in connection with interest and depreciation; the operating charges, which is dependent upon the size of the load required distinct from the kilowatt hours use the running portion, those costs which are, dependent upon the kilowatt hour output of the station as distinct from those which are due to having supply available; the customer or consumer charge, the portion of the costs of supply in obtaining and servicing customers.
The apportionment of the percentages of the various costs between these three headings is one which would vary considerably with various companies depending on the nature of the generation, transmission and distribution, as well as on actual usage of electricity. It is for this reason that regulatory commissions had been unable to lay down any fixed rules and with the exception of the formulae adopted by the British grid system for base generating stations these are hard to find."
"In the general cost allocations the regard to superintendence and operation, labour, power station; fuel; miscellaneous operating expenses; boiler and other maintenance; transmit:
jeration and maintenance; distribution operation and maintenance; testing customers' installations, customer billing and new business expenses; general expenses; and rates, and royalties.
The figures of percentages given in the sample allocation, Mrs. Evans said, would apply to a general allocation but when separate allocations were used for block and general supply, the figures would require a slight alteration.
These figures dealt with the breakdown of the production expenses, but to complete the costing, the speaker added, it was necessary to analyse the capital invested to apportion the interest and depreciation charges between the block and general supply.
This breakdown was not usually as complicated as that of the production costs because Mr. Evans added, generation and transmission, land, building and plant capital might be divided in direct ratio to the demands of the two classes of supply, The head offices, showrooms and general equipment capital were usually placed against the general supply customer, he continued.
On the distribution side, however, more care had to be taken as the capital invested in this section of a company's equipment might be as high as 40 per cent. of the total.
Having obtained these two sets of figures and added appropriate sums for stores, ete., interest was charged on each amount and depreciation as applicable to the equipment concerned. This then gave the total annual interest and depreciation cost which was divided by the station firm cap-city to give an annual cost per kilowatt, Mr. Evans added.
The application of this to the construction or alteration of rates was a different subject, but after obtaining the figures it was necessary to apportion the peak load responsibilities of each class of supply, and apply the costs to the kilowatt demand, kilowatt hour consumption end number of customers in each class.
In closing the speaker stressed that the method described had necessarily to be kept flexible to meet varying conditions of supply.
Text read from the printed page and cleaned; old type leaves the occasional error.