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<br /> 507
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<br /> Total invested in both departments by
<br /> the council $48,55l~72
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<br /> The Council's "equityll or investment as of 1911, in all the properties, ~
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<br /> can not be greater than the total cost of the properties turned over to ~",,-.J
<br /> the Board, less the total debt turned over to the Board at t~e same time.
<br /> Let us assume for purposes of the discussion that this equity exists~
<br /> If so, the city would be entitled to some return on its investment. What
<br /> return has it had? The report of the Public Service Commission states, on
<br /> page 21, that
<br /> I!Accrued interest during the period since this debt was incurred should
<br /> not be held as an obligation against the ~ater Board by reason of the fact
<br /> that throughout this time the city has been supplied with water at low
<br /> rates which more than offset the entire interest accrualD.
<br /> What benefit has the city had since that time?
<br />. Capital stock or Equity:
<br /> Page 19 of the P.S. C. report refers to the Council's "equitiest/ as
<br /> capital s t 0 c k.. Now, stock in a utility is owned for the purpose of re-
<br /> ceiving dividends therefrom. It is seldom paid back by the Company issuing
<br /> it. The owner of stock should receive dividends, but cannot demand the
<br /> return of the principal at will. If dividends are paid, the stock is
<br /> generally worth its capital value only. This is the case here. The City
<br /> has received a high rate of dividends on its "equityll or stock, and should
<br /> not expect the return of principal, plus dividends, plus interest. The
<br /> Council's investment made lower rates possible, and the City has benefited
<br /> by such lower rates. The City, and its citizens together, have r!3aped
<br /> millions of dollars of benefit. The Council's return on its investment
<br /> has been immense.
<br /> In view of the low Eates that have been applied to the City service,
<br /> we do not believe that the Council should ask for interest on any "equity"
<br />I or any investment that it 'may be agreed that the Council has heretofore
<br /> made in the utilities. It has had far more than its interest, through
<br /> low rates, all these past years, as shown by the following comparisons:
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<br /> The p.s. C. report, page 42, stetes that a
<br /> I!Municipally owned plant, in a large sized communicty in Oregon,
<br /> must have a rate r.oughly averaging lO~ below that of a privately
<br /> owned plant, in order to give the same general result to the ul-
<br /> ! tiraate consumer".
<br /> Eugene electric rates are about 40~ lower than rates in surrounding
<br /> territory, and the water rates to the City itself are about 50% lower
<br /> than the average under private ownership in general. The City of
<br /> opringfield pays nearly 10i per kwhr. for street lighting service,
<br /> while Eugene pays about 2i per kwhr. for a better service.
<br /> In Portland, the City pays $4.00 per month for 600 c. p. residence
<br /> district liGhts, for which ~ugene pays $1.95, that is less than one-half.
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<br /> The manual of the American Water Works association states that
<br /> revenue to cover cost of fire protection should be about 25~ of the
<br /> total revenue of a plant. The ~ater Board revenue from that source
<br /> is about 5~.
<br /> $1.00 to $1.25 per capita is held by the ~isconsin P.S.C. to be the
<br /> right charge for fire protection service, and the average actual rates
<br /> , for 243 municipally owned plants has been found to 'be 62i per capita.
<br /> ~ugene pays about 37i per capita.
<br /> Eugene, in 1936, with all its added paving area, is paying for street
<br /> flushing the same amnunt, less 25%, that was paid in 1917.
<br />I These facts prove that the City government has received immense finan-
<br /> cial benefits, from the utilities.
<br /> If low rates for service are a good reason for omitting interest claims
<br /> in the years before 1917, low rates are certainly a more powerful argument
<br /> I for the omission of interest claims from 1917 to date.
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