Discussion on “the multiplex cost and rate system” (Goldman), Portland, Ore., January 5, 1915. (see proceedings for May, 1915)

Publisher: IEEE - Institute of Electrical and Electronics Engineers, Inc.
Publication Date: 1 November 1915
Volume: 34
Page(s): 2,662 - 2,665
ISSN (Paper): 0097-2444
DOI: 10.1109/PAIEE.1915.6590499



Julian Loebenstein (by letter): Mr. Goldman discusses what he calls growth factor. Just what does he mean by that term? It seems that since he increases the fixed charges in order to take care of future growth, he expects to make extensions from earnings. This has been done in the past, but will the public service commissions permit it in the future? In other words, according to modern practise, extensions should be made from capital, not from earnings. Of course, if the company is in a position to pay a fair dividend but prefers to invest the dividend moneys in extensions, capitalizing those expenditures, no commission would find fault; but it is far from likely that two charges will be allowed as part of the rate, one to take care of future extensions and another allowed, in itself large enough to yield a fair dividend.