nually thereafter until 1894, then 8 per cent. until 1898, 10 per cent. until 1904, and since that year 12 per cent. The lastnamed rate yields a return of 8.9 per cent. on the par of the capital stock and premium and 7 per cent. on $170, which was the amount paid by the shareholders for the stock last issued, being the market value of the same as determined by the Board under the statute.

In March, 1886, the net price for gas was $2.70 per thousand cubic feet, since which time by frequent reductions the present rate has been reached. At the date of the filing of this complaint and for nearly four years previously the price of gas was $1.50 per thousand feet, with a discount of 20 cents for prompt payment. On July 1, 1908, the net price was reduced to $1.20, and on July 1, 1909, the company made a further reduction to $1.15 net. The company began to supply electric light in 1888, and its prices have been modified and readjusted with the progress of the art, as changes have been made by companies generally. At the date of the filing of this petition and for nearly two years prior thereto the maximum price for electricity was 15 cents a kilowatt hour, with a discount of 10 per cent. for prompt payment, making the net rate 13.5 cents. On July 1, 1908, the maximum price was reduced to 13 cents, with a discount of 1 cent for prompt payment, making the net rate 12 cents a kilowatt hour. The company offered a lower rate for all electricity supplied for light in excess of 750 kilowatt hours per month, and a differential scale of rates for power, beginning with a maximum of 10 cents.

This price for gas is lower than in any other company of equal size in the State making the same kind of gas, and the price for electric light to consumers generally as low or lower than any other, with the exception of certain companies in larger cities, where the volume of business is much greater. While these facts are worthy of commendation and entitled to weight, they do not conclude the question as to the fair price. The company's present ability and immediate prospects must also be considered.

In reaching the above-named rate for gas, the company had apparently been influenced more largely by a public demand for

reduction, based upon prices in neighboring cities supporting a much larger business, than by a consideration of the return to be obtained. At the price stated, the difference between the gas income and the cost of operating is less than half the company's dividend requirements.

The income from the electric business is about 50 per cent. greater than the gas income, and the apparent profits about three times as large. Actual profits can only appear when a fair allowance for depreciation has been made, which is probably much greater on the electric than on the gas side of the business. These profits appear to have been in part due to exceptional conditions likely to be materially changed in the near future. The relation of the station capacity to the maximum load indicated the need of an immediate addition to the electric portion of the company's plant. Such changes, in the interest of the company and the public, should be made with sufficient liberality to meet the increased demands for a reasonable term of years. To do this will require a substantial expenditure, will probably displace much of the present equipment, and, decreasing as it will for a time the plant efficiency, is likely to temporarily increase the ratio of operating and investment cost to income.

In the face of these facts, it seemed reasonable not to require any further reductions in the prices of gas and of commercial electric lighting, beyond those already made, until the effect of this expenditure upon the company's business and profits shall receive some actual demonstration.

Reference has already been made to the excess of the plant values above liabilities. Of the gross expenditures of the company, under its present management, for new construction, more than one-third, or upwards of $180,000, was obtained from earnings, and a large part of this in the more recent years. These figures indicate that, notwithstanding the numerous and fairly frequent reductions in price made by the company, the profits, in excess of dividends, which have been used to extend and improve its plant, have been larger than can readily be justified, in view of the duty which the company owes to the public. In the early days of public-service corporations such a

policy was very general, and was justified by the belief that, as the capital charge was kept low and the amount per unit required for dividends decreased, low prices might be more certainly and quickly attained. If, however, the claim now made by some companies is to be conceded, and the same return is to be allowed upon the value of all property employed for the public convenience, from whatever source derived, no benefit accrues to the public from such accumulation. If the claim can be successfully made, it amounts in effect, if not in form, to a stock dividend. But such a claim is not necessary to insure a continuance of the commercial prosperity of companies of this class.

The public has a substantial interest in what remains of the net earnings above a fair dividend. No corporate interest, properly viewed, requires that such surplus be distributed to the stockholders, or so invested as to impose new burdens upon consumers. A public-service corporation exercising a virtual monopoly is bound to give its customers the best possible service at the lowest reasonable price; nor is the discharge of this duty to be measured merely by a comparison with the service and price prevailing elsewhere. After a payment of reasonable operating expenses, proper allowance for depreciation and emergencies and a fair return upon the investment, surplus earnings should be used to facilitate further reductions in price. The Board is convinced that this company no longer needs to continue, as heretofore, to provide capital for extensions out of income. As soon as the combined effect of the recent reductions and the necessary prospective expenditure and changes shall be realized, if profits shall then exceed dividends, as in some former years, it will be the plain duty of the management to make a further revision of existing rates.

The question of the price for street lighting was not considered at the hearing, but from Dec. 1, 1909, the price of are lights for this purpose was reduced from $90 to $85 per lamp per year.

In view of the facts and considerations stated, the Board voted to dismiss the petition. (January 25.)

LEOMINSTER COMPLAINT.

This was a complaint in writing by the selectmen of Leominster, under section 34 of chapter 122 of the Revised Laws, relative to the quality and price of street lighting supplied by the Leominster Electric Light and Power Company. Two hearings were held upon the complaint, and, pending a further hearing, the town entered into a contract with the company for the supply of its street lights, and requested that the complaint be discontinued. It was accordingly dismissed on Feb. 21, 1910.

CHARLESTOWN PETITION.

This was a complaint, under section 34 of chapter 122 of the Revised Laws, by more than twenty customers of the Charlestown Gas and Electric Company, relative to the price and quality of gas supplied by said company.

Both parties were represented at the public hearing which was held at the office of the Board.

This company supplies gas and electricity in the Charlestown district of the city of Boston, and gas only in that portion of the city of Somerville lying northerly and easterly of the location of the Boston & Lowell Railroad. That portion of Somerville on the other side of the railroad location is supplied by the Cambridge Gas Light Company. The entire course of this railroad through Somerville lies in thickly settled areas.

The complaints about quality, as presented to the Board, originated in the mercantile section of the Charlestown district, and upon investigation appeared to be due to defects in the service or to conditions affecting the delivery of the gas, rather than to the quality of the gas itself, which appears to have been fully up to the standard fixed by law. After the hearing the company made ample expenditure to remove these defects, and an examination by the Board during the winter season, when the troubles complained of were most likely to be repeated, showed that the causes of the complaints had been removed. No order, therefore, appeared necessary respecting this part of the

case.

On Jan. 1, 1906, the company, pursuant to a recommendation

of this Board, reduced its price from $1 to 90 cents net, the present price. At the same time the adjacent Cambridge and Boston companies reduced their price, the former from $1 to 90 cents, and the latter from 95 cents to 90 cents. In view of the existing condition and circumstances of the Charlestown company, the Board was of the opinion that the price of 90 cents was as low as it could reasonably be required to supply at that time. During the year prior to that decision the company purchased more than two-thirds of its gas from the Boston or allied companies, and was at the time engaged in the reconstruction of its manufacturing plant. The new works were completed and put in operation in December, 1905, and the company has since bought a much smaller percentage. After the decision referred to the company's sales increased from 182,000,000 feet in the fiscal year ending in 1905 to 230,000,000 feet in 1909. The receipts from such sales advanced from $184,313 in 1905 to $208,789 in 1909, and the gas income from all sources from $201,869 in 1905 to $250,137 in 1909. Increases in operating costs have combined with the reduction in price to reduce the gas profits from $68,778 in 1905 to $57,026 in 1909. During the same period the book value of the gas plant increased from $558,709 to $817,489, and its capital stock from $500,000 to $600,000, by the issue to its stockholders of 2,000 shares at $95 each, the par value being $50. On June 30, 1909, the total assets were given as $956,932,-$817,489 for the gas plant, $67,186 for the electric plant and the balance of $72,257 for quick assets.

For several years the company has purchased all of the electricity sold by it from the Edison Electric Illuminating Company of Boston. Following a reduction by the Edison company in the charges for street and commercial lighting in the remaining portion of the city of Boston, the Charlestown company, on Jan. 1, 1909, reduced its commercial prices, and in May following its street lighting price, to meet those charged by the Edison. During the ten months following June 30, 1909, although under the changed prices there was some increase in the income from commercial lighting and power, yet, owing to the large reduction for street lights and the in