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Economic Principles of Sound Main Extension Policies
Author(s) -
Stuart Charles L.
Publication year - 1960
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1960.tb00545.x
Subject(s) - investment (military) , revenue , service (business) , capital (architecture) , mains electricity , economics , business , finance , engineering , economy , electrical engineering , archaeology , voltage , history , politics , political science , law
This article begins by providing a brief overview of the economic characteristics of the privately owned water utility, including its organization, the conditions of cost under which it operates, the nature of the demand for its services, its capital investment, the sources from which its capital funds are derived, and, to some degree, the sources and distribution of its utility income. These economic characteristics of privately owned water utilities will aid in the understanding of economic principles for a sound main extension policy that includes the following: consider historical aspects; be objective; not tend to raise the rates of existing customers; protect the utility against speculation; preserve the financial ability of the utility; consider the liability for replacement inherent in all new businesses; provide a means to enable the regulated utility to compete with unregulated utilities; recognize the utility investment in water supply, system storage, transmission mains, and meters; permit the purchase of main extension contracts at current market rates; leave the choice of materials, sizing, continuing extensions, and other engineering specifications to the utility; base refunds on something other than revenue; recognize the advantage of fire protection made available through utility services; and, recognize the increase in land value that accrues when a recognized water utility pledges its water rights, service, and organization to a development.