important factor in
calculating profit and loss. This brings home to us the fact that in
his efforts to show the greatest possible efficiency of his plant and
distribution system, it is quite possible that the station manager may
spend so much capital as to eat up many times over in interest charge
the saving that he makes in direct operating expenses. It is a common
mistake for the so-called expert to demonstrate to you that he has
designed for you a plant of the highest possible efficiency, and at
the same time for him to lose sight of the fact that he has saddled
you with the highest possible amount of interest on account of
excessive investment. Operating cost and interest cost should never be
separated. One is as much a part of the cost of your current as the
other. This is particularly illustrated in connection with the use of
storage batteries. Those opposed to their use will point out to you
that of the energy going into the storage battery only 70 per cent. is
available for use on your distribution system. That statement in
itself is correct; but in figuring the cost of energy for a class of
business for which the storage battery is particularly adapted, the
maximum load, that portion of your operating cost affected by the 30
per cent. loss of energy in the battery, forms under 41/2 per cent.
of your total cost, and it must be self-evident, in that case at
least, that the 30 per cent. loss in the storage battery is hardly an
appreciable factor in figuring the operating cost of your product. So
far as I have been able to ascertain, it would appear to be economical
to use storage batteries in connection with central station systems
the peak of whose load does not exceed from two to two and one-half
hours.
In order to illustrate the important bearing which interest has on
cost, I have prepared graphical representations of the cost of
current, including interest, under conditions of varying load factors.
For the purpose of this chart I have assumed an average cost of
current, so far as operating and repairs and renewals and general
expense are concerned, extending over a period of a year, although of
course these items are more or less attested by the character of the
load factor. For the purpose of figuring interest, I have selected
seven different classes of business commonly taken by electric light
and power companies in any large city. Take, for instance, an office
building. It has a load factor of about 3.7
|