Charges for Public Water Service to Private Fire Protection Systems
When the rates of a water utility which furnishes service to private fire protection systems in its territory are under review or are in process of readjustment, the question as to how much of the utility’s revenue should be derived from that class of service becomes a subject for serious consideration. In a slightly different form it became one of the leading topics of discussion at the thirty-second annual convention of this association held at Louisville in June. 1912, by having been involved, to some extent, in questions 6 and 7 in the query box. It has apparently been a more or less vexatious subject in water works circles for many years. It has been involved in cases in the courts and has had to be passed upon judicially. The same question is involved in the rate case of the Milwaukee water works, now pending before the railroad commission of Wisconsin. There has already been so much discussion of it in the past that it is difficult if not impossible to present any entirely new considerations in reference to the subject, hence the writer’s present object is merely to summarize as fully as possible the several arguments for and against the establishment of schedule charges for service of this kind. This will be done with particular reference to such special conditions as exist in Milwaukee. The Milwaukee water works now has about 150 connections of its mains with private fire protection systems. Many of these are for automatic sprinkler service, others serve standpipes having inside hose attachments, and probably some are for service to private yard hydrants. Some of those first installed are of 6-inch diameter, but all of the more recently made connections are of the 4-inch size. The water department no longer permits branch connections larger than 4 inches in diameter to be made, but it allows two of that size to supply a 6-inch private line. All have been made at the expense of the property owners served, so that the department has no property the investment in which is chargeable wholly to this class of service. The city has heretofore been furnished fire service through these connections free of charge, yet one of the department’s rules (not enforced) provides that “all unmetered branches used for fire purposes must be controlled by a meter approved by the board of public works.” The rules contemplate the installation of the meter by, or at the expense of. the property owner in each instance. After having made and submitted a tentative valuation of the physical property of the Milwaukee water works, the engineering department of the railroad commission was instructed to apportion the value between public and private service. The former class included the general fire protection and municipal sewer flushing. The latter includes all other municipal as well as domestic and industrial service. The commission further called for a subdivision of the value apportioned to public service, the subdivision being between municipal hydrant service and private fire protection. The commission, therefore, sought to know the amount of the investment in the property of the utility to be supported by revenue which may hereafter be received for the furnishing of private fire protection. This involved the preparation of a report covering the following underlying and related questions:
1. What is the effect of private fire service connections upon the necessary facilities of the utility?
2. Is private fire service fairly chargeable with the support of any part of the plant investment?
3. If question 2 be answered affirmatively, upon what basis is the amount of the investment so to be supported to be measured?
The report covered also the method of making the primary apportionment of the value of the property between public and private service. Briefly stated, that method was to apportion the value of each feature of the property on the basis of the estimated relative costs of corresponding features of hypothetical separate plants. In this connection it was shown that the reasonable maximum demand which a public service plant should at present be capable of meeting was a rate of at least 10,000 gallons per minute, or about 15,000,000 gallons per 24 hours in the districts of greatest hazard, while that for private service should, for the present, be about 70,000 gallons per minute, or 100,000,000 gallons per day, distributed over the entire city. The result of the application of the method was the following final summary of the apportionment of the value of the property:
•Read at convention of Am. W. W. Association held at Minneapolis. June 23-28, 1913.
Returning again to question 1 above, let us consider what is the effect of private fire service connections upon the necessary facilities of the utility. It has been urged that such connections endanger the general fire service of the community through the possibility or even probability of wrecking and breaking of private pipe lines during fires, in which case the utility finds it impossible to keep up the necessary pressure at surrounding hydrants. Cases of the kind are reported to have occurred in other cities, though none as yet in Milwaukee. In some of these disaster resulted from inability to control the supply of water flowing freely through the broken piping, owing to lack of proper gate valves or to the fact that they had been provided but set in places which became inaccessible during the fires. It is reported that the practice in some cities is to place the controlling valve just outside the building, and that sad experiences have shown the lack of wisdom in such practice. In Milwaukee the valves are adjacent to the water main in the street, where they are in but little danger of becoming inaccessible during fires. Another very important reason why the general fire protection service in Milwaukee is not endangered by the possibility of broken piping of private fire lines lies in the fact that the water works does not attempt, at any fire, to maintain anv considerable pressure at neighboring hydrants and furnish hose streams directly therefrom. All fire streams from the city mains are supplied by steam fire engines, of which the city has 26 in regular service and three in reserve, and which have a combined rated pumping capacity of over 21,000 gallons per minute. The city pumping stations do not even receive notice of a fire alarm, and of course do not make any increase in pressure above that regularly furnished. When a number of engines are drawing heavily from the group of hydrants surrounding a fire, or from cisterns in the same vicinity supplied by the water mains, the water pressure at a broken private fire service connection will, especially if the mains in the locality be comparatively small, he thereby so much reduced below normal as to materially reduce the flow and waste through such break. So long as water does escape in that way it must, in general, pass the points of draft of the engines and represent an excess of supply above the requirements of the engines. These and other conditions make it appear that there is but very little, if any. danger that the general service in Milwaukee may be seriously crippled by breaking of private fire lines. A competent water works employe responds to all second and third fire alarms to co-operate with the fire department in the manipulation or use of valves, hydrants or other water works equipment. It is his duty to close the valves or connections to private systems upon instructions from officers of the fire department. It seems that we arc compelled to regard connections between the city mains and private fire systems in Milwaukee as a means of making quicker and more efficient use of the water service which would otherwise be supplied only through hydrants and steam fire engines rather than to regard them as a possible menace to the general service. The writer finds no basis for considering that such connections create any greater demand upon the utility in this case than would exist without them. The facilities of the utility which are necessary to meet the requirements of the general fire service are, therefore, apparently unaffected by private fire service. If this be true it would seem that the apportionment to this class of service of a part of the investment in the property of the utility can be made only on an arbitrary basis.
Cost of Furnishing the Service
A careful reading of the several decisions of the railroad commission of Wisconsin in public utility rate cases leads strongly to the idea that the schedules of charges prescribed therein are based almost entirely upon the ascertained cost of furnishing the service, rather than upon its value to parties served. The commission ha; repeatedly stated that every utility is entitled to earn its legitimate operating expenses, including depreciation and taxes, and also a fair and reasonable rate of return upon the value of its property. Insofar as either the legitimate operating expenses or fixed charges of anv utility are definite amounts at any period of its history or development. it would appear that when a third general class of service enters into consideration and is made to hear a share of the general expenses by apportioning them upon either a logical or arbitrary basis, it would seem that the other two classes are to be relieved of the amounts so charged to the third class and benefited by a reduction of rates somewhat below what they would otherwise be. Insofar as the gross amount to be earned by a utility is definite, it is not easy to see that the utility itself is necessarily to be much concerned whether the earnings are to come from two classes or three. The consumers in the three classes appear to have far more concern in the matter. If it be granted that the recipients of water service for private fire protection are not to he required to contribute to the fixed charges of the plant owing to an absence of any hut an arbitrary basis of division thereof, we arrive at the subject of the operating expenses. It is often argued that private fire protection systems are installed for the sole purpose of reducing cost of insurance and therefore of economizing in annual expenses of the property owner. This saving is effected, however, by the making of a considerable investment, which means increased charges for interest and depreciation, thereby offsetting some of the apparent saving. The granting, by fire insurance companies. of material reductions in premiums is an unquestionable testimonial of the greater efficiency of private over public fire protection. Greater efficiency in this rase does not mean that the same work or the same quantity of water accomplishes greater results, for there is only one result to be accomplished, namely, to quench the fire. It means that less water is required to accomplish the drsired result. The supplying of less water means the burning of less fuel for driving the water works pumps and consequently the furnishing of private fire protection effects a direct, though perhaps small, saving to the utility from the cost of furnishing only public fire protection service. So far as pumping expense alone for actual fire fighting is concerned, it does not appear reasonable to assess any part thereof to a class of service which is a distinct advantage to the utility in reducing its expenses. But experience has shown that, unless metered, the service is likely to he misused and abused in many cases. Although the rules of the insurance companies forbid the use of private fire systems for general water service, and in fact stipulate that they are to he used for no purpose other than fire fighting, the rules are not effective unless rigidly enforced and are supplemented by close inspections and tests. Numerous instances in which large quantities of water have been surreptitiously used daily through secret connections to the fire systems are reported to have been discovered by water works officials in various cities. Such secret connections have in some cases apparently been made by overzealous employes on their own responsibility, and in others under the orders of unscrupulous employers, but in either case the water thus obtained from the public supply mains represents a loss to the utility of revenue which should have been, but was not, obtained. In the light of experience, unmetered public water service to private fire protection systems must be regarded as distinctly involving a special expense to the utility. The expense may be cither in the cost of pumping water which is afterward stolen from the system by dishonest citizens, or it may he in the coat of maintaining an adequate system of inspections and tests to detect and stop such abuses. Metered service of the same class is apparently free from both elements of cost. The meter becomes the inspector, working continuously without pay, and presumably determines, within narrow limits of accuracy, the amount of water used. The revenue due the utility therefor can readily he computed and collected, at no greater expense in general than In billing and collecting from any other consumer. As previously stated herein, all private fire service connections in Milwaukee arc required to be equipped with meters at the expense of the property owners served. There is in Milwaukee an organization of insurance companies known as the Milwaukee Board of Fire Underwriters, and which claims to effectively prevent the misuse of private fire pipe systems. The officials of the water department have expressed a belief that the department has not suffered any material loss of revenue through i the stealing of water. This situation may be due to unusually efficient inspections by the Milwaukee Board of Fire Underwriters, or to the general use of meters, or it may be due to a combination of both preventive measures. Under the existing circumstances there does not appear to he any considerable necessity for the water utility to maintain inspections of private systems beyond that of meter reading. There is, therefore, apparently hut little, if any. necessary expense to the water department on this account which is chargeable to the furnishing of private fire protection. So far as actual cost of furnishing the service is concerned, it does not appear that any charges can properly he made by the utility in such cases.
Value of Service
That the service furnished by a public water works through connections to private fire lines is distinctly of value to the party served has never, so far as the writer knows, been denied. It is upon the basis of the value of the service that the strongest claim for revenue is made by the management of water plants. This basis of charges has received the consideration of and has been used to a limited extent by the railroad commission of Wisconsin, hut it has apparently been given greater weight in railroad rate cases than in those involving public utilities. The extent of the use by the commission of this basts of charges appears to have been a mere modification, for the sake of expediency, of the charges determined on the basis of actual cost. It is apparently upon this basis alone that courts have already held, and may in future cases continue to hold, that the recipients of private fire protection service should furnish a part of the utility’s revenue by the payment of schedule rates. The service may be of value to the party served in that in may form one of two required sources of water supply to the premises in question. A condition precedent to the granting by insurance companies of the maximum reduction in insurance rates for the added security of automatic sprinkler service is that the facilities shall include two separate sources of water supply, one of which may be the city mains. The other may be a suitable tank properly elevated to furnish adequate pressure and tilled from the city mains; or it may be a private pumping plant drawing its water from a stream, lake, reservoir or an adequate well. The city water service, however, apparently is not recognized as one acceptable source of supply for automatic sprinkler systems unless the minimum pressure regularly maintained in the mains of that vicinity is suitable for effective operation of the highest line of sprinklers in the building. It will, therefore, be evident that the value of city water service for private tire protection, from the standpoint of a property owner, will depend upon the height of his building and the ordinary pressure in the city system in his vicinity. There are many instances where the ordinary city water pressure in Milwaukee is inadequate for automatic sprinkler service in the upper stories of the buildings. In these cases the branch connections from the public mains are for the purpose of supplying water to private pumping plants which are arranged either to deliver the water into elevated tanks or to furnish direct pressure should the tanks he out of commission. In these cases the yearly value of the private fire service furnished by the water utility would seem to be measured, or measurable, by the interest and depreciation on the investment required to obtain an alternate supply of water for the private pumping plant. In the cases of industries along the rivers a small investment would provide an inexhaustible supply for the private fire pumps, and the value of the city supply would be rendered quite small. There are evidently many cases, also, in Milwaukee wherein the value to the property owner of the private fire service of the city water works is much greater than in those contemplated above. The diversity of conditions found in different cases in the city of Milwaukee introduces great difficulties in the way of establishing schedule charges for private fire protection service on the basis of its value to the property owner. While this class of service has a greater or lesser value to the property owner, it is equally clear that it has some value to the water utility and to the public in general. The interest in private fire protection, which is more efficient fire protection, is mutual. The interest of the water utility is, perhaps primarily, in the reduction of the number of bad fires of long duration to be fought, but it is also interested in the continued prosperity of its patrons, which means the prevention of destruction, by fire, of industries and the consequent throwing out of employment of large numbers of workmen, many of whom are patrons of the utility. The city at large is interested in the preservation and prosperity of its industries, the continued employment of its people and in the protection of property and human life. The public is interested greatly in insurance rates or cost of carrying fire insurance. Since insurance rates are so largely dependent upon the fire losses, and these are in turn dependent on the efficiency of fire-fighting equipment, the public as well as the individual property owner is financially interested in the installation of better fire protection facilities in the establishment of large value. The courts have said in certain cases that the interest of the water utility and the public in the installation of private fire-fighting systems is secondary and incidental and that of the property owner is primary and of such moment as to justify a charge for water service thereto. But it appears to the writer that such opinion results from an overestimate of the value, to the individual, of the water service and an underestimate of the value to the utility and to the public. The value of private fire protection systems, especially automatic sprinkler systems, in the protection of human life can scarcely be expressed in dollars and cents. That such value is great is well indicated in the following quotation from the October, 1912, “Bulletin of the General Fire Extinguisher Company”:
“Information gathered by the United States Geological Survey records 1,449 deaths by fire and 5,654 persons injured in the year 190f. and states that these figures are incomplete and perhaps do not represent more than one-half of the persons who were victims of fire. Contrast with this record the data furnished by the Manufacturers’ Mutual Fire Insurance Company, showing that in properties equipped according to their standard the loss of life by fire was less than one per year per million employes, due to their risks being protected by sprinklers. Automatic sprinklers have been included in the proposed New York building code as the result of agitation by architects, engineers and fire insurance authorities. Illustrative of the attitude of the Fire Insurance Exchange are E. P. Boone’s remarks on the Asch building fire: There is no question in my mind that the automatic sprinkler solves the problem of fire prevention. It is one of the greatest life savers. If there had been a proper sprinkler system with an adequate supply of water I am certain there would have been no loss of life in the Asch building fire. Of course, in dealing with the class of help employed there, any show of fire is almost certain to cause a panic. People lose their heads. But in such cases the automatic sprinkler has a psychological effect on the panic-stricken. Not only the sight of the sprinkler heads letting go and deluging the fire, but the cold water itself falling on people has the effect of bringing them to their senses, of quieting their nerves. The insurance record of a fire February 17 in the Bush Terminal building. Brooklyn, which was equipped with automatic sprinklers, described 800 girls working in the building in the stories above the fire as making no attempt to create a panic or leave the building, though the nature of the fire was such as to cause a great deal of smoke, so confident were they in the character, arrangement and sprinkler equipment of the building.”
The writer hesitated about making reference to what will be termed the advertising matter of a manufacturer of private fire apparatus, well knowing that advertising matter is often subjected to large discounts. It, therefore, appears advisable to mention, also, the fact, as reported, that the plan of requiring, by municipal ordinances, the protection of certain classes of property by automatic sprinkler systems has been agitated in the conventions of the International Association of Fire Engineers, which is composed largely of the chiefs of our leading fire departments. The writer has talked personally with the chiefs or assistant chiefs of the departments in Milwaukee, Chicago, Minneapolis, St. Paul and other cities, and knows that there is a strong sentiment among fire department officials in favor of such ordinances. The city of Chicago already requires its theaters to be protected from fire by automatic sprinklers, and is now (January, 1913) reported to be considering an ordinance extending the requirement to other classes of property. This is in the interest of public safety. The writer firmly believes that the time is soon coming when all of our leading cities will have such requirements in force. The enactment of ordinances imposing upon property owners a duty of providing expensive private fire apparatus carries with it a moral obligation on the part of the city to furnish water to that apparatus instead of withholding it for use only through city hydrants and fire department service. The water should be furnished inside the premises at no greater cost to the property owner thereof than if supplied from hydrants. The service from hydrants is presumably paid for by the property owner as a part of his general property taxes. He should be entitled. without extra charge, to make more efficient use of that same service. F. A. Raymond, an engineer of the committee on fire prevention of the National Board of Fire Underwriters, in a paper read at the Denver convention of the International Association of Fire Engineers, in September, 1912. showed that apparently a large majority of municipal water plants of this country. and a considerable proportion of the privately owned works, already furnished service to private fire line systems either entirely -without special charge or at a very small charge. The cost to the utility of furnishing such service is apparently, in many cases, held to be covered in the revenue commonly called hydrant rental. There is one condition now existing, as the writer believes, only in Wisconsin, which is of ‘such interest and importance in this connection as to deserve attention at this time. This arises from the passage, and the provisions, of the Wisconsin public utilities law, under which the railroad commission is empowered to equitably divide the total expenses of a water plant between public and private service. It was found that several Wisconsin water utilities, and it is believed that many such utilities in other States, have not received a fair share of their revenues from the public in return for the hydrant service furnished When the so-called hydrant rental? are made to cover a better share of the fixed charges and operating expenses of a water works, and all of such expenses are provided for in the rates and earnings, the utility has less necessity of endeavoring to increase its earnings by charging separately for private fire protection. In the case of the city of Beloit v. Beloit Water. Gas & Electric Company, 7 W. R. C. R., 187, the commission held that the city should pay an increased charge for fire protection and that the payment should cover all fire protection. including that formerly furnished by the company, at a special charge, to private hydrants in the yards of certain industrial plants, in view of all the consideration? in the matter, most of which have been considered above, but perhaps with less fulness in some cases than might have been proper, the writer has reached the conclusion that the Milwaukee water works should continue to furnish service to private fire systems free of special charge. There are two other important questions relating to the foregoing and concerning which some comment may here be in order. The first of these is that of sire of pipe used for thp branch connection from the street mains. The conclusion reached on the question of charges for service to private fire systems was irrespective of the sire of the connection. Had it been, or should it lie. found that a charge should be made for service thnuigh any given sire of connection it would be ea?y to establish the justice of varying the charge with the size of pipe. Due to the existence of some 6-inch connections made prior to the Milwaukee water works department’s adoption some years ago of the rule limiting the size of openings made thereafter from the mains to a maximum diameter of -1 inches, this rate case might have involved, and may possibly vet involve. the determination of the difference in charges for service through branches of those sizes. But so long as the department’s rule stands unquestioned and so long as the foregoing conclusion a? to charges for private fire service is accepted, the other question concerning variation in charges is eliminated from the case. The other of the two related matters is the danger of pollution of the water in the city mains by the leakage, through detective check alves. of water from private fire systems which are ordinarily and normally kept filled under higher pressure, with vvateT from an independent and badly polluted source. There are a number of cases in Milwaukee where such danger exists, and the water superintendent report? having found evidence that much foul water has entered the city mains in that way. Some of primary supplies of the private fire systems arc taken from the Milwaukee. Kinnickinnic and Menomonee rivers, all of which receive a great deal of sewage. The connections for city water service to such private systems are tor the purpose of providing the secondary or alternate water supply required by the underwriters. The department in this case is considering. if not already determined upon, the requirement of two check valves in series, probably with auxiliary features on the connections to private fire lines and probably periodical inspections to determine the tightness of the cheek valves. The danger can very readily he cared for and probably wholly eliminated. It is certainly a matter of very great importance and demands effective supervision.