Die deutsche Kaliindustrie

Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 1821348664

URN:: urn:nbn:de:zbw-retromon-217403

Document type:: Monograph

Title:: Die deutsche Kaliindustrie

Place of publication:: Berlin

Publisher:: E. S. Mittler & Sohn

Year of publication:: 1929

Scope:: XII, 175 Seiten; Tab

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Entwicklung der Produktionsbedingungen

Collection:: Economics Books

ESSENTIALS OF VALUE 73 While this circumstance may justify the inclusion of appre- ciation in the appraisal of the rate-base in some cases, there will be others where the appreciation is out of all proportion to the original investment. Furthermore, a strict analysis will show that such inclusion would deprive the rate-payer of any share in the unearned increment to which he, too, is a contributor. It is, moreover, as already stated, difficult and oftentimes Impos- sible to ascertain the rate of appreciation which might fairly be taken into account and finally, if appreciation is included in the appraisal of land, it should also be included in the appraisal of all other kinds of property. Such inclusion would greatly and unnecessarily complicate every calculation relating to rates and would introduce an element of much uncertainty. It will be much simpler and yet fair to all concerned to exclude appre- ciation from the rate-base but, as already suggested, to allow the owner of every utility to participate in the general prosperity by allowing the rate of return on the rate-base to be higher than it would otherwise be estimated. If this practice coupled with the Unlimited Life Method of procedure could be made general there would be no revision of a rate-base, once established, except as made necessary by ad- ditions to the utility properties or changes therein, nor would there be any need of determining present value, and yet the unearned increment would not be ignored. It would appear in the earnings and not in the rate-base, and the equitable appor- tionment of the unearned increment to the utility owner and to the rate-payer would be facilitated. If the unearned increment (appreciation) is estimated from time to time and is treated as income and the total net return on the rate-base does not exceed ordinary interest rates on safe investments, the estimated appreciation should be added to the rate-base in fairness to the owner of the utility. If appreciation is estimated from time to time and added to the rate-base but is not treated as income, the rate-payer will be denied any share thereof. If appreciation is ignored, and a rate-base, once determined, — Tr

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