CHAPTER XV 
ELEMENTS DESERVING SPECIAL CONSIDERATION 
WHEN RATES ARE TO BE FIXED 
(Note: This chapter is substantially as it appeared originally in the author’s 
“Public Utility Rate Fixing,” now out of print.) 
A — Obsolescence 
Obsolescence Cannot Be Predicted. — An appliance, ma- 
chinery or a process of manufacture in use by a public utility may 
under efficient management at any time be replaced and super- 
seded by a better device or process. When this is the case more 
or less property is usually discarded, which, under the conditions 
as they prevailed when this property first came into use, should 
have served for many years longer. Obsolescence has forced its 
abandonment. 
The knowledge that obsolescence may shorten the term of 
usefulness of a machine or of portions of any plant used in the 
public service has prompted valuation experts and the rate-regu- 
lating authorities to attempt estimates of the allowances which 
should be made in the earnings to cover the prospective aban- 
donment of property due to this cause. 
The last word has not been said in the discovery of new forces 
in nature and their adaptation to human requirements. It is 
the belief of many engineers, for example, that the internal com- 
bustion engine will put the old types of marine engines of ocean 
freighters on the scrap heap, and yet the older type under gradual 
development to its present high state of efficiency has maintained 
itself for more than a hundred years. 
The use of oil in place of coal, not alone as a producer of gas 
but also as fuel in the production of steam, has caused appliances 
and machinery to be abandoned which would otherwise have 
continued in service. No one today can be sure which of two 
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