18 VALUATION, DEPRECIATION AND THE RATE-BASE
“ The capitalization of income, even at reasonable rates, can-
not be adopted as a sufficient or satisfactory test of present
value. But while not a test, present and probable future earn-
ings at reasonable rates are properly to be considered in de-
termining the present value of the system.”
In this case, ‘“ Kennebec Water District vs. City of Waterville
et al” (97 Maine 185; 54 Atlantic 6), the district was authorized
by law to acquire the entire plant property and franchise, rights
and privileges of the Maine Water Co. and the instructions
referred to were issued by the court upon a joint request.
According to the decisions of the courts, as the matter stands
today, that which is to be ascertained and made the starting
point when rates are to be fixed, is the present value of the
property devoted to the public use.
In this connection the Supreme Court of the United States
says in the Minnesota Rate Cases (230 U.S. 352): “ The basis
of calculation is the fair value of the property used for the con-
venience of the public.” In San Diego Land and Town Co. vs.
National City the Court says, “ What the company is entitled
to demand, in order that it may have just compensation, is a
fair return upon the reasonable value of the property at the time
it is being used for the public.” In the Minnesota Rate Cases
the Court also quotes with its approval from Smyth zs. Ames
(169 U.S. 466).
“Tn order to ascertain that value, the original cost of con-
struction, the amount expended in permanent improvements,
the amount and market value of its bonds and stock, the
present as compared with the original cost of construction,
the probable earning capacity of the property under particular
rates prescribed by statutes, and the sum required to meet
operating expenses, are all matters for consideration and are to
be given such weight as may be just and right in each case.
We do not say that there may not be other matters to be re-
garded in estimating the value of the property. What the com-
pany is entitled to ask is a fair return upon the value of that
which it employs for the public convenience. On the other
hand, what the public is entitled to demand is, that no more be
