Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 1025475909

URN:: urn:nbn:de:zbw-retromon-42255

Document type:: Monograph

Author:: Liefmann, Robert http://d-nb.info/gnd/118779931

Title:: Die Geldvermehrung im Weltkriege und die Beseitigung ihrer Folgen

Place of publication:: Stuttgartt

Publisher:: Deutsche Verlags-Anstalt

Year of publication:: 1918

Scope:: 1 Online-Ressource (199 Seiten)

Digitisation:: 2018

Collection:: Economics Books

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

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Zweites Kapitel. Die Tatsachen der Geldvermehrung und des Valutarückganges

Collection:: Economics Books

30 VALUATION, DEPRECIATION AND THE RATE-BASE Public Utility. — A public utility is an enterprise which ren- ders a service or which supplies a commodity of general neces- sity or convenience to the public. There may be public owner- ship of the utility, or the privilege of serving the public may be delegated to a private person. When the private person is a corporation, we have the public service corporation. Rate-base. — The ‘‘rate-base” is the starting point, the basis of the calculation when earnings are to be determined to which the owner of a public utility is entitled. The owner is entitled to a fair return on the legitimate investment which he has made for the benefit of the public. He may also be en- titled to more than what would be considered a reasonable return on ordinary investments but this fact is to be deter- mined by the circumstances in each particular case. To know the legitimate investment, whether ascertained from book rec- ords or by estimating the cost of reproduction or otherwise, is fundamental. The rate-base which is the most satisfactory is the actual reasonable and proper investment or original cost new, includ- ing a proper allowance for the cost of establishing and develop- ing the business, undiminished by depreciation, though in some cases, perhaps, diminished by the bonus which may have been contributed by the public or by the rate-payer. The endeavor is made in these pages to show that the value of the service rendered and the earnings are independent of accrued depreciation and that for this reason the present or depreciated value of the physical elements is not the best cri- terion for a determination of the legitimate amount of the earnings. But the sacrifice which the owner has made, the amount of money which is in the business legitimately as of the date of construction, the original.cost, in other words, less the capital which has been contributed to the work as a bonus and not as amortization, is the essential element for con- sideration and should be made the starting point when rates are to be regulated. It is to be understood, as a matter of course, that special consideration may have to be given to the

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