Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VIII. The fixing of rates

Collection:: Economics Books

THE FIXING OF RATES i43 inordinate profits, sometimes real and sometimes fictitious. Where there were no public service commissions — and these are a relatively new institution, — the accounts were kept in a fashion to suit the manipulator. Apparent profits were used as the basis for a distribution of dividends and for the issuance of stocks and bonds, and the rate-payer was charged to the limit. The Right to Regulate Rates. — The right to regulate rates is now quite generally recognized. Without such right every cor- poration which has a monopoly would have the public at its mercy and could charge for its service all that the traffic will bear. The right to regulate, if properly exercised, should in the long run prove of advantage to the owner of the utility. Fair regu- lation will insure to the owner what he is entitled to and will protect him against unfair competition such as has frequently been the result of opportunity to capture with a relatively small outlay the cream of the business. Under proper regulation the owner of every public utility whose existence is justified by all attendant circumstances, should get the protection of his legitimate reasonable investment, also a fair interest return on this investment and should recover all the necessary operating expenses including replacement requirements. He should receive such treatment that at some time, by amor- tization of the capital which he has invested, or by a sale to some purchaser, he can withdraw from the business without loss, provided of course, that he has exercised due foresight and has not met with unavoidable losses such as may be caused by floods or earthquakes. Regulation Essential. — The necessity for regulation has now become apparent. The practice of granting perpetual franchises with unwise privileges has fallen into disfavor. This first be- came manifest in laws permitting the periodical regulation of public service rates by local, municipal and county authorities. Thus, for example, in California the Constitution of the State (in effect Jan. 1, 1880 but now modified) provided: ~— an

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