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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VIII. The fixing of rates

Collection:: Economics Books

THE FIXING OF RATES og not as simple nor as easy as appears at first view. The main difficulty lies in the fact that tax rates are already high and that the layman sees the force of the argument that the payment for the individual service rendered should be measured by the cost of the service. It is convenient to ignore the unearned increment that goes to the parties who are not served by the utility and it has become Customary to ignore the same, conse- quently, the practice of letting the rate-payer carry the full burden may be expected to continue with only rare exceptions. Cost of Rendering the Service as a Modifier of Rates. — In the case of the service rendered by certain utilities special effort is made to determine the cost of serving various classes of cus- tomers in order that the charge for the service may bear some direct relation to the cost of rendering the service in each class. This may be unwise. The prime consideration is what should the rate-payer in each class be asked to pay when his ability to pay is weighed against that of the rate-payers in other classes. Perhaps the establishment of class service is not always the best procedure, but it is legitimate and at present apparently the only practicable way of conducting certain business enterprises. There is no intent to find fault with the system except only to say that, if cost to serve the individual rate-payer were made the criterion of the charge for the service, there would be practi- cally as many rates as there are rate-payers. In the application of the principle, therefore, whether always sound or not, it has become customary to classify the service and within the estab- lished classes to make the charge uniform. Consideration is to be given, then, when rates are to be fixed, not alone to the total amount of the earnings, but also to their distribution to various classes of consumers. This is a subject which will not be taken up in this volume, in which the problem under discussion is concerned with aggregate earnings and not with the distribution thereof to the individual rate-payer. Deficient Earnings in Early Years. — N early every public utility begins operating at a loss. There may be a number of years during which the earnings will not be sufficient to cover IQ”

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