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

I 58 VALUATION, DEPRECIATION AND THE RATE-BASE sacrifices made by the owners to establish the business, finan- cial aid by the public, the quality of the service, the cost of like service rendered elsewhere and other similar matters. The aim will be to establish, first, a rate-base on which the owner is to get a fair interest return and, second, to ascertain what the net earnings should be in addition to this return to create such a value as will be fair to both the owner and to the public. Comments on Base Physical Cost by the Wisconsin Railroad Commission. — Referring to the use of the original cost of the properties of the LaCrosse Gas and Electric Co. as the basis of the calculation the Wisconsin Railroad Commission states (Wis. R. C. R., Vol. 2, p. 16) in substance that it is quite likely that, because of local conditions or the manner in which the plants have been acquired, the cost of these plants to the present owner is considerably higher than the figures given (cost of reproduction). Owing to progress in the electrical field most plants have had to be rebuilt or re-equipped. The cost to pres- ent owners of such plants is likely therefore to be much greater than either the cost of the original plant or the cost of repro- duction new. The Commission in the Antigo Water Case (Wis. B.C. R., Vol. 3, p. 631) says: “ The original cost, the cost of reproduction new and the present value bear a very close relation to the physical prop- erty of the plants and are therefore of the greatest importance in determining the value of the same. As to which one of these three elements is of the greatest importance in fixing this value, is a matter that largely depends upon the circum- stances in each case and may also be more or less affected by the purposes for which the valuation is intended. . . . No matter what the differences between these three cost values may amount to, each one of these items constitutes evidence of the true value and should therefore be carefully considered.” The Commission also says that the burden of unreasonably high construction cost should not be charged to the rate- payers.

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