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 XI. The value of a water-right and of reservoir and watershed lands

Collection:: Economics Books

THE VALUE OF WATER-RIGHTS IS already fully developed and is in use or is being supplied to a market which takes it all. But when the power is undevel- oped, some consideration must be given to the uncertainty of achieving the expected results and due allowance must be made for the time that will have to elapse before a return from the sale of power can be realized. There will, of course, be cases in which an analysis of the cost of generating and delivering power will show the advantage to be with the power developed by steam. In such cases the hydro-electric enterprise may nevertheless be a legitimate one. It may have been initiated when the price of fuel for generating steam was such that the advantage of cost was temporarily with the water-power; or the margin in favor of the steam-power may be so small that the recognized advantage and economic value to society in conserving the energy which annually reappears in the water of the stream outweighs any financial disadvantage that may appear from a comparison with steam as a source of power, and justifies earnings that might not under other cir- cumstances be considered reasonable. Furthermore, if the market for the output of a hydro-electric installation has been established, there is no certainty that the market of a competing plant, at a different cost and sale price of power, would be the same. This is a circumstance which should be duly weighed in making the comparison. In any event, the owner of such utility should be recognized as engaged in a meritorious enterprise, deserving not only ade- quate protection, but also such reward for having developed the water-power and having made an investment for the benefit of the public as the circumstances may justify. Under this view, even when the water-right which makes the development of power possible would appear to be without market value at current fuel prices, it will be reasonable to allow to the owner, not alone a rate-base increment equal to the cost of securing the water-right, if there has been any such cost, but also, if this cost has been legitimate and reasonable, some excess allowance in the earnings, perhaps proportional to the amount of power - “ous

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