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

216 VALUATION, DEPRECIATION AND THE RATE-BASE developed rather than to the actual investment in works for developing and marketing this power. But this can only be done within limits or so long as the rates for the service remain reasonable. When it would require excessive rates, the owner must suffer the penalty of having made an untimely if not an unwise investment. Illustration of Strategic Value. — As an illustration of special water-right value the case of a water supply for general and domestic use which affords water of prime quality in limited amount may be taken, but which, when compared with other sources in use in the same community, has the advantage of proximity, elevation and reliability of service. Let it be assumed, for example, that such a supply was the first to come into use, that its water was distributed as required throughout the built-up section of a growing town, but that at length a time came when additional water had to be brought in by a second system from some remote source, and that at the time of the valuation the distributing pipes of each of the two systems cover practically the entire built-up territory. The original water-works may now be supplying only a small fraction of the aggregate amount of water being used. Undoubtedly under such circumstances, the charge for water by the two con- cerns would be the same or very nearly the same. The water from the newer works could not be supplied at a low enough rate to drive the earlier concern out of business. Without any reduction of rates, this original utility should hold its customers. There need be no falling off in the amount of water which it supplies, assumed to be the limit of its capacity. But, if, as assumed, the rates charged by the two concerns are the same, the relative amount of net earnings will be greater for the original than for the new water-works. If it costs the original concern 17.5 cents per thousand gallons to develop and market its water crop (interest on the investment included) and it is costing the new concern 20 cents to do the same, and if this larger cost has been taken into account in fixing the water rates, then the water-right and other intangible elements of value of

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