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

218 VALUATION, DEPRECIATION AND THE RATE-BASE only inferior uses. Where a water-right thus limited in life is to be valued, the question not only arises as to its strategic value, but cognizance must be taken of the fact that the life of the right is limited and that it will not be a source of revenue for all time. The value of any water-right, in excess of cost, like the value of a franchise, results from earnings in excess of a fair interest on the investment. This value is, therefore, directly dependent upon the rates established by the rate-fixing bodies or, in the case of the restricted franchise, upon the rates allowed to be charged under such franchise. Large power is in the hands of the rate-fixing authorities to make or to destroy the value of water at its source and until a definite policy has been adopted by such authorities, there will continue to be more or less un- certainty relating to such value. The real value of property of this character will, for the present, remain somewhat specu- lative, particularly in cases where the development of the water or of a water-power lies in an uncertain future. This can hardly be otherwise because it is not yet certain that the tendency of today to allow something for the water-right, practically as com- pensation for making the development, will be adhered to. When it is fully understood that such an allowance will be made and when a definite limit is set to the amount of such an allowance, the valuation experts will be relieved of much em- barrassment. In the case of the established utility much of the difficulty ordinarily encountered when water-rights or franchises are to be valued as a basis for fixing rates will fall away if the method of procedure which the author recommends be followed and the invested capital and not present value be made the rate-base. Views of the Wisconsin Railroad Commission on Water- power Value. — The attitude of the Wisconsin Railroad Com- mission toward the determination of the value of a water-power by a comparison with the cost of steam power appears in the following quotation from the Commission’s decision in the case of the City of Beloit vs. Beloit Water Gas and Electric Co. (Wis. R. C. R,, Vol. 7, p- 247).

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