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 I. Introduction and general notes

Collection:: Economics Books

10 VALUATION, DEPRECIATION AND THE RATE-BASE payer and with his approval. Consequently the rates should be fixed with a view to amortize sooner or later such expenditures. In thus making provision for unproductive expenditures de- termined, perhaps, from actual expenditures legitimately in- curred in excess of cost of works in use, care must be taken not to go too far. Wasteful expenditure is not to be sanctioned and wise and prudent management is entitled to reward. Ex- perience alone can determine what allowance should be made for hazards of the business and for the cost of establishing the business and bringing it up to a paying basis. If it be found, for example, that a suburban electric road will not be on a pay- ing basis for a number of years, the losses (or deficient earnings) during these years may be added to the cost of the road not as elements of value but as a part of the investment on which an interest return is to be allowed or as the preferable alternative, net earnings in excess of interest on the cost of the road can be allowed in such amount that within a reasonable time the early losses will be amortized. Thereafter a continuation of some excess of earnings above the returns from ordinary safe invest- ments will be the owner’s reward for having engaged in the enterprise. Franchise and Water-right Values. — When the public through properly constituted authority grants a franchise or confers a privilege to enter upon a business which is in the nature of a public service, as, when it grants the use of water for power, for irrigation or for other purposes, the franchise or water-right is valuable only to the extent that the public pro- vides a market for the service rendered or commodity supplied. When the rates to be charged are subject to regulation and are not fixed in the franchise or water-right grant, no basis exists (except in the cases of strategic value) for determining fran- chise or water-right value. This value depends, as will be explained, upon earnings in excess of a fair return on the invest- ment and if earnings are not protected by franchise terms, it will lie in the power of the rate-fixing body to eliminate fran- chise and water-right value altogether. This is as it should

Access restriction

Copyright

fullscreen: Valuation, depreciation and the rate base

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation