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 XVI. The rate-base and depreciation in recent decisions of the U.S. Supreme Court

Collection:: Economics Books

THE RATE-BASE AND DEPRECIATION S51 law and policy seems to require the allowance of a reasonable return upon at least that sum. “ Upon the present trial, it was insistently urged upon me by some of the defendants that there should be deducted from the cost of the property (irrespective of whether ‘original,’ ¢ pre- war,” or ‘ present reproduction ’ cost be under consideration) an amount claimed to represent so-called ¢ accrued theoretical de- preciation,” based upon an assumption of ‘life expectancy ’ for a gas plant and equipment and the estimated or known number of years since the same was erected or installed. From the testimony given upon the trial, I was strongly impressed that, in respect of a very large proportion of gas property, there is no ascertainable ‘life expectancy.” The withdrawal of such prop- erty from service comes about from inadequacy or obsolescence, which cannot be forecast in terms of years or even satisfactorily guessed at. “ Certain parts of operating machinery and equipment are of course subject to the effects of use. The replacement of these wearing parts enters into the cost of repairs. As to the sub- stantial units of structures, apparatus, mains, and equipment, their withdrawal from the property accounts comes about from causes not attributable to the condition of the property itself, or any diminution in its operating efficiency, but varying utterly with the particular plant, time, local conditions, and service demands, and hence capable of being forecast only as the occa- sion for such change in plant or equipment becomes imminent. “ In other words, in order to keep abreast of improvements in the art of making and distributing gas when and as it becomes economically advantageous to do so, and to meet the growing demand of the public for service more adequately and economic- ally than would be possible through merely making additions and extensions to existing plant and equipment, larger or better and more economical and efficient units of plant and equipment are from time to time installed, to take the place of units which are still operating as efficiently as when first installed. The loss due to such supersession cannot properly be said to have accrued during the period the superseded unit was in service. It occurred when supersession took place. It became a proper charge against the economies to be realized therefrom. It furnished no basis for the imposition of an additional charge against the user of the superseded unit during the period of its useful service, over and above the higher cost of operating it. Such a charge could not be justified, either on the ground that the unit was losing poten- Pa

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