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

316 VALUATION, DEPRECIATION AND THE RATE-BASE and materials other than those which prevailed at the time of original construction, the Supreme Court in the case of the Blue- field Water Works and Improvement Company vs. Public Service Commission of West Virginia (U. S. 262, p. 679; L. Ed. p. 1176) has this to say: “ The record clearly shows that the commission, in arriving at its final figure, did not accord proper, if any, weight to the greatly enhanced costs of construction in 1920 over those prevail- ing about 1915 and before the war, as established by uncon- tradicted evidence; and the company’s detailed estimated cost of reproduction new, less depreciation, at 1920 prices, appears to have been wholly disregarded. This was erroneous. “ The question in the case is whether the rates prescribed in the commission’s order are confiscatory and therefore beyond legislative power. Rates which are not sufficient to yield a reasonable return on the value of the property used, at the time it is being used to render the service, are unjust, unreasonable, and confiscatory, and their enforcement deprives the public utility company of its property in violation of the 14th Amend- ment. This is so well settled by numerous decisions of this court that citation of the cases is scarcely necessary.” In the Atlanta case, that is, Georgia Railway and Power Company vs. Railroad Commission of Georgia (U. S. 262, p. 625; L. Ed., p. 1144) some attention is given to the ‘‘ rate base ” the difficulty being indicated of laying down any definite rule for its determination. The Court says on this subject: “ The objections mainly urged relate to the rate base; and one of them, is of fundamental importance. The companies assert that the rule to be applied in valuing the physical property of a utility is reproduction cost at the time of the inquiry, less depreciation. The 1921 construction costs were about 70 per cent higher than those of 1914 and earlier dates, when most of the plant was installed. So much of it as was in existence Janu- ary 1, 1914, was valued at an amount which was substantially its actual cost or its reproduction cost as of that date. The companies claim that it should have been valued at its replace- ment cost in November, 1921,— the time of the rate inquiry; and that the great increase in construction costs was ignored in determining the rate base.

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