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 7 “ The refusal of the commission and of the lower court to hold that, for rate-making purposes, the physical properties of a utility must be valued at the replacement cost, less depreciation, was clearly correct.” The court in these various decisions shows its embarrassment resulting from the attempt to use value and not the reasonable legitimate investment as the rate-base. The court fails, also, to indicate that intangible values in excess of investment are created by adequate rates and that such values cannot exist unless the rates produce a net income in excess of a fair interest rate on the legitimate investment. The legitimate investment is usually best determined on the basis of actual cost of recent investments and on the reproduction cost of older items at the best available approximation of current normal prices of labor and materials. In the determination of normal prices considera- tion should be given to the prices which have prevailed in years recently past (generally 2 to 5) and also to the causes, if they can be identified, of the recently past and current trend of prices. The fundamental requirements when rates of public utilities are to be fixed may now be restated as follows: The rates should produce an income adequate: 1. To meet operating expenses (here used in the narrow sense not including interest). 2. To amortize properly estimated unavoidable losses during the development period of the business (i.e., the cost of establishing the business). 3. To amortize losses from fortuitous events. 4. To amortize the remaining value of property discarded because of obsolescence. 5. To yield an ordinary interest return on the capital legiti- mately invested (to be estimated at current normal prices or from records of actual recent investment, undiminished by depreciation). 6. To cover ordinary hazards of the business. 7. To cover a fair allowance for management. 31;

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