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 IV. Essentials of value

Collection:: Economics Books

ESSENTIALS OF VALUE ; 1 just as the owner of land participates. He does so, of course, in a measure as his business increases, but if held down to earn- ings which will barely yield the ordinary interest rates on safe investments, the extent of doing this may fall far short of the advance in property value shared in by practically all the owners of the realty in the community. Application to Public Utilities. — Such considerations as this, although not thus expressed, have led the U.S. Supreme Court to hold that the owner of a public utility is entitled, in most cases at any rate, to have the present value of his property made the basis of the computation when rates are to be fixed. In the Consolidated Gas Co. case (Wm. R. Willcox et al. vs. Consoli- dated Gas Co. of N. Y., 212 U.S. 19, 29 Sup. Ct. Rep. 192) as already quoted the court says: “And we concur with the court below in holding that the value of the property is to be determined as of the time when the inquiry is made regarding the rates. If the property which legally enters into the consideration of the question of rates has increased in value since it was acquired, the company is entitled to the benefit of such increase. This is at any rate the general rule. We do not say that there may not possibly be an ex- ception to it where the property may have increased so enor- mously in value as to render a rate permitting a reasonable return upon such value unjust to the public.” The court has, perhaps, overlooked the fact that unearned increments are earnings and can be allowed without adding them to the investment. It may have been perfectly fair to make the valuation allowance to the full extent of the unearned increment in the Consolidated Gas Co. case and this allowance is not here made the subject of criticism. It is only the practical applica- tion of the ruling which is brought into question. It is believed that as these matters are better understood there will be a general acceptance of the view that appreciation had better not be included in the rate-base. In the case of farm lands the situation may obtain of a greater supply thereof than can be made use of by the inhabitants of 7

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