Valuation, depreciation and the rate base

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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.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Essentials of value

Collection:: Economics Books

76 VALUATION, DEPRECIATION AND THE RATE-BASE is allowed to remain uninfluenced by appreciation, the owner of the public utility should be allowed a higher rate of return than if appreciation were included in the appraisal of the rate- base. The endeavor should be to secure a general recognition of the latter principle and thereby secure the same liberal treatment for those utilities which do not include among their properties land holdings, as is now accorded with approval of the courts, to those which do include large amounts of real estate. If treated in this way the owner will never be in a position to capitalize appreciation, unless the use of the property in the public service be abandoned. This is as it would be if the owner were acting as agent, and is equitable. In the Minnesota Rate Cases, the United States Supreme Court apparently recognizes the broad principle that the public service property should earn a return upon the increasing value of its properties, provided the appreciation be properly ascer- tained. The Court in these cases says: « Assuming that the company is entitled to a reasonable share in the general prosperity of the communities which it serves, and thus to attribute to its property an increase in value, still the increase so allowed, apart from any improvements it may make, can not properly extend beyond the fair average of the normal market value of the land in the vicinity having a similar character.” It would be much better to let this principle, recognized gen- erally by the courts when they say that present value is to be the basis of the calculations when rates are to be fixed, be ap- plied, as already suggested, without reference to or without being dependent upon and restricted to the present value of land, <0 that the same share in the general prosperity would come to the owner of the utility which owns no real estate as to the other utility which owns broad acres. Cost to Reproduce New Includes Appreciation. — When re- production cost is used as a means of approximating the in- vestment or the rate-base,” the basis of the calculation may

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