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 V. Elements which reduce value

Collection:: Economics Books

82 VALUATION, DEPRECIATION AND THE RATE-BASE is the question. If such properties are included in the valuation of the rate-base as of date when purchased, the rate-payer is taxed for the benefit of the future. If, on the other hand, they are not included in valuations until they are actually put into use, then they must ultimately be included at original cost plus interest, or as seems to be a more general practice, at their value at the time they go into use. Sometimes by such pro- cedure a large unearned increment represented by increase of value goes to the public utility owner and generally he is entitled thereto as a reward for his foresight. As a general principle the holding of a reasonable amount of property which will at an early day be in use, should be con- sidered legitimate and in conformity with the practice that would be followed by any prudent management, and it will be proper to place such property in the same category as property in actual use. This, in its essence, is no different from allow- ing full value of the pumping plant which has twice the capacity immediately required, but which was planned with due regard to future demand upon it. When any property which is thus held to meet prospective requirements is not included in the appraisal, the burden of holding the same available for future use falls on the owner of the property. When he thus acquires rights, lands or other elements which are of value to his system of works, but are perhaps of a character from which no return can be expected, he puts the community under obligation to suitably recompense him for his foresight and for the material service which he thereby renders. By judicious investment from time to time in property which a prudent agent under like circumstances would acquire, the public utility owner not only provides for the expansion of his system of works, but he hopes to profit by the increased value that comes to all property located in prosperous sections that are well served by public utilities. The ideal arrangement would be to have all acquisitions of property of whatever nature that appertain to future service

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