Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 1830562916

URN:: urn:nbn:de:zbw-retromon-217337

Document type:: Monograph

Author:: Huntington, Ellsworth http://d-nb.info/gnd/117070092; Cushing, Sumner W.

Title:: Modern business geography

Place of publication:: New York [usw.]

Publisher:: World Book Company

Year of publication:: 1930

Scope:: VIII, 352 S.; Ill., graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part one. The field of primary production

Collection:: Economics Books

ELEMENTS WHICH REDUCE VALUE Bt While not endeavoring to set up a rule for the determination of the extent to which it may be proper to take future require- ments into account in planning any installation, attention is called to the fact that any such provision for anticipated future service adds to the investment of capital and thereby makes higher earnings necessary than would be required, if, at all times, the plant capacity could be kept exactly at the momen- tary requirement. Here then is an additional call upon the rate-payers, which, naturally, will fall heaviest upon those of the early years, at which time the disparity between actual demand and the provided capacity is generally greatest. There lies herein a further reason why the rate-payer in the early years of the life of any public utility should be relieved, as elsewhere suggested, of the requirement to meet amortization of capital. These rate-payers will ordinarily have done their full share if they contribute operating expenses, interest on the investment, and whatever may be necessary to anticipate and to meet re- placements of discarded parts as such replacements become necessary. Property not in Use. — Guided by the decisions of the courts and by the rulings of public service boards and commissions, it has become customary to discriminate with care between the property of a public utility which is in use and the property which may not strictly be regarded as in use. Property which is in no way related to the service rendered and which is of no prospective necessity will be left out of consideration in this discussion. But there is another type of property owned, but not in use, as for example a reservoir site, acquired by a water works owner at a favorable moment but not likely to be made a part of the system for an indefinite period, or a terminal right of way for a railroad, or an undeveloped water-power which according to sound judgment must be regarded as necessary for future expansion though not in active use as a part of the present system. The wisdom of early acquisition of such prop- erties at opportune moments can hardly be questioned. How to deal with them in making an appraisal for rate-fixing purposes 8.

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