84 VALUATION, DEPRECIATION AND THE RATE-BASE
“ Duplication of such plants is a waste of capital whenever
service can be adequately furnished by one plant. . . . Com-
petition in this service therefore usually means a bitter struggle
and low rates, until one of the contestants is forced out of the
field, when the rates are raised to the old level, if not above it,
or to a combination of some kind between them which also
ultimately results in higher rates.”
The Commission in the case of the City of Racine vs. Racine
Gas Light Co. (Wis. R. C. R., Vol. 6, p. 286) calls attention
to the fact that the investment in physical properties is some-
what greater than the amount ordinarily needed. The invest-
ment was made to meet anticipated needs. Latitude must be
given in such cases to owners but it is questioned whether the
return allowed on the investment should be at such high rates
as prevail in other cities of the same size.
Referring to non-operating property the Commission in the
LaCrosse Gas and Electric Co. case (Wis. R. C. R,, Vol. 8,
p. 164) expresses the view that the value of such property can
be made a part of the value used in fixing rates only when the
income therefrom is added to actual income or deducted from
operating expenses, even though future use of the same is an-
ticipated.
Discarded Property. — In Wisconsin it is required by law
that discarded property must be left out of consideration in
making appraisals of value as a basis for fixing rates. However
there are nevertheless cases in which equipment, not actively
a part of the plant, but held in reserve for emergency use,
may properly be included in the base value (Wis. R. C. R,,
Vol. 5, p. 24).
Depreciation, Amortization and the Replacement
Requirement
Depreciation. — Depreciation is a lessening of worth with age
which deserves special consideration in any discussion of rate
regulation. The matter of amortization and the making of
provision for renewals or replacements is so intimately inter-