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
