Public Utilities: A Plea for Present Cost of Reproduction as the Just Basis of Valuation |
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acre ascertain average cost basis bond Brandeis rule capital charge capital embarked chair factory charter Cole County common stock conceded Consolidated Gas Co Constitution cost of construction cost of operation cost of reproduction cost theory decision decline determined dollar earn a fair ent value enterprise equity estimated exchange value fair return farm lands farmer ferry boats Fourteenth Amendment greenbacks guarantee higher cost historical cost income increment in value industry inquiry investor Iowa Justice Brandeis says manufacturer measured in commodities ment Minnesota Rate minority opinion Missouri original cost original investment out-of-pocket cost owner paper profit Peter Witt power of money present cost present value price level prise private ownership prudent investment public servant public utility purchasing power railroad rate base rate commissions rate-making purposes reproductive value rule proposed San Diego Land Southwestern Bell street railway struction Supreme Court tion United utility is entitled valuation yield a fair
Popular passages
Page 10 - The property is held in private ownership and it is that property, and not the original cost of it, of which the owner may not be deprived without due process of law.
Page 10 - What the company is entitled to demand, in order that it may have just compensation, is a fair return upon the reasonable value of the property at the time it is being used for the public.
Page 8 - We hold, however, that the basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And, in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable...
Page 8 - And in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that...
Page 13 - prudent investment' is not used in a critical sense. There should not be excluded, from the finding of the base, investments which, under ordinary circumstances, would be deemed reasonable. The term is applied for the purpose of excluding what might be found to be dishonest or obviously wasteful or imprudent expenditures. Every investment may be assumed to have been made in the exercise of reasonable judgment, unless the contrary is shown...
Page 10 - The just compensation safeguarded to the utility by the Fourteenth Amendment is a reasonable return on the value of the property used at the time that it is being used for the public service.
Page 13 - Ames, and further defining it, declares that what is termed "value" must be ascertained by giving weight, among other things, to estimates of what it would cost to reproduce the property at the time of the rate hearing. The so-called rule of Smyth v. Ames [169 US 466 (1898)] is, in my opinion, legally and economically unsound.
Page 10 - And we concur with the court below in holding that the value of the property is to be determined as of the time when the inquiry is made regarding the rates. If the property, which legally enters into the consideration of the question of rates, has increased in value since it was acquired, the company is entitled to the benefit of such increase.
Page 13 - It is impossible to ascertain what will amount to a fair return upon properties devoted to public service without giving consideration to the cost of labor, supplies, etc., at the time the investigation is made. An honest and intelligent forecast of probable future values made upon a view of all the relevant circumstances, is essential. If the highly important element of present costs is wholly disregarded such a forecast becomes impossible. Estimates for tomorrow cannot ignore prices of today.
Page 9 - What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth.