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Utility Depreciation Problems and Procedures
Author(s) -
Welmon William C.
Publication year - 1961
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1961.tb00686.x
Subject(s) - depreciation (economics) , equity (law) , economics , inflation (cosmology) , capital (architecture) , equity capital , monetary economics , public economics , finance , business , market economy , capital market , capital formation , human capital , political science , law , financial capital , physics , archaeology , theoretical physics , history
This article suggests that present depreciation procedures be modernized to give consideration to the inflationary forces that are causing the continuing increase in prices. The article refers to a report entitled “Economic Depreciation, or Capital Recovery Under Changing Price Levels”, prepared by a joint subcommittee of the American Gas Association and the Edison Electric Institute, members of which were later augmented by representatives of the Economics Committee of the American Gas Association. The article states that the recognition of replacement depreciation for tax purposes and in the determination of rates would do no more than permit utilities to recover cost in the same manner that unregulated business recovers all its cost. The articles suggests that the equity owners of regulated public utilities should follow the same practices as the equity owners of all industries who have, to varying degrees, made up for inflation and will continue to do so as long as inflation continues.