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Principles of Discounting for Main Extensions
This article demonstrates how the rate of return will differ on an extension where, in one case, the utility is required to make the full investment, as compared with the same extension where only a part of the investment is made by the utility with the balance paid by the customer as a contribution in aid of construction. The figures used in this discussion are taken from the financial reports and records of the New Haven (Connecticut) Water Company for 1962. A fair rate is essential to the financial health of the utility. Such a fair rate is a function of the water rates through gross revenues, however. The water revenues must be adequate to produce this rate of return from existing customers and it will automatically follow that the extension policy will produce a fair rate in that the extension policy will be (or should be) based on the discount rate that will be the rate of return earned by the utility.
Principles of Discounting for Main Extensions
This article demonstrates how the rate of return will differ on an extension where, in one case, the utility is required to make the full investment, as compared with the same extension where only a part of the investment is made by the utility with the balance paid by the customer as a contribution in aid of construction. The figures used in this discussion are taken from the financial reports and records of the New Haven (Connecticut) Water Company for 1962. A fair rate is essential to the financial health of the utility. Such a fair rate is a function of the water rates through gross revenues, however. The water revenues must be adequate to produce this rate of return from existing customers and it will automatically follow that the extension policy will produce a fair rate in that the extension policy will be (or should be) based on the discount rate that will be the rate of return earned by the utility.
Principles of Discounting for Main Extensions
Woods, Charles E. (Autor:in)
Journal ‐ American Water Works Association ; 57 ; 397-409
01.04.1965
13 pages
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
Revenues , New Haven , Financing , Connecticut , Utilities , Water Rates
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