A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
It is the author's observation that most rates are based upon past and present costs with too little, if any, consideration of what costs will be over the period during which the rates will be in effect. This results in immediate attrition in the net income from the new rates. It is believed that to correct this situation rates should be predicated upon a rate base and expenses that can be reasonably forecast for the middle of the 10‐year period for which the rates are expected to be in effect, that is, 5 years after the time that the rates become effective. Water rates must necessarily be collected after they have been fixed. They cannot be collected retroactively and their adequacy is based upon their ability to cover future as well as immediate costs. Fixed charges for publicly‐ owned plants are usually based upon the unamortized construction cost of the facilities in operation at the time the rates are fixed plus the amount that will be necessary to meet capital requirements of the near future.
It is the author's observation that most rates are based upon past and present costs with too little, if any, consideration of what costs will be over the period during which the rates will be in effect. This results in immediate attrition in the net income from the new rates. It is believed that to correct this situation rates should be predicated upon a rate base and expenses that can be reasonably forecast for the middle of the 10‐year period for which the rates are expected to be in effect, that is, 5 years after the time that the rates become effective. Water rates must necessarily be collected after they have been fixed. They cannot be collected retroactively and their adequacy is based upon their ability to cover future as well as immediate costs. Fixed charges for publicly‐ owned plants are usually based upon the unamortized construction cost of the facilities in operation at the time the rates are fixed plus the amount that will be necessary to meet capital requirements of the near future.
Review of Ratemaking Theories
Howson, Louis R. (author)
Journal ‐ American Water Works Association ; 58 ; 849-855
1966-07-01
7 pages
Article (Journal)
Electronic Resource
English
| Wiley | 1966
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