What question did this study set out to answer?

This research examines the implications of measuring rate bases by original costs versus subsequent purchase prices.

Original Cost as a Rate Base.

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Argues against using purchase price for rate base, emphasizing original cost in utility services.

This research examines the implications of measuring rate bases by original costs versus subsequent purchase prices.
Analysis of the prudent investment standard for rate regulation.
Discussion of the implications of utility property ownership transfers.
Review of how market prices affect rate base calculations.
Original cost is essential for compensating investors who build utility plants.
Transfer prices cannot accurately reflect the true costs of public utility services.
Using purchase price undermines the principles of prudent investment in public utilities.

James C. Bonbright (1945) studied this question.

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