Abstract This article focuses on the accounting aspects of rate making in the public utility field. Quite a divergent array of experts participate in rate-making. Included are: economists, statisticians, engineers, accountants, lawyers, and business administrators. It is reasonable that the respective fields should raise conflicting concepts, methods, principles, and procedures. In company of such experts, representing widely differing fields, the accountant must be conversant with all of the facts and some inevitable fiction, if they contribute their share of skill and knowledge toward an equitable determination of whatever issue they is asked to help settle. A return to reproduction cost as a factor in rate-making would be greatly facilitated if the charge that it is cumbersome and misleading can be overcome, or at least materially reduced. Two suggestions come to mind. In the first place, it will be necessary to take a more liberal-and less literal-concept of reproduction cost. Another possibility is to take the original investment in a utility plant and restate it in terms of current purchasing power of the dollar. This approach would at least avoid the time and expense of a detailed inventory of plant items, which is standard procedure in appraisals.
Harry D. Kerrigan (Sun,) studied this question.