Law Commons^™

Public Utility Valuation - Rate Base

Michigan Law Review

The California Railroad Commission, in conducting a hearing in 1930 on natural gas rates charged by the Los Angeles Gas and Electric Corporation, found that the "historical value" of the utility was $60,704,000, and that its "fair value" for rate-making purposes was $65,000,000. This fair. value figure included no specific allowance for going concern value. The company's engineers had estimated the fair value at $95,000,000, on the basis of the "present cost of reproduction" theory. The commission, relying on its fair value figure of $65,000,000, ordered a rate reduction. A three-judge federal court refused to enjoin the enforcement of the …