Fundamental Principles of Public Utility Valuation

This paper is undertaken as a consequence of the voluminous discussion of the writer's prior paper: “The Depreciation of Public Utility Properties as Affecting Their Valuation and Fair Return,” presented December 17th, 1913. That discussion, though it showed the greatly increased interest which valuation matters are now receiving, also seemed to show that many engineers lack a clear perception of the fundamental principles involved in valuation work, presumably because such principles are to be found only in the law and the interpretation of the law by the Courts. This paper shows that the science of valuation calls for a knowledge in three professions or callings: the law, engineering, and economics, and that, fundamentally, it is the law, and its interpretation by the higher Courts, which controls.