Public Utility Valuation for Rate Purposes

The cogency of the arguments of Mr. Justice Brandeis in support of prudent investment as the proper basis of return to a public utility is admitted. From reliable indications, the majority of state public service commissions would welcome the definiteness which prudent investment would contribute to rate regulation and to the alleviation of what is now a most perplexing and trying problem. As gladly as this principle would be accepted, the desire to do so, unless manifested by other agencies, cannot become the prompter of com- mission action. Commissions are bound to recognize the Constitution of the United States as interpreted by the federal Supreme Court. To say that this court has not emphatically enunciated any guiding doctrines on valuation for rate purposes is an evasion of what is obvious.