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LSDefine
Simple English definitions for legal terms
rate-base value
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A quick definition of rate-base value:
A rate-base value is the original cost of something, like a piece of equipment, minus any depreciation. It's used to determine the value of assets for public utilities.
A more thorough explanation:
Rate-base value is the cost of an asset when it was first acquired or devoted to public use, minus accumulated depreciation. It is also known as net book cost. This value is used to determine the rate that a public utility can charge for its services.
For example, if a utility company buys a power plant for $10 million and it has been in use for 5 years, with a depreciation of $2 million, the rate-base value of the power plant would be $8 million. This value is used to calculate the rate that the utility company can charge its customers for the electricity produced by the power plant.