Opinion ID: 1865879
Heading Depth: 1
Heading Rank: 6

Heading: iiid

Text: The appellant also claims that the Commission made several errors with regard to calculating the working capital component of the rate base. Working capital represents the amount of cash, materials, and supplies ordinarily required by a utility in its day-to-day business operation to meet current expenses and such contingencies as may typically develop. Preparing For The Utility Rate Case 195 (F. Welch ed. 1954). It is customary to include an allowance for working capital in the rate base, since cash working capital, like fixed assets, represents invested capital for which the owners should gain some return. In the case sub judice, the appellant's counsel argued that the salaries expense and the interest expense should have been included in the working capital component. Since the officers' salaries and payroll taxes should have been regarded as legitimate operating expenditures, these amounts should have also been included in the working capital component. See J. Barnes, The Economics of Public Utility Regulation 495-99 (1942) (discussion of expenses to be included in working capital such as salaries and wages).