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Fortnightly Magazine - February 1 1998

service. Therefore, investors are neutral from a net present value perspective between receiving the return of their capital more quickly, through higher depreciation charges, or receiving the return of their capital over a longer time period. As long as the net present value discount rate equals the investor's cost of capital, from a net present value perspective, the depreciation rates used by the Company are irrelevant."

I trust that the explanation provided will shed light on the depreciation process, but not be misconstrued as a criticism of Dr. Beecher's and Dr. Mann's very informative and sound article.

William C. Schaffer

Public Utility Analyst

Delaware Public Service Commission

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