Abstract
In the regulation of water utilities by state agencies, the useful service life of the several types and classifications of operating property plays a critical part in the determination of rates and charges. In nonregulated water utilities, the expected service life is important in financing and in long‐range planning. The life expectancy of proposed improvements is a prime consideration in determining their feasibility and size. The often wide variance in estimated service lives given by engineers emphasizes the need for a more scientific approach that will reduce the judgment factor in such estimates. The selection of the applicable survivor curve and the determination of the average service life can be made by the following four actuarial analyses: retirement rate, original‐group, individual‐unit, and simulated plant balances methods. This article focuses on the retirement rate method, considered the most reliable, as it is based on the collection and compilation of data on all property in service during a recent period, usually 3‐30 years.
Published Version
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