This paper seeks to contribute to a longstanding tradition in accounting research which attempts to understand accounting within its social and historical context. The topic of this historical narrative is the creation and role of accounting in the formation of the electricity industry in the US between 1882 until 1944. The paper is divided into three parts. In the first part we examine how early electrical engineers struggled to understand the nature and behavior of the costs of generating and distributing electricity at the turn of the 19th Century. In doing so, these engineers established a relationship between costs and the engineering concepts of load factor and diversity and developed pricing structures which would recover both standing (fixed) and running (variable) costs. In the second phase, we examine how this accounting knowledge was deployed by early "inventor entrepreneurs" and businessmen in their attempts to dominate the early electric markets in the US and how investor owned regulated utilities emerged out of these strategies as a uniquely North American institution. In the final phase, we examine how accounting became the center of intense conflict between regulatory commissions and investor owned utilities in the US court system - including the Supreme Court - as representatives of these entities vied with each other over the chart of accounts, allowable expenses, the valuation of assets and depreciation. Here we contend that utility accounting did not simply grow to reflect a regulatory process but rather worked to shape utility regulation in the US. In 1944 a legal ruling displaced the primacy of accounting in the regulatory process and shifted its focus from asset valuation to rate of return determination. The space once dominated by accountants was ceded to regulatory economists. After that, accounting became taken-for-granted and matter-of-fact.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.