Equity flotation cost adjustments in utilities' cost of service

Journal Article · Thu Mar 01 00:00:00 EST 1984 · Public Util. Fortn.; (United States)

OSTI ID:5108935

Bierman, H Jr; Hass, J E

Recovery of the unavoidable costs of issuing new shares of stock is generally agreed to be appropriate in determining utility revenue requirements. This article suggests that the methods by which that is usually accomplished are of questionable accuracy. The conventional practice of adjusting the allowed rate of return on common equity is examined, and an improved adjustment formulation is presented. Acknowledging that application of the formula remains subject to considerable error, however, the authors propose yet another solution. Capitalization of flotation costs as intangible assets is suggested as a way of more accurately factoring such expenses into tariff determinations. 6 references.

• Research Organization: Cornell Univ., Ithaca, NY
• OSTI ID: 5108935
• Journal Information: Public Util. Fortn.; (United States), Vol. 113:5
• Country of Publication: United States
• Language: English

Related Subjects

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
29 ENERGY PLANNING
POLICY AND ECONOMY
ELECTRIC UTILITIES
COST RECOVERY
OPERATING COST
CALCULATION METHODS
ERRORS
FINANCING
INCOME
COST
PUBLIC UTILITIES
320603* - Energy Conservation
Consumption
& Utilization- Municipalities & Community Systems- Public Utilities- (1980-)
296000 - Energy Planning & Policy- Electric Power