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Determination of regulatory rank: a revealed preference analysis

Book ·
OSTI ID:5533073
Recent studies find that an unfavorable regulatory climate (from an investor's point of view) raises a utility's cost of capital and reduces the availability of capital. This study examines the statistical relationship between the regulatory climate rankings given to the public utility commissions (PUCs) and the eight major criteria which major Wall Street firms claim are important determinants of regulatory rank. These include the allowed rate of return, average regulatory lag, use of interim rates, whether an historic or future test year is used, whether construction work in progress (CWIP) is allowed in the rate base, whether normalization or flow-through is the accounting convention, specification of automatic adjustment clauses, and whether an original cost or fair value rate base is used. The analysis suggests that only the allowed rate of return and the inclusion of CWIP in the rate base are of statistical importance. 32 references, 3 tables.
OSTI ID:
5533073
Country of Publication:
United States
Language:
English