Parents and subsidiaries and the embedded cost of debt

Journal Article · Thu May 25 04:00:00 EDT 1978 · Public Util. Fortn.; (United States)

OSTI ID:6947644

Marx, T G

An alternative to the ''double leverage'' method is suggested as a better way of allocating capital costs when measuring the costs of common equity capital for utility subsidiaries. The double leverage method fails to weigh the costs of debt and equity by the capital structure of the consolidated system. The proposed procedure uses both the individual subsidiary's embodied cost of debt and the consolidated capital structure, which reflects differences of debt timing and economic efficiency. This yields the same aggregate debt for the parent utility, but allocates specific debts to the individual subsidiaries. The method is described in a step-by-step illustration.

• Research Organization: General Motors Corp., Warren, MI
• OSTI ID: 6947644
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 101:11; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
ACCOUNTING
ALLOCATIONS
CAPITAL
COMPARATIVE EVALUATIONS
COST
DATA
ECONOMIC ANALYSIS
ECONOMICS
EFFICIENCY
FINANCIAL DATA
INCOME
INFORMATION
MANAGEMENT
PUBLIC UTILITIES