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Return on Equity: Interest Rates Push Down Allowances

Results of the annual survey of energy utility rate proceedings.
Fortnightly Magazine - November 15 2002

the life of the plant provides certainty to utility investors, the board concluded that with the risk-lowering effects of a fixed return, an ROE allowance set at the high end of the 10.23 percent to 12.23 percent range produced by its risk premium analysis was needed to properly reflect the intent of the statute. .

Certainly, while most eyes remain fixed on the battle at the federal level over the future of wholesale power markets, the issue of the appropriate level of "profit" to include in the rates of regulated electric and natural gas companies continues to figure prominently for those engaged in the task of retail ratemaking.

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