Despite the hype about cheap gas, pipeline constraints are creating new risks. New England’s wholesale power prices ran three times as high this past February compared to the same month in 2012....
- Base =
(NOPATc,t / Rate Base)
NOPATc,t = net operating profits after tax for firm c in year t
y0 = universal constant
y1 = coefficient for allowed return on Rate Base
y2 = coefficient for regulatory risk
- Most of these variables are significant at the 98 percent or greater level.
- The graphic uses the average allowed ROE granted in decisions handed down during the calendar year for expected return and uses the standard deviation of returns across the industry for the calendar year.
- We are looking to validate the appropriate range of target Sharpe ratio. Our research continues, but based on our work to date, a ratio between 2 and 2.5 seems appropriate.
Articles found on this page are available to subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.