It is hard tyo foresee abandoning the discounted cash flow method relied upon so heavily for the past couple of decades.
In the Feb. 15, 2003, edition of , Jonathan Lesser says that regulators need to rethink the traditional discounted cash flow (DCF) method for finding the cost of capital, or "at the very least, regulators should no longer rely solely on the DCF to set allowed returns."
PUCs could face rate shock if feds push plans for an RTO signup bonus.
State PUCs will surely weigh in on the latest move by the Federal Energy Regulatory Commission (FERC) to work its will on the nation's electric transmission grid. In this case, the item in question concerns a policy statement proposed by FERC that would reward electric utilities for investing in new transmission upgrades and-more importantly-for joining up with a regional transmission organization (RTO).
Today's volatile markets upset the discounted cash flow model, and others.
DCF Utility Valuation: Still the Gold Standard?
Some thoughts on who should take the lead and how to set up financial incentives.
One of the most interesting questions that arises from federal restructuring of the electric grid, with regional transmission organizations (RTOs) and a standard market design (SMD), concerns the risk of building transmission in an RTO environment.
Understanding power company volatility in the context of valuation theory.
Results of the annual Survey of Energy Utility Rate Proceedings.
(December, 2001) The results of our annual survey of authorized rates of return on common equity for state-regulated energy utilities show a continued reliance on traditional cost-of-service ratemaking in many states. At the same time the results also show that rate case filings do not dominate the field of economic regulation the way they might have in times of higher rates of inflation and prior to the advent of price cap regulation and market restructuring programs.
Having now passed a rule that takes very few chances, the FERC must decide what's in store for investors.
Whatever happened to the Sunshine Act - the law that tells government officials to hold their meetings in the open?
That's what all of us in the trade press wanted to know on Dec. 15, when Chairman James Hoecker kept us waiting all morning and well into the afternoon, while he and his cohorts at the Federal Energy Regulatory Commission debated in secret on the ninth floor over the future of the electric utility industry.