Rate Setting in the Utilities Industry: Does Size Make a Difference?

Scott Besley and Steven E Bolten

The Financial Review, 1994, vol. 29, issue 4, 521-38

Abstract: This study provides evidence that the "size effect," which has been investigated extensively in the literature, has not been considered by regulators in the utility rate setting process. In essence, the results indicate the rates assigned to both large and small utilities have not differed significantly in the past, statistically. However, to be consistent with the behavior observed in the competitive financial markets, the rates regulators set should be significantly higher for small utilities compared to large utilities. The fact that this was not observed might suggest inequities exist in the rate-setting process. Copyright 1994 by MIT Press.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:29:y:1994:i:4:p:521-38

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