Stay-out adjustments and multi-year regulatory rate plans

Ryan Davies and Kathleen T. Hevert

The Quarterly Review of Economics and Finance, 2020, vol. 76, issue C, 105-114

Abstract: Multi-year regulatory rate plans are becoming more common. An agreement to “stay out” of the rate revision process removes an option for the utility company or regulatory commission to request a modification to tariff rates in response to changes in interest rates. We develop an objective approach to adjust the utility’s required return on equity to account for these lost options.

Keywords: Stay-out premium; Multi-year rate plans; Rate of return regulation; Rate freeze; Utilities (search for similar items in EconPapers)
JEL-codes: G23 G38 K23 L9 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:76:y:2020:i:c:p:105-114

DOI: 10.1016/j.qref.2019.03.005

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