Issue Costs and Regulated Returns: A General Approach

Keith M Howe and William Beranek

Journal of Regulatory Economics, 1992, vol. 4, issue 4, 365-78

Abstract: This paper sets forth a general, unified procedure for the treatment of flotation costs for the regulated utility, a method which reduces to standard treatments as special cases. In this approach, the regulated return becomes a weighted average of the required rates on different portions of equity capital, portions that are distinguished by whether or not issue costs are incurred in their acquisition. In addition, the method provides solutions for a host of financial environments, including solutions where past flotation costs are to be recognized, and where merged utilities with different flotation-cost recovery patterns must be combined. Copyright 1992 by Kluwer Academic Publishers

Date: 1992
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