Public utilities
by Tony Tinker
International Journal of Economics and Accounting (IJEA), Vol. 9, No. 2, 2020

Abstract: How are the prices of utility charges for its services determined? Utility's rates are set on a cost-plus-profit basis. The profit is decided by using the regulated profit % to the amount that a firm invested in assets that produce the services; this investment is termed led the rate base. The regulated profit percentage is usually set at a level that will give the company at return on its investment that is termed the rate base. There are extensive differences between states in how each defines the rate base and in what constitute an allowable expense for rate setting purposes, although the general procedure described in the following as to how the rate-per-unit of service is arrived at in the majority of states.

Online publication date: Fri, 14-Feb-2020

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