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Excerpt from The Setting of Allowed Rates of Return for Public Utilities Regulation of public utilities usually involves the setting of maximum overall rates of return which the firms are allowed to earn. These rates are normally applied on some measure of the firm's rate base which is also deter mined by the regulators. Normally the rate base is some variant of the firm's book value. Through court decisions general standards have devel oped as to the spirit of regulation. The return allowed must be sufficient to attract capital in the market. It must be commensurate to returns enjoyed by firms which face corres ponding risks. The meaning of these general notions to the economist is fairly clear. Returns allowed must somehow reflect the opportunity costs of capital. (2) About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

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