The Effect of "Fair Value" Rate Base Valuation in Telephone Regulation

Document Type

Article

Journal/Book Title/Conference

The Engineering Economist

Volume

22

Issue

1

Publisher

Taylor and Francis

Publication Date

1976

First Page

27

Last Page

32

Abstract

Public utility regulation in the United States is based on a rate of return on capital criteria. Regulatory commissions allow firms to charge rates which are designed to generate no more than some allowed return on the firm's capital. There is considerable variation in commission procedures used to determine the capital or rate base. Some commissions use original cost, some use reproduction cost, and others set a "fair value" rate base which lies between original and reproduction cost.

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