The Effect of "Fair Value" Rate Base Valuation in Telephone Regulation
The Engineering Economist
Taylor and Francis
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.
The Effect of Fair Value Rate Base Valuation in Telephone Regulation. 1977. The Engineering Economist, Vol. 22 No. 1, January 1977.