Issue Costs and Regulated Returns: A General Approach

Howe, Keith M.; Beranek, William
December 1992
Journal of Regulatory Economics;Dec1992, Vol. 4 Issue 4, p365
Academic Journal
This paper sets fort 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 we incurred in they acquisition. In addition, the method provides solutions hr 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,


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