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Stay-out adjustments and multi-year regulatory rate plans

Author

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  • Davies, Ryan J.
  • Hevert, Kathleen T.

Abstract

Multi-year regulatory rate plans are becoming more common. An agreement to “stay out” of the rate revision process removes an option for the utility company or regulatory commission to request a modification to tariff rates in response to changes in interest rates. We develop an objective approach to adjust the utility’s required return on equity to account for these lost options.

Suggested Citation

  • Davies, Ryan J. & Hevert, Kathleen T., 2020. "Stay-out adjustments and multi-year regulatory rate plans," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 105-114.
    • Handle: RePEc:eee:quaeco:v:76:y:2020:i:c:p:105-114
    DOI: 10.1016/j.qref.2019.03.005
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    References listed on IDEAS

    as
    1. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Stay-out premium; Multi-year rate plans; Rate of return regulation; Rate freeze; Utilities;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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