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ROE

Equity Returns: ‘Allowed’ vs. Earned

Understanding how PUC rate case findings differ from a utility’s financial reports.

 

(November 2015) Setting an allowed return on equity has consistently proven to be the most contentious and subjective part of a rate case proceeding.
Byline: 

Phillip S. Cross

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Growth Through Productivity

Enterprise Management: Taking a wider view of asset management.

Utility executives today see few choices if they wish to achieve growth. Better scheduling can improve overall productivity by 10-15 percent, offering the potential for growth. Yet it is not sufficient simply to focus narrowly on work execution in the field.
Byline: 

Mark Hoffman and Jagoron Mukherjee

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Risk Holds Sway

Interest rates not always controlling for return on equity. 

(November 2014) Our annual survey of rates of return on common equity authorized by state public utility commissions in recent rate cases for electric and gas retail distribution utilities.
Byline: 

Phillip S. Cross

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Utility Capital in the Twenty-First Century

What FERC might learn from Thomas Piketty and his best-selling book on wealth and income.

Thomas Piketty’s best-selling book, “Capital in the Twenty-First Century,” shows why utility transmission owners should not enjoy excessive returns.
Byline: 

David E. Pomper

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Game Changers

State regulators address transformative forces.

In Fortnightly’s Regulators’ Roundtable, commissioners from Idaho, Illinois, and Minnesota consider transformative forces and the regulatory response.
Byline: 

Michael T. Burr

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Anomaly or New Normal?

Regulators weigh interest rate climate and future Fed policy in setting allowed return on equity.

(November 2013) Consumer advocates argue for lower allowed utility returns, to reflect lower financing costs. Our rate case survey shows mixed regulatory responses.
Byline: 

Phillip S. Cross

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Productivity Plateau

A mature industry faces a worrying round of hype.

Are we languishing, or working off a 20th-century legacy? Gartner’s hype cycle suggests the latter, as new technologies start producing value.
Byline: 

Michael T. Burr, Editor-in-Chief

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Five Years Later

Wall Street is back in business. What’s next for utility finance?

When Lehman Brothers went bankrupt in September 2008, it marked the beginning of a financial crisis. By most accounts, the utility industry has been a picture of stability through tumultuous times. The view from Wall Street remains bullish – despite some reasons for concern.
Byline: 

Michael T. Burr

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Bargain or Bonanza

Is discounted cash flow (DCF) still a reliable tool for determining equity cost?

The time-honored discounted cash flow method for determining appropriate utility returns falls short when interest rates are low. Inadequate ROEs ultimately increase cost of capital and wipe away any temporary savings.
Byline: 

Carmen L. Gentile and Monica M. Berry

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Investor Sequester

State complaints over FERC-granted equity returns could dry up funding for transmission expansion.

Perhaps sensing the weight of evidence allayed against them, transmission owners have thrown caution to the wind by openly and admittedly submitting an ROE analysis that doesn’t comport with FERC precedent.

Byline: 

Bruce W. Radford

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