State Regulations Affect The Rate Of Return For Shareholder-Owned Electric Companies.
State commissions are charged with determining electric companies’ maximum possible rate of return. These determinations are made after a series of hearings are held. These hearings are open to the public and take into account the public’s input. The rate of return must be a dollar amount that is enough to cover commission-approved company expenses and allow for a reasonable return to investors for use of their money. However, electric companies are not guaranteed they will achieve this rate of return.
For the 18 states and the District of Columbia where electric competition is in place, competitive models vary, and state regulators continue to approve electric distribution rates set by these electric companies. However, the prices charged by competitive electric energy providers are not regulated.