Public Utilities, Inflation, Regulation
Traditional public utilities are regulated by one or more regulatory bodies. Rate increase requests must be submitted to and approved by the appropriate regulatory body. Such approval may take from 6 months to several years. During this period of time, inflation may increase the cost of doing business without necessarily increasing revenues by corresponding amounts, and thus further decrease earnings and/or rate of return on common stock. Ultimately, any decrease in earnings or rate of return on common stock is born by the stockholders and may affect the ability of the company to attract new outside capital for construct ion purposes. The end result may be a financial bind - where and how to get money to construct facilities to meet future demand. A number of procedures are being used to moderate the harmful effects of inflation.
Proceedings of the Iowa Academy of Science
©1977 Iowa Academy of Science, Inc.
Lamp, George E. Jr.
"Inflation and Regulation,"
Proceedings of the Iowa Academy of Science, 84(3), 126-128.
Available at: https://scholarworks.uni.edu/pias/vol84/iss3/8