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Title: Public utility beta adjustment and biased costs of capital in public utility rate proceedings
Authors: Michelfelder, Richard A. 
Theodossiou, Panayiotis 
Keywords: Capital Asset Pricing Model;CAPM
Category: Economics and Business
Field: Social Sciences
Issue Date: 1-Nov-2013
Publisher: Elsevier
Source: Electricity Journal, 2013, Volume 26, Issue 9, Pages 60-68
Abstract: The Capital Asset Pricing Model (CAPM) is commonly used in public utility rate proceedings to estimate the cost of capital and allowed rate of return. The beta in the CAPM associates risk with estimated return. However, an empirical analysis suggests that the commonly used Blume CAPM beta adjustment is not appropriate for electric and electric and gas public utility betas, and may bias the cost of common equity capital in public utility rate proceedings.
ISSN: 10406190
Rights: © 2013 Elsevier Inc.
Type: Article
Appears in Collections:Άρθρα/Articles

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