BEGIN:VCALENDAR VERSION:2.0 PRODID:-//hacksw/handcal//NONSGML v1.0//EN CALSCALE:GREGORIAN BEGIN:VTIMEZONE TZID:Europe/London BEGIN:STANDARD TZNAME:GMT DTSTART:19710101T020000 TZOFFSETFROM:+0100 TZOFFSETTO:+0000 RRULE:FREQ=YEARLY;BYMONTH=10;BYDAY=-1SU END:STANDARD BEGIN:DAYLIGHT TZNAME:BST DTSTART:19710101T010000 TZOFFSETFROM:+0000 TZOFFSETTO:+0100 RRULE:FREQ=YEARLY;BYMONTH=3;BYDAY=-1SU END:DAYLIGHT END:VTIMEZONE BEGIN:VEVENT DTEND;TZID=Europe/London:20220223T140000 UID:https://www.lse.ac.uk/granthaminstitute/?post_type=event&p=58008 DTSTAMP;TZID=Europe/London:20240329T152659Z LOCATION:Online (via Zoom) DESCRIPTION:
Stephen Jarvis is an Assistant Professor in Environmental Economics in the Department of Geography & Environment\, LSE.
He will be presenting his paper “Rate of Return Regulation Revisited”
Abstract:
Utility companies recover their capital costs through regulator-approved rates of return on debt and equity. The US costs of risky and risk-free capital have fallen dramatically in the past 40 years\, but these utility rates of return have not. We estimate the gap between what utilities are paid now\, and what they would have been paid if their rate of return had followed capital markets\, using a comprehensive database of utility rate cases dating back to the 1980s. We estimate that the current average return on equity is 0.5–4 percentage points higher than historical relationships would suggest\, and consumers pay an average of $2–8 billion per year more than they would otherwise. We then revisit the effect posited by Averch–Johnson (1962)\, estimating the consequences of this incentive to own more capital: a 1 percentage point increase in the return on equity increases new capital investment by about 5% in our preferred estimate.
Please email gri.events@lse.ac.uk to request the Zoom joining details for this workshop by by 5pm on Tuesday\, 22th February 2022.
URL;VALUE=URI:https://www.lse.ac.uk/granthaminstitute/events/stephen-jarvis-london-school-of-economics/ SUMMARY:Rate of Return Regulation Revisited | Stephen Jarvis DTSTART;TZID=Europe/London:20220223T123000 END:VEVENT END:VCALENDAR