Which of the Following Is Not True for a Regulated

question 61

Multiple Choice

Which of the following is not true for a regulated electric utility that has construction work in progress?

• A)The political climate of the utility commission that will be ruling on the construction work in progress costs is not an issue to be considered.
• B)Most utility commissions allow no construction work in progress or only a small amount in the rate base.
• C)In the long run,everybody pays for inefficiency and excess capacity because disallowed costs are a risk that can drive the stock price down and interest rates up for the utility.
• D)Costs related to construction work in progress that are disallowed are,in effect,charged to the stockholders.
• E)Future income will not include a return on disallowed costs.