Analysis of gas utility capital structure and return on equity
On behalf of a state public utility regulatory agency staff, Karen Morgan reviewed a request for approval by a jurisdictional utility of the use of its actual capital structure in the preparation of its capital budget for fiscal year 2019. Her analysis supported the use of the actual capital structure for rate-making purposes calculated on the basis of a trailing four-quarter average and subject to a cap of no more than 58%–60%. Recommended a reduction in the utility's benchmark return on equity to reflect the impact of the change in capital structure on the cost of equity. The Bates White report helped Staff settle with the utility, voiding the need for a full hearing.