INTERDEPENDENCE OF UTILITY RATE-BASE TYPE, PERMITTED RATE OF RETURN, AND UTILITY EARNINGS.

The article explores the relationships between public utility rate-base type, permitted rate of return, and utility earnings. The author compares 15 local companies of AT&T, known as Bell operating telephone companies, as examples of local variation of utility regulation for the period of 1944 through 1959. For Bell telephone companies operating within a single regulatory jurisdiction, the permitted rates of return varied inversely with the rate base. The permitted rate of returns are generally based on either reproduction cost as a percent over original cost, fair value percent over original cost, or percent weight given reproduction cost in determining fair value.