CPUC Plans to Weigh Small LECs' Capital Costs Next Month
The California Public Utilities Commission may vote July 11 on a proposed decision related to ratemaking for small local exchange carriers. It would respond to Calaveras Telephone and other small LECs’ September 2022 application seeking approval to establish cost of…
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capital for each company’s ratemaking purposes (see 2306070065). Cost of capital is the rate of return a company may recover on infrastructure investments. The CPUC draft would establish a cost of capital for 2022-2025. “To arrive at the Cost of Capital for the Small LECs, this decision adopts a hypothetical capital structure” of 55% equity and 45% debt, “which we find to be consistent with our findings with respect to the regulatory capital structure of these companies,” the draft said.