Suppose that a utility has a rate base of 500,000. It expects to sell 3,500,000 kWh to firm customers and 99,000 kWh to residential customers Operating costs are 355,000. The public service commission believes that 9 is a normal rate of return for the utility. The utility asked the PSC for a rate increase to 10 per kWh for firm users and to 15 per kWh for residential users. Should the PSC approve the rate increase? Why? or Why not?

Answer rating: 100% (QA)

Yes the PSC should approve the rate increase to 10 per kWh for firm users and 15 per kW... View the full answer