ALL Utility companies are
guarantied about a fixed return on ASSETS by federal statute.
If the utility company adds assets to benefit the customer, as required by the regulator, the rates will go up.
If the cost of maintenance goes up, the rates will go up.
All interruptions in service are recorded and timed from outage to restoration. Depending upon the storm level, excess times are fined.
All customer inbound service telephone calls are time recorded, there are requirements to answer and provide solutions. depending upon the issues, the company can be fined for poor customer service.
The cost of storm damage is recorded and collected separately and billed recovery over a future time period, not all at once.
The cost of repairing a car damaged telephone pole is recorded and the damaged asset removed and the new pole cost added to the assets for rate recovery. .
If the regulator denies the increase in rates, the utility will sue in federal court and win per the statute.
Each state has different rate setting rules, ie:
NY State allows rate increases to prepay for the investment in assets
MA State only gives rate increases AFTER the asset is in service (the utility has to borrow to make the investment, thereby increasing the cost of the investment)
There is a formula for rates which includes the cost of maintenance.
Utility ratemaking - Wikipedia.
Revenue Requirement formula
The traditional rate formula is intended to produce a utility's revenue requirement:
R = O + (V − D)r
The elements of the traditional rate formula are defined as:
R is the utility's total revenue requirement or rate level. This is the total amount of money a regulator allows a utility to collect from customers.
O is the utility's operating expenses, which are passed through to customers at cost with no mark-up. Examples include labor (for everything from field repair and maintenance crews to customer service and accounting personnel); bad debt expense; interest on debt; depreciation on assets; and federal (and sometimes state) taxes on income. A large operating expense is often the cost of the commodity itself (electricity, or natural gas, or water) purchased by a utility for its customers' use.
V is the gross value of the utility's tangible and intangible property.
D is the utility's accrued depreciation. Combined (V − D) constitute the utility's rate base, also known as its capital investment. Examples include wires, pipes, poles, substations, pumping stations, generating stations, computer software, computer hardware, office furniture, office buildings, etc.
r is the rate of return a for-profit utility is allowed to earn on its capital investment or on its rate base. Non-profit utilities, such as those owned by states or municipalities, or those owned by customers in rural areas (common in the United States) do not add an "r" in the Revenue Requirement formula, nor do they incur income tax expenses.
Progress and population expansion is not free, never has been never will be.
We are living in a developing area, unlike the old parts of the country, where there is no land left.
now enough with the rate increase hysterics. . .