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By JEAN ANN f’UX
Rappahannock Newt Contributing Writer*
Virginia consumers dismayed by the rapid increase in electric, gas and telephone rates during the 1970s and early ’80s will be happy to learn that they are due a significant reduction in their utility bills. But they need to let the State Corporation Commission know that they expect the rate-making process to run as efficiently in reverse as it does in forward.
What has happened? Two things.
First, the rate of return utility companies need in order to attract investors has dropped sharply with a decline in inflation and interest rates from the levels earlier in this decade. Second, tax reform has slashed the amount of money utilities must collect from the consumer to pay Uncle Sam. Either of these developments should translate into a large rate cut. Yet, the utilities have been slow to reduce their rates voluntarily.
Virginia’s current utility rates are set to permit a return on equity in the 13 to 15 percent range. This is excessive by almost any measure. By comparison, the current benchmark rate of return on equity for
91.5%