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 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.