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> expenses relating to attendance or participation in any formal proceeding before a regulatory commission are also prohibited from recovery. States require su

> expenses relating to attendance or participation in any formal proceeding before a regulatory commission are also prohibited from recovery. States require such participation, e.g. in the form of myriad document filings. Ratepayer revenue may be a utility's only revenue. How should such a utility pay its employees who produce filings for the state PUC?

hgomersall 3y ago
Shareholders' funds?
- johngladtj 3y ago
  Why should shareholders put up those funds, and where do they get them from if not the running business? Do you expect that shareholders should run a permanent loss on the business?
  - hgomersall 3y ago
    I haven't read the proposed legislation but I expect in practical terms it means such expenditure can't be treated as a business expenditure for tax purposes but still impacts the balance sheet. Whether or not that's good or bad I have no opinion.
  - miguelazo 3y ago
    I seriously doubt those expenses would result in a permanent (or even a single year's) loss under that scenario.
- prepend 3y ago
  What are shareholder funds? Are you saying that there would be a capital call to shareholders to pay operating expenses? I’m not sure I understand this term as related to how corporations pay expenses.
  - willcipriano 3y ago
    Shareholders get paid dividends right? Have a firm loan the utility the costs and recover them from the dividend payments.
    - prepend 3y ago
      Dividends come out of profits and profits come out of revenue. “Recovering from the dividend” is just another way of saying you are using revenues to pay for something. Paying a dividend out and then taking part back is not only inefficient but would still violate any prohibition to spend revenue on something. If you wanted to do this, it’s just the same as reducing the dividend by some amount and the paying that amount out to a different expense. Also, dividends are post tax so this is super inefficient in that you wouldn’t be able to deduct the expense if wanted to pay out as dividend and then have shareholders pay the expense.
decremental 3y ago
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scott00 3y ago
They do not literally mean that money collected from ratepayers can't be used to pay political expenses. I'm not an expert in this, but roughly speaking the way utility rate regulation works is that rates are set at a level that gives the utility a certain return on capital. (roc = profit/equity = (revenue - expenses) / equity). What they probably want is for political spending to be excluded from the expenses section of that formula for the purposes of the rate setting calculation. (They would still appear there in GAAP financial statements.) So the utility would pay those expenses by accepting reduced profits.

hgomersall 3y ago

Shareholders' funds?

johngladtj 3y ago
Why should shareholders put up those funds, and where do they get them from if not the running business? Do you expect that shareholders should run a permanent loss on the business?
- hgomersall 3y ago
  I haven't read the proposed legislation but I expect in practical terms it means such expenditure can't be treated as a business expenditure for tax purposes but still impacts the balance sheet. Whether or not that's good or bad I have no opinion.
- miguelazo 3y ago
  I seriously doubt those expenses would result in a permanent (or even a single year's) loss under that scenario.
prepend 3y ago
What are shareholder funds? Are you saying that there would be a capital call to shareholders to pay operating expenses? I’m not sure I understand this term as related to how corporations pay expenses.
- willcipriano 3y ago
  Shareholders get paid dividends right? Have a firm loan the utility the costs and recover them from the dividend payments.
  - prepend 3y ago
    Dividends come out of profits and profits come out of revenue. “Recovering from the dividend” is just another way of saying you are using revenues to pay for something. Paying a dividend out and then taking part back is not only inefficient but would still violate any prohibition to spend revenue on something. If you wanted to do this, it’s just the same as reducing the dividend by some amount and the paying that amount out to a different expense. Also, dividends are post tax so this is super inefficient in that you wouldn’t be able to deduct the expense if wanted to pay out as dividend and then have shareholders pay the expense.

decremental 3y ago

[dead]

scott00 3y ago

They do not literally mean that money collected from ratepayers can't be used to pay political expenses. I'm not an expert in this, but roughly speaking the way utility rate regulation works is that rates are set at a level that gives the utility a certain return on capital. (roc = profit/equity = (revenue - expenses) / equity). What they probably want is for political spending to be excluded from the expenses section of that formula for the purposes of the rate setting calculation. (They would still appear there in GAAP financial statements.) So the utility would pay those expenses by accepting reduced profits.