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Utilities don't invest on ROI the way someone does investing in equities. Usually a utility gets a fixed return based on capex. The incentive, outside of the re
by teed 3y ago
Utilities don't invest on ROI the way someone does investing in equities. Usually a utility gets a fixed return based on capex. The incentive, outside of the return on capex, is to provide clean base load power to stabilize the grid.
- bruce511 3y agoI get that in different places utilities would have different mandates. And would potentially have different mechanisms to calculate costs and prices. A govt funded utility could of course then focus on things that are not good (financial) investments. In which case sure, I can see that in play. (Not sure the US is leaning in that direction though.) >> Usually a utility gets a fixed return based on capex This would imply that funding is from sources other than consumers right? Because as a consumer I'm billed on usage, not on utility-capex.
- chii 3y ago> funding is from sources other than consumers right? funding is never going to be from the end consumers. It will be from long term financiers such as large pension funds, PE or some other long term funding sources. The consumer is the other end - they are the 'returns', rather than the funding.