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difference between the achieved rate of return of a
utiiity and its required rate of return applied to an
average investment rate base or an end-of-period
investment ret~ base.
~ (2) For pur oses of this subsection:
(a) "Achieved rats of return" means the rate of
return earned by the company for the most recent
12=month p~riod. The achieved rate of return shall
be calculated by applying appropriate ad~ustments
consistent with those which were used in the most
recent rate case of the utility and annualizing any
- rate changes occurring during such period.
~ (b) "Required rate of return" shall be calculated
j as the weighted average cost of capital for the
! most ~recent 12-month period, using the last
authorized rate of return on equity of the utility,
the current embedded cost of fixed-rate capital,
the actual cost of short-term debt, the actual cost
of variable-cost debt, and the actual cost of
other sources of capital which were used in the
last rate case of the utiiity.
(c) In a proceeding for an interim increase, the
term "last authorized rate of return on equity"
used in subparagraph b means the minimum of the
~ range of the l~st authorized rate of return on
~
equity established in the most recent rate case of
passages are deleted. Underlined passages are
~ added. -26-
:
~ gooK 557 PAGf 92
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