The Brattle Group provides expert testimony on asymmetric risks faced by rate-regulated firms that may not be reflected in the cost of capital but which may require compensation. We provide estimates of the compensation required for bearing such risk. Our economic consultants also possess substantial experience in the area of regulatory takings.
For a large California utility, we estimated the premium to the cost of capital required to compensate for stranded cost risk associated with deregulation of the California electric power market. The California Public Utilities Commission ultimately awarded an increase in the allowed rate of return based on The Brattle Group's testimony.
Federal regulation grants cable and telecommunication providers the right to put attachments on or in electric poles. For the owners of such poles, The Brattle Group has estimated the appropriate rates for pole attachments under the Federal Communication Commission’s cable rate and telecom rate formulas as applied to utility distribution assets. We also have estimated the fair market value of such attachments.
We addressed stranded costs for a large utility in a state that was only beginning to discuss retail access. We quantified stranded costs and identified a number of alternative scenarios for competitive policy in terms of start dates, stranded cost estimation methods, and alternative stranded cost recovery mechanisms.