Utilities are at a challenging crossroad of increased capital spending to maintain and future-proof their assets to meet increasingly stringent state demands, while simultaneously maintaining affordability for their customers. As stakeholders, regulators, and utilities search for methods to make additional “room” for competing expenses, utilities need to attract sufficient capital at reasonable rates. With this consideration, it is important to recognize that the cost of equity reflects the utility’s cost of raising and retaining equity capital required to serve customers, and therefore should not be viewed as a discretionary lever.
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