Mathematical Models of Growth Allowances for Public Utility Regulation—A Synthesis

The construction and application of mathematical models which aid in the determination of fair rates of return for regulated industries is a development of potentially great importance to both the theoretician and the purchaser of regulated industry services. This paper shows that the two apparently dissimilar models of fair rates of return under conditions of growth found in the literature are derivable from a third more general model of such a process. The relative usefulness of the models is discussed, along with the validity of the behavioral assumptions that underlie the models.