Utilities Have a High-Wire Act Ahead

Utilities are meant to serve both the customers who pay the bills and the investors who fund them. For years, low interest rates and cheap natural gas made it easy to please both stakeholders. Today’s environment could break down that win-win formula.

Thus far, high natural-gas prices have been a problem for consumers, not utilities, many of which automatically pass on the cost of fuel to customers. But trouble for utilities could start the next time they ask regulators for a bump in the revenue they can collect. In what is known as the rate-case process, a utility has to make the case for a rate increase that depends partly on what it costs to improve and maintain its service (say, a new transmission line) and partly on what it costs to fairly compensate investors.

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This article was written by and originally published on www.wsj.com