Fair rate of return

(redirected from Fair Return Rate)

Fair rate of return

The rate of return that state governments allow a public utility to earn on its investments and expenditures. Utilities then use these profits to pay investors and provide service upgrades to their customers.

Fair Rate of Return

The profit that a government allows an industry to make if it deems that industry to be necessary for public function. A state may impose a fair rate of return on industries, such as utilities, to keep services affordable for consumers. Critics of this practice contend that this is economically inefficient and ultimately harms consumers, though this is a matter of considerable dispute.