Fair rate of return

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.
References in periodicals archive ?
Instead of following the tried and true rate regulations, Mercury argued the insurer should be allowed to argue over how to calculate the fair rate of return in every case.
The model indicates that a fair rate of return on underwriting is the negative of risk-free interest rate multiplied by the fund-generating coefficient "a"plus the risk premium of underwriting.
At present, interest rates of 45 percent are probably a fair rate of return to both the community investor and the co-op.
Our primary concern throughout this process is to ensure that we are able to achieve a fair rate of return in order to continue our investment in the future of the UK's communications infrastructure.
Incentives for private investors will be limited to the minimum necessary to trigger urban projects and may not exceed a fair rate of return established through a competitive process or, where that is not possible, by an independent expert.
Memorable points amongst the 20 priorities listed in the ETUC document are: developing a European energy solidarity pact; creating a "democratic" European energy agency to promote a common energy policy; ensuring energy bills reflect just prices (socially fair, affordable, based on fair rate of return and not on excessive profit taking); protecting vulnerable energy consumers and reducing the energy bill of low and medium-income households.
These include removing current barriers to investment and making sure that anyone who chooses to invest in fibre can earn a fair rate of return for their shareholders.
We pay pounds 45bn already in the UK and we don't get anywhere near a fair rate of return.
The report points out that the major challenge facing several countries in Europe is to establish a sustainable health care model in which generics can provide savings to payers and innovative drugs can provide a fair rate of return to manufacturers.
If, as an example, the salesman misrepresented the potential of earnings and it would be clear to a court that it would be virtually impossible to earn money or get a fair rate of return for the investment, then it could be shown the proposition was flawed.
Beyond this, retailers should look for products that offer distinctive benefits within the category, fulfill a specific consumer need and have a consumer acceptance factor that will provide the retailer with a fair rate of return.