The value of a regulated public utility and its operations as defined by its regulators and on which the company is allowed to earn a particular rate of return.
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The value of the assets of a utility company. The rate base helps the local government determine the price the utility company is allowed to charge its customers. The rate base determines prices because it helps to ensure a reasonable profit for the utility company while keeping utilities (which are perceived as necessary) affordable for customers.
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The valuation of a utility's assets for the purpose of determining the rates the utility is permitted to charge its customers. Exactly what a utility should be permitted to include in its rate base is often a point of contention between it and its customers.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.