State and federal regulators retain the authority to set or approve public utilities' prices.An important prerequisite for this role is to know the utility's:

Question

Quizplus · Accepted Answer

Regulators need to know a public utility's true cost function in order to ensure that the prices set or approved by the authority are fair and reasonable. This includes understanding the costs of production, operation, maintenance, and upgrading of facilities, as well as the costs of providing customer service, investments in infrastructure and new technologies, and regulatory compliance. Price elasticity of supply, income elasticity of demand, and price in other economies are not directly relevant to setting or approving public utility prices.

State and Federal Regulators Retain the Authority to Set or Approve