Code of Massachusetts Regulations
220 CMR - DEPARTMENT OF PUBLIC UTILITIES
Title 220 CMR 31.00 - Optional Formula For Determining Allowed Rates Of Return On Equity For Water Companies
Section 31.03 - Formula

The formula used to establish the allowed return on equity shall be as follows:

Allowed return on equity = Index + 3.5%, if the utility has a common equity ratio of 25% or lower;

Allowed return on equity = Index + 3.0%, if the utility has a common equity ratio in excess of 25% but below 75%;

Allowed return on equity = Index + 2.5%, if the utility has a common equity ratio of 75% or greater;

Except where the Department may otherwise determine in specific cases, the allowed return on equity may not exceed 14.5% or be below 11.5%.