Public Utility Commissioner Selection and Electric Utilities' Cost of Capital, Part 2: Bond Ratings. Final Report for 1986/87 SOMED Project

摘要

The objective of the project is to determine if the direct election of Public Utility Commissions (PUCs) has any effect on electric utilities cost of capital. The second part of the project is an analysis of electric utility bond ratings for the period 1979-1983. Bond ratings are widely used to assess the quality of bonds, and are viewed as reflecting the degree of credit and default risk. An N-chotomous probit model is used to analyze the effects of political and financial variables on bond ratings. Direct election of the PUC has a significant negative effect on electric utilities bond ratings.