Abstract
Public utilities often impute a value to an asset when determining the rate base for the regulated portion of the company, in particular when the asset is partially or even completely utilized by a subsidiary (in such a case, an imputed reduction in the rate base). Further, imputation is a practice sometimes employed by state public utility regulatory agencies when a vertically integrated regulated firm is the primary supplier of a productive input both to itself and to its competitors in a downstream market; a value is imputed for the input which is used for the production of the integrated firm’s downstream service. In these contexts, the common thread is that there is not necessarily a market transaction that establishes a value for the item which must be imputed.
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Larson, A.C., Parsons, S.G. (1994). An Economic Analysis of Transfer Pricing and Imputation Policies for Public Utilities. In: Crew, M.A. (eds) Incentive Regulation for Public Utilities. Topics in Regulatory Economics and Policy, vol 18. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-2782-4_4
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