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    cost of equity capital

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    California Electric has a cost of equity capital of 16 percent. The firm has consistently been authorized a return on equity capital below this cost. Also, the effects of regulatory lag and attrition have further reduced the realized return to the 13-percent range. If the utility expects this problem to continue, what actions would you expect Cal. Electric to take or not take as a result?

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    I expect Cal. electric to modify its ...

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