Public Utilities Essay Example | Topics and Well Written Essays - 2250 words

Public Utilities - Essay Example Regulatory commissions must them establish the measure of value for each of these items; these value determinations are made, not found, rendering the overall value relatively unknown. In a competitive market, value is determined by normal market processes such as supply and demand. However, in the case of regulated industries, earnings are dependant upon the rates established by the regulatory commissions-if rates are set low, the value is consequently low, and the same results from rates that are set high. Time variant rates might occur when the public being served fluctuates in their demands of the public utility. For example, residents living in the northern states will go through periods within the year where they will need more heat, creating a demand for electricity and gas power and services. These times, referred to as "peak times," can cause temporary fluctuations in the rates to ensure proper distribution of the appropriate services. Similarly, phone and Internet companies can see the same fluctuating demands at various times in the day as changes in shifts occur at work or school for the public. As people are relieved from their jobs, they might see the need to begin using the phone to contact family members, set appointments, or call other places of business for problems or clarification of services and bills. These time variant rates can often lead to drastic increases or decreases in rates for a short period, and can also add to the public's opinion of how necessary the s ervices might be. For example, several phone companies across the United States offer a standing rate for service; however, the rates on Sundays for long distance service might decrease drastically to provide consumers with an opportunity to contact family members that live out of state. The development of cell phone technology has further dropped the rates for long distance phone service. However, to continually regulate the rates at which the public utility companies are charging the public, regulatory commissions at the public, state, and federal levels are necessary for several reasons. The first step to successfully regulating industries categorized as public utilities is making sure the public within the communities realize the economic advantages of holding regulated monopolies rather than competitive businesses. After the need for regulations have been expressed, the agencies provided these responsibilities must ensure that they are regulating the industries to the best of their abilities; doing so will not only provide necessary services to the public, but will also offer large economic growth to the community. (Phillips 9). To regulate effectively, state and federal regulation commissions must pay close attention to the methods with which they are regulating their respective areas of industry. They must carefully watch the overall expenditures of the industry to ensure that they are within acceptable limits. Performance evaluations should be used to ensure the overall effectiveness of employees working in the public utility industry. Regulating price control by maintaining knowledge over the current markets being served and the overall cost of