These federal agencies supervise utilities conducting interstate business. Rates are subject to review by the courts, which have held that they must provide a "fair" return on a "fair" valuation of investment. How valuation is to be determined has been the subject of much controversy. The most common ways to base rates are: on the basis of prudent investment, present earning power, or present cost of production An established principle of regulation is that a utility may not earn excessive profits. Since most utilities lack competition to keep their prices low, regulation is involved to keep the rates at a reasonable le!.
vel. The means of regulation include supervision of accounting and control of security issues.
Municipalities dissatisfied with the results of public regulation of privately owned local utilities have often acquired ownership of such companies. To keep rates down and make utilities available to more people, the United States has formed public corporations or agencies, such as the Tennessee Valley Authority, which also has served as a measurement of the efficiency of privately owned utilities, and the National Railroad Passenger Corporation, which operates virtually all intercity passenger rail lines in the United States.
In the 1970s and 80s, Untied States government agencies broke up some utilities and deregulated others. In 1974 an antitrust suit was filed against American Telephone and Telegraph (AT&T). In 1982 the company settled the suit by agreeing to separate from 22 local telephone-operating companies. In return, AT&T was given the right to enter new businesses. Since then, federal regulators have made it easier for companies to enter the telecommunications industry and for phone companies to set rates for long-distance services. Legislation passed in 1978 partially deregulated natural gas prices in 1985, and legislation passed in the late 1970s and early 80s deregulated trucking, railroad, and airline rates, which had been set by the federal government.
