For US electric utilities realized rates of return were less than allowed rates from 1977-82 and less than the market cost of capital from 1979-82. Also, allowed rates were less than the cost of capital in 1980 and 1981. Estimates of the influence of rate-of-return regulation on the behavior of electric utilities have assumed that the allowed and realized rates are equal in equilibrium and that the allowed rate is at least as great as the cost of capital. We test the validity of these assumptions by examining rates of return and costs of capital between 1973 and 1982.