Despite the apparent simplicity of the reduced form DCF model [ke=(D1/P0+ g], the cost of equity measure emerging from most DCF analyses must be adjusted before being applied to a test year rate base to determine a utility's required earnings. The failure of regulatory commissions to recognize the need for these adjustments provides a partial explanation of why utilities tend not to earn either their allowed or their required returns. A recent FERC case is used to demonstrate the impact that an incorrect implementation of the DCF methodology may have upon the estimation of a utility's required earnings.