Other inefficiencies arise because if rates are set too high, public utilities will overinvest in fixed assets and use excessively capital-intensive production methods to avoid showing above-normal returns (which would lead to rate reductions). On the other hand , if public utility rates are set low, public utility companies will underinvest in fixed assets (i.e., in plant and equipment) and overspend on variable inputs, such as labor and fuel, and tend to reduce the quality of services. Overinvestment or underinvestment in plant and equipment resulting from the wrong public utility rates being set is known as the Averch-johnson or A-J effect (from Harvey and Leland Johnson, who first identified this problem) and can lead to large inefficiencies. And yet, it is difficult indeed for regulatory commissions to come up with correct utility rates in view of the difficulty of valuing the fixed assets of public utilities and because of the long planning and gestation period of public utility investment projects.