Deregulating fairly: Untangling the interests of stockholders and customers

Journal Article · Sat Apr 15 04:00:00 EDT 1995 · Fortnightly

OSTI ID:115007

Riddick, L A ^[1]

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1. American Univ., Washington, DC (United States)

There is nothing regulators or others can do to prevent an initial drop in stock prices for the newly competitive components of most of the original utilities. Indeed, the introduction of competition should lead to some drop in prices. Then the individual firms will have to compete and let the market determine the final winner, which will be the firm or firms that can adjust most efficiently to the new environment. In the end, some firms will be gone, most will stay, and stock prices will adjust to this appropriate levels (whether lower or higher). This discussion does not explore additional problems associated with deregulation, such as how to best assign assets to the new firms, or how to prevent low-cost customers from leaving the regulated distribution company. But regulators must carefully consider the impact their actions will have on both parties. Their best hope is to assign value as accurately as possible, and then let the financial markets sort out the winners and losers.

• OSTI ID: 115007
• Journal Information: Fortnightly, Journal Name: Fortnightly Journal Issue: 8 Vol. 133; ISSN FRTNE8
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
ACCOUNTING
DEREGULATION
ECONOMICS
ELECTRIC UTILITIES