Purchased power: Risk without return?
Journal Article
·
· Fortnightly
OSTI ID:381237
- Benrose Economic Consultants, New York, NY (United States)
Electric utilities have turned more to purchased power to satisfy capacity needs, but with an increase in risk. Purchased power will become more significant if today`s vertically integrated utilities spin off the generation function. Either way, utilities must address this added risk through fair compensation and by correctly assessing the true cost of supply alternatives in resource planning. This article reviews the financial, regulatory, market, and supply risks associated with purchased power, as well as the risk associated with a declining rate base, and it suggests that regulators should treat purchased power as a capital asset and allow a separate return on investment.
- OSTI ID:
- 381237
- Journal Information:
- Fortnightly, Journal Name: Fortnightly Journal Issue: 4 Vol. 134; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
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