The mega-NOPR: Implications of stranded investment recovery
The so-called Mega-NOPR, the Federal Energy Regulatory Commission`s (FERC`s) blueprint for restructuring the electric power industry, envisions the creation of more open and competitive power markets through non-discriminatory open access to the nation`s transmission facilities. Unfortunately, this basic objective of lowering rates through increased competition may be at adds with the FERC`s second objective of full recovery of stranded investments. Under the FERC proposal, a customer seeking an alternative power supplier would have to pay, at a minimum, the transmission tariff of its current utility as well as its pro rata share of its current utility`s stranded investment. If the cost of an alternative supply plus the transmission tariff and stranded investment exit fee is less than its current rate, the customer would benefit from leaving its current utility. If, however, the combination of the tariff and exit fee is sufficiently high, it will effectively preclude the customer from seeking cheaper supplies. Clearly, for customers, the effect of the exit fee significantly overshadows the importance of the transmission tariff. It also ensure that the calculation and allocation of stranded investments will continue to occupy center stage in the FERC`s proposal to restructure the electric power industry.
- OSTI ID:
- 450597
- Journal Information:
- Fortnightly, Journal Name: Fortnightly Journal Issue: 14 Vol. 133; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
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