Incentive ratemaking in Illinois: The transition to competitive markets

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

OSTI ID:450599

Harvill, T S

To accommodate the future which portends more competition, a properly designed, incentive-based mechanism will prove superior to traditional rate-of-return regulation because it will allow the incumbent utility to compete with new market entrants on an even plain, while protecting the captive ratepayer and not interfering with competition. In October 1994, the Illinois Commerce Commission (ICC) enacted price-cap regulation for Ameritech-Illinois. Price-cap regulation focuses on constraining the company`s prices, within a given degree of flexibility. Profits are allowed to fluctuate with the degree of cost savings. At the heart of the price cap plan is the price-cap index (PCI) which constrains prices and must produce just and reasonable rates over the life of the plan while also improving company productivity and efficiencies.

• OSTI ID: 450599
• Journal Information: Fortnightly, Journal Name: Fortnightly Journal Issue: 14 Vol. 133; ISSN FRTNE8
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY
FINANCIAL INCENTIVES
ILLINOIS
PRICING REGULATIONS