A regulatory compact worthy of the name
Owners` claims of a right to full compensation of stranded investment are wrong, but a conditional opportunity to recover is sound policy. Matching sensible conditions to future utility conduct is among the greatest challenges facing government energy officials today. Billions of dollars are at stake here, some stemming from nuclear construction costs, some from expensive power purchase contracts, some from deferred taxes and benefits, some from social programs and obligations - including those protecting the environment. Also at stake is the pace at which U.S. consumers get the benefits of competition in the electricity industry. A compelling case can be made for allowing utilities an opportunity to recover these investments under some circumstances, but this case emphatically does not rest on the proposition that regulators, as society`s representatives, have blessed as {open_quote}prudent{close_quote} every dollar of investment not specifically disallowed, and must therefore assure full recovery of this money as part of a transition to competition. The equitable case for unconditioned full recovery of investment, based on a societal arms-length bargain or on inadequate past compensation, depends on a fantasy of omnipresent past regulatory statesmanship and past investor security that is not to be taken seriously. To assess more limited claims, one must look, category by category, at the components that drive utility costs above market prices. The author touches here only on the generating plant investments and purchase contracts, but taxes, operating efficiencies, regulatory assets and societal benefits all require attention by anyone seeking comprehensive solutions.
- OSTI ID:
- 456945
- Journal Information:
- Electricity Journal, Vol. 8, Issue 9; Other Information: PBD: Nov 1995
- Country of Publication:
- United States
- Language:
- English
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