Fuel-cost-adjustment clause incentives: an analysis with reference to California

Journal Article · Thu Jun 10 04:00:00 EDT 1982 · Public Util. Fortn.; (United States)

OSTI ID:5154121

Violette, D M; Yokell, M D

This article addresses a variety of policy issues raised by regulatory efforts to structure automatic fuel- and other cost-adjustment mechanisms in such a way as to provide incentives for efficiency and economy in fuels (or other materials and services) procurement and use. It takes one of the most elaborate of adjustment clauses, the energy cost adjustment clause in effect for electric utilities in California, as a point of departure, demonstrating how a carefully constructed set of provisions intended to promote efficient use of fuels in fact creates distortions in the relative costs of fuel-related decisions by utility managements, ultimately leading to decisions that would be uneconomic and therefore not taken but for the operation of adjustment-clause provisions. The authors offer suggestions for the design of a fuel-cost adjustment that avoids the undesirable effects identified in the California case. Their article is based on work originally done under contract to the California Public Utilities Commission. 5 tables.

• Research Organization: Energy and Resource Consultants, Inc., Boulder, CO
• OSTI ID: 5154121
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 109:12; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
296000* -- Energy Planning & Policy-- Electric Power
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320603 -- Energy Conservation
Consumption
& Utilization-- Municipalities & Community Systems-- Public Utilities-- (1980-)
ECONOMIC IMPACT
ELECTRIC UTILITIES
FINANCIAL INCENTIVES
FUEL ADJUSTMENT MECHANISMS
PUBLIC UTILITIES
RATE STRUCTURE