Total-factor-productivity studies as a rate-case tool

Journal Article · Thu Mar 13 04:00:00 EST 1980 · Public Util. Fortn.; (United States)

OSTI ID:5444977

Robinson, F S

In an order issued on December 18, 1979, concluding a proceeding centered upon a total factor productivity (TFP) study by Consolidated Edison Company, the New York Public Service Commission determined that TFP analysis, while perhaps useful, should not be made mandatory in rate cases. Summarizing its reasons for this decision, the Commission noted that output can be influenced by simultaneous, multidirectional changes, so that a total factor trend tends to obscure the real volatility of individual factor inputs; that rate cases are primarily concerned with the productivity effects of management decisions, which a total factor analysis does not distinguish from the effects of exogenous circumstances; and that the analysis cannot predict whether productivity trends are likely to continue. The Commission stated that TFP analysis could be useful in various contexts, and also that it was exploring the possibility of using such techniques as an adjunct to its management audit program, but decided that at the present state of the TFP art, it cannot satisfy the rigorous evidentiary requirements of a rate proceeding without an unreasonable expenditure of effort by all interested parties. The author of this article gives the reasoning which led him, as an administrative law judge, to recommend against making TFP analysis a rate case requirement.

• OSTI ID: 5444977
• Journal Information: Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 105:6; ISSN PUFNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
296000 -- Energy Planning & Policy-- Electric Power
ECONOMICS
ELECTRIC UTILITIES
FORECASTING
GAS UTILITIES
MANAGEMENT
PRODUCTIVITY
PUBLIC POLICY
PUBLIC UTILITIES
RATE STRUCTURE