Beyond regulation: A social compact' for gas and electricity
The public utility covenant, granting franchise protection to firms in return for just and reasonable rate regulation, has come under increasing scrutiny as socially inefficient for several reasons. First, cost-based regulation fails to adequately incite cost-minimization and new product development. Second, public utility regulation has turned into a micro-management exercise where prospective strategies are laboriously scrutinized and past performance is penalized from 20-20 hind-sight. Third, traditional regulation has provided a forum for nontraditional special interest regulation that may not be in the ratepayer's interest. An alternative to the regulatory covenant is the social compact where long-term contracts among the affected parties set price and service terms. The advantages of such contracting would be to reduce the administrative costs of regulation, better incite the market's entrepreneurial discovery process, deregulate upstream production and transportation, and eliminate extraneous regulation of electric and gas distribution. The winners would be gas consumers and the most efficient industry suppliers.
- OSTI ID:
- 6353907
- Journal Information:
- Public Utilities Fortnightly; (United States), Vol. 131:5; ISSN 0033-3808
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
GOVERNMENT POLICIES
COST
PRICING REGULATIONS
SOCIO-ECONOMIC FACTORS
PUBLIC UTILITIES
ELECTRIC UTILITIES
GAS UTILITIES
NATIONAL GOVERNMENT
STATE GOVERNMENT
INSTITUTIONAL FACTORS
REGULATIONS
293000* - Energy Planning & Policy- Policy
Legislation
& Regulation