State agencies order incentive rates to end growing power-plant cost-overrun problems: dangerous precedent or promoter of efficiency
State regulatory agencies are involving themselves in power plant construction plans in an effort to hold down costs before large expenditures are committed. One approach to stopping cost escalations is the incentive rate of return (IROR) that rewards completion or penalizes shareholders depending on whether the construction costs are under or over their target. The concept is used in New York and is under study by other states. Debate over IROR as an experimental approach questions its legality, its fairness, and its impact on the company's credit standing. New York utilities and regulators see it as a workable plan, despite its untested assumptions, for setting future rates of return. (DCK)
- OSTI ID:
- 6883754
- Journal Information:
- Electr. Light Power; (United States), Journal Name: Electr. Light Power; (United States) Vol. 60:10; ISSN ELLPA
- Country of Publication:
- United States
- Language:
- English
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