Rate reform advocates target: The adjustment clause
The propriety of the automatic pass-through of certain types of costs without a formal rate hearing, while always an issue for debate among theorists, has taken a more practical tone as low inflation continues and interest in competitive market forces increases among regulators. Is it time to move away from one of the first and most widely accepted [open quotes]aberrations[close quotes] to traditional ratemaking The primary purpose of the automatic adjustment clause is to keep utilities financially healthy during periods of inflation when costs rise faster than utilities and commissions can complete rate cases. Created to respond to World War I coal-price increases, the clause has generally fallen out of fashion during periods of stable prices. Now, the Colorado Public Utilities Commission has announced its intention to review whether the nation is again experiencing such a period. Other state commissions are also questioning whether the bare pass-through of costs to utility customers is consistent with the trend toward [open quotes]market-based[close quotes] regulation.
- OSTI ID:
- 7022645
- Journal Information:
- Fortnightly; (United States), Journal Name: Fortnightly; (United States) Vol. 132:9; ISSN FRTNE8
- Country of Publication:
- United States
- Language:
- English
Similar Records
Automatic adjustment clauses in public-utility rate schedules. A staff report on the implementation of Section 208 of the Public Utility Regulatory Policies Act of 1978
Automatic fuel-cost-adjustment clauses: issues and evidence