Electricity matters: A new incentives approach for a changing electric industry
The method of regulating a utility`s rates should be changed fundamentally to promote responses to competition. An approach that addresses price caps, profit sharing and affords flexibility in pricing can offer utilities and those they serve a {open_quotes}win-win{close_quotes} scenario. U.S. businesses face fiercely difficult challenges to compete in the global marketplace, requiring many firms to search for new and innovative competitive strategies. American business must make fundamental changes to cope with the forces of competition - or risk going out of business. Electricity suppliers can facilitate economic progress by providing cost-effective, high-quality and reliable service to their customers. But as many utility managers know too well, this goal is not easy to achieve. For regulators, it is important to frame and resolve the issues in a proactive way. At the outset, American electric utilities must have strong incentives to be efficient. The purpose of this paper is to explore some of the incentive regulation techniques, such as price-cap regulation, which U.S. and foreign electric utilities should use to facilitate change. These techniques can better accomodate the current mixed competitive and regulated environment while providing an appropriate transition to a dynamically competitive electric services market.
- OSTI ID:
- 75507
- Journal Information:
- Electricity Journal, Journal Name: Electricity Journal Journal Issue: 1 Vol. 8; ISSN ELEJE4; ISSN 1040-6190
- Country of Publication:
- United States
- Language:
- English
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