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| Boyd, James. |
| Progress toward electricity market deregulation has brought controversy over whether or not utilities are entitled to compensation for "stranded costs," i.e., costs utilities will not be able to recover due to the advent of competition in their markets. This paper uses a legal and economic analysis of contracts to address the desirability of utility cost recovery. First, underlying principles of law are reviewed to determine whether or not there is a legal presumption of recovery. Then, the analysis considers whether or not an implicit "regulatory compact" between utilities and regulators follows from principles in the economic analysis of law, particularly theories of efficient breach and implicit contracts. The paper concludes that recovery should occur... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Stranded costs; Deregulation; Contracts; Electric utilities; Environmental Economics and Policy; L43; L94; K12. |
| Ano: 1996 |
URL: http://purl.umn.edu/10803 |
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| Brennan, Timothy J.; Boyd, James. |
| This paper explores ways in which economic analysis can help resolve the stranded cost controversy that has arisen in debates over electricity market deregulation. "Stranded costs" are costs electric utilities will not recover as power markets move from protected monopolies to an open, competitive environment. The paper begins with a description of the stranded cost problem, its magnitude, and the prominent arguments for and against recovery. We then turn to an analysis of contracts in order to understand whether there is, or should be, a legal duty to compensate utility shareholders for unrecovered costs. The paper also argues that efficient approaches to electricity deregulation will rely on more than an analysis of contracts. In particular, the politics... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Stranded costs; Deregulation; Takings; Electric utilities; Contracts; Resource /Energy Economics and Policy; L43; L94; K12. |
| Ano: 1996 |
URL: http://purl.umn.edu/10688 |
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