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The Effect of a Fuel Adjustment Clause on a Regulated Firm's Selection of Inputs

Frank A. Scott, Jr.

Year: 1985
Volume: Volume 6
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No2-9
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Abstract:
When input prices are changing rapidly, the delays inherent in rate-of-return regulation can result in rate decisions that are outdated before they can be implemented. Many regulatory commissions have adopted fuel adjustment clauses to remedy this problem. Fuel clauses adjust output price for changes in fuel costs so that the utility's profit remains relatively unaffected. Fuel adjustment clauses are now used in almost all the 50 states and the District of Columbia; a survey by the National Association of Regulatory Utility Commissioners (NARUC) (1978, p. 6) revealed that only 7 states did not permit fuel clauses.



Direct Investment in Conservation Measures by a Public Utility

Anthony M. Marino and Joseph Sicilian

Year: 1987
Volume: Volume 8
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol8-No2-10
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Abstract:
During the period 1978-1980, public policy toward U.S.-regulated utilities mandated residential conservation programs. Public utilities encouraged residential customers to invest in home conservation measures to help meet the national goal of energy security. The actual programs growing out of this legislation can be grouped as information programs (such as the energy audit program), financial incentives or subsidy programs, and direct investment programs. Our focus is on the third type wherein the public utility itself does home-retrofit conservation work (weather stripping, caulking, storm windows and doors, and attic and wall insulation), and the residential customer pays no direct charges. (In Marino and Sicilian (1986) we provide an economic analysis of information and financial incentives programs.) Our principal goals are: (a) to give an economic explanation of why a regulated utility would want to provide conservation measures that reduce the demand for its primary product and (b) to examine whether existing regulatory structure and utility programs are likely to lead to economic efficiency in conservation investment. We also provide an idealized regulatory structure and conservation program that does lead to economic efficiency.



Utilities and Cogeneration: Some Regulatory Problems

Peter Zweifel and Konstantin Beck

Year: 1987
Volume: Volume 8
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol8-No4-1
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Abstract:
Cogeneration-a technology which uses waste heat for electricity generation-has been known for over one hundred years. To be economically viable, it requires that excess electricity be fed into a grid for distribution. In the U.S., utilities have been legally obliged by PURPA legislation (Public Utility Regulation Practices Act) to put their grids at the disposal of electricity suppliers in industry. Nonetheless, cogeneration has recently accounted for no more than 14 percent of electricity used in industry (Anandalingam, 1985). Thus, PURPA legislation may not be enough to open markets to cogenerators.





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