Comparing “Stranded Cost” Arguments in Telecommunications and Electricity

Abstract

As the prospect of competition has gained salience with regard to the electricity industry in the United States, a number of transitional issues have garnered substantial attention. Certainly among the leaders, if not the leader, is the extent to which policy makers should impose ex post fees in the competitive environment to provide utility stockholders with revenues to cover the otherwise not recovered ex ante costs of generator investments and power purchasing contracts made during the regulatory era.

Discussions with Paul Kleindorfer, Dale Lehman, Colin Loxley, Molly Macauley, Glenn Meyers, Karen Palmer, Richard Simnett, and Tom Spavins were quite helpful. Errors of commission and omission remain the author’s sole responsibility.