Estimating Potential Stranded Commitments for U.S. Investor-Owned Electric Utilities

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Description

New technologies, low natural gas prices, and federal and state utility regulations are restructuring the electricity industry. Yesterday's vertically integrated utility with a retail monopoly franchise may be a very different organization in a few years. Conferences, regulatory-commission hearings, and other industry fora are dominated by debates over the extent and form of utility deintegration, wholesale competition, and retail wheeling. A key obstacle to restructuring the electricity industry is stranded commitments. Past investments, power-purchase contracts, and public-policy-driven programs that made sense in an era of cost-of-service regulation may not be cost-effective in a competitive power market. Regulators, utilities, and other ... continued below

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42 pages

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Baxter, L. January 1, 1995.

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Description

New technologies, low natural gas prices, and federal and state utility regulations are restructuring the electricity industry. Yesterday's vertically integrated utility with a retail monopoly franchise may be a very different organization in a few years. Conferences, regulatory-commission hearings, and other industry fora are dominated by debates over the extent and form of utility deintegration, wholesale competition, and retail wheeling. A key obstacle to restructuring the electricity industry is stranded commitments. Past investments, power-purchase contracts, and public-policy-driven programs that made sense in an era of cost-of-service regulation may not be cost-effective in a competitive power market. Regulators, utilities, and other parties face tough decisions concerning the mitigation and allocation of these stranded commitments. We developed and applied a simple method to calculate the amount of stranded commitments facing U.S. investor-owned electric utilities. The results obtained with this method depend strongly on a few key assumptions: (1) the fraction of utility sales that is at risk with respect to competition, (2) the market price of electric generation, and (3) the number of years during which the utility would lose money because of differences between its embedded cost of production and the market price.

Physical Description

42 pages

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  • Other Information: PBD: 1 Jan 1995

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  • Report No.: ORNL/CON-406
  • Grant Number: AC05-00OR22725
  • DOI: 10.2172/814057 | External Link
  • Office of Scientific & Technical Information Report Number: 814057
  • Archival Resource Key: ark:/67531/metadc734574

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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  • January 1, 1995

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  • Oct. 18, 2015, 6:40 p.m.

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  • March 31, 2016, 12:50 p.m.

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Baxter, L. Estimating Potential Stranded Commitments for U.S. Investor-Owned Electric Utilities, report, January 1, 1995; United States. (digital.library.unt.edu/ark:/67531/metadc734574/: accessed November 18, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.