000 02433cam a2200349 i 4500
001 rnd000000000047412
003 RAND
008 920212s1985 caua b 000 0 eng d
010 _a 85006456
020 _a0833006444 (pbk.)
027 _aRAND/R-3245-RC
035 _a(Sirsi) a188513
037 _c$25.00
040 _aCstmoR
_cCstmoR
050 0 0 _aHD9685.A2
_bJ56 1985
100 1 _aJohnson, Leland L.
_eauthor.
245 1 0 _aIncentives to improve electric utility performance :
_bopportunities and problems /
_cLeland L. Johnson.
264 1 _aSanta Monica, CA :
_bRAND,
_c1985.
300 _axvii, 96 pages :
_billustrations ;
_c23 cm
336 _atext
_btxt
_2rdacontent
337 _acomputer
_bc
_2rdamedia
337 _aunmediated
_bn
_2rdamedia
338 _aonline resource
_bcr
_2rdacarrier
338 _avolume
_bnc
_2rdacarrier
500 _a"March 1985."
504 _aIncludes bibliographical references (p. 91-96).
520 _aThis report uses material from a recent Arizona Public Service Company rate case, and published literature, to address several issues generic to the electric utility industry: the effects on utility incentives and on rates to customers of including "construction work in progress" (CWIP) in the rate base; the use of prudence tests by regulators to determine what costs should, and which should not, be passed on to ratepayers; and the use of incentive programs, with explicit rewards and penalties, to reduce the construction costs of large power plants and to improve their operating performance after they go into service. It draws three major conclusions: (1) Economic principles do not support the notion that cost recovery from ratepayers should begin only after a plant is used and useful. (2) Traditional accounting practices produce rate shocks that force prices upward at the very time that the costs of using a plant are declining. Putting CWIP in the rate base is one of the ways rate shocks can be reduced. (3) Although including CWIP in the rate base may generate perverse incentives, the exclusion of CWIP from the rate base can also generate perverse incentives for utilities faced with severe cash flow problems.
530 _aAlso available on the internet via WWW in PDF format.
588 _aDescription based on print version record.
650 0 _aElectric utilities
_xFinance.
710 2 _aRand Corporation.
856 4 1 _yOnline Access
_uhttp://www.rand.org/pubs/reports/R3245/
999 _c598518
_d598518