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Stranded cost recovery in electricity market reforms in the US

Author

Listed:
  • Woo, C.K
  • Lloyd, D
  • Karimov, R
  • Tishler, A

Abstract

An important element of an electricity market reform is stranded cost recovery. This paper explains the cause of stranded costs, describes four recovery mechanisms, evaluates these mechanisms using the criteria of recovery certainty, economic efficiency and equity, reviews the financial performance of 12 utilities in the US in connection to stranded cost recovery, and shows why the mechanism used in California has contributed to the reform failure in that state.

Suggested Citation

  • Woo, C.K & Lloyd, D & Karimov, R & Tishler, A, 2003. "Stranded cost recovery in electricity market reforms in the US," Energy, Elsevier, vol. 28(1), pages 1-14.
    • Handle: RePEc:eee:energy:v:28:y:2003:i:1:p:1-14
    DOI: 10.1016/S0360-5442(02)00090-7
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    References listed on IDEAS

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    1. Woo, Chi-Keung, 2001. "What went wrong in California's electricity market?," Energy, Elsevier, vol. 26(8), pages 747-758.
    2. Aigner, Dennis J., 1984. "The welfare econometrics of peak-load pricing for electricity : Editor's Introduction," Journal of Econometrics, Elsevier, vol. 26(1-2), pages 1-15.
    3. C.K. Woo & Brian Horii & Ira Horowitz, 2002. "The Hopkinson tariff alternative to TOU rates in the Israel Electric Corporation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 9-19.
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    Citations

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    Cited by:

    1. Woo, C.K. & King, M. & Tishler, A. & Chow, L.C.H., 2006. "Costs of electricity deregulation," Energy, Elsevier, vol. 31(6), pages 747-768.
    2. Woo, Chi-Keung & Horowitz, Ira & Tishler, Asher, 2006. "A critical assessment of the Hong Kong Government's proposed post-2008 regulatory regime for local electricity utilities," Energy Policy, Elsevier, vol. 34(13), pages 1451-1456, September.
    3. Woo, C.K. & Milstein, I. & Tishler, A. & Zarnikau, J., 2019. "A wholesale electricity market design sans missing money and price manipulation," Energy Policy, Elsevier, vol. 134(C).
    4. Liu, Wei & Wang, J.H. & Xie, Jun & Song, Chang, 2007. "Electricity securitization in China," Energy, Elsevier, vol. 32(10), pages 1886-1895.
    5. Woo, C.-K. & Lloyd, Debra & Clayton, William, 2006. "Did a local distribution company procure prudently during the California electricity crisis?," Energy Policy, Elsevier, vol. 34(16), pages 2552-2565, November.
    6. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    7. Woo, C.K. & Cheng, Y.S. & Law, A. & Zarnikau, J. & Ho, S.T. & Leung, H.Y., 2015. "Consumer support for a public utilities commission in Hong Kong," Energy Policy, Elsevier, vol. 76(C), pages 87-97.
    8. Lin, Jiang & Kahrl, Fredrich & Yuan, Jiahai & Liu, Xu & Zhang, Weirong, 2019. "Challenges and strategies for electricity market transition in China," Energy Policy, Elsevier, vol. 133(C).
    9. Simshauser, Paul, 2017. "Monopoly regulation, discontinuity & stranded assets," Energy Economics, Elsevier, vol. 66(C), pages 384-398.
    10. Horowitz, I. & Woo, C.K., 2006. "Designing Pareto-superior demand-response rate options," Energy, Elsevier, vol. 31(6), pages 1040-1051.
    11. Zarnikau, J. & Cao, K.H. & Qi, H.S. & Woo, C.K., 2023. "Has retail competition reduced residential electricity prices in Texas?," Utilities Policy, Elsevier, vol. 84(C).

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