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The bird in hand: Stipulated settlements in the Florida electricity sector

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  • Littlechild, Stephen

Abstract

In the last quarter century, stipulated settlements between the electric utilities and the Office of Public Counsel have largely superseded the traditional method of litigation before the Florida Public Services Commission. Some have opposed settlements. But consumers have gained from reductions in electricity revenues worth over $3Â billion, which are greater or earlier than would have otherwise occurred. The utilities have benefited from commitments by parties outside the scope of the Commission, and from a more flexible accounting policy. Most importantly, stipulations have changed the form and nature of regulation: away from a conventional rate of return approach to a fixed-price approach, and later away from incentive schemes with profits caps to stronger and more enforceable incentive schemes without profit caps.

Suggested Citation

  • Littlechild, Stephen, 2009. "The bird in hand: Stipulated settlements in the Florida electricity sector," Utilities Policy, Elsevier, vol. 17(3-4), pages 276-287, September.
  • Handle: RePEc:eee:juipol:v:17:y:2009:i:3-4:p:276-287
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    References listed on IDEAS

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    1. Littlechild, S., 2007. "The bird in hand: stipulated settlements and electricity regulation in Florida," Cambridge Working Papers in Economics 0713, Faculty of Economics, University of Cambridge.
    2. Zhongmin Wang, 2004. "Settling Utility Rate Cases: An Alternative Ratemaking Procedure," Journal of Regulatory Economics, Springer, vol. 26(2), pages 141-163, September.
    3. Doucet, Joseph & Littlechild, Stephen, 2009. "Negotiated settlements and the National Energy Board in Canada," Energy Policy, Elsevier, vol. 37(11), pages 4633-4644, November.
    4. Doucet, J. & Littlechild, S., 2006. "Negotiated Settlements: The development of economic and legal thinking," Cambridge Working Papers in Economics 0622, Faculty of Economics, University of Cambridge.
    5. Paul L. Joskow, 1989. "Regulatory Failure, Regulatory Reform, and Structural Change in the Electrical Power Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 125-208.
    6. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
    7. Nillesen, Paul H. L. & Pollitt, Michael G., 2001. "Becoming a Best-Practice Company: The FPL Story Revisited," The Electricity Journal, Elsevier, vol. 14(9), pages 96-101, November.
    8. Joskow, Paul L, 1974. "Inflation and Environmental Concern: Structural Change in the Process of Public Utility Price Regulation," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 291-327, October.
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    Cited by:

    1. Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
    2. Stephen Littlechild, 2016. "Contrasting Developments in UK Energy Regulation: Retail Policy and Consumer Engagement," Economic Affairs, Wiley Blackwell, vol. 36(2), pages 118-132, June.
    3. Littlechild, Stephen, 2018. "Regulation and the nature of competition," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 211-223.
    4. Stephen Littlechild, 2011. "Regulation, customer protection and customer engagement," Working Papers EPRG 1119, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Bordignon, Stephen & Littlechild, Stephen, 2012. "The Hunter Valley access undertaking: Elements of a negotiated settlement," Transport Policy, Elsevier, vol. 24(C), pages 179-187.
    6. David Sappington & Dennis Weisman, 2010. "Price cap regulation: what have we learned from 25 years of experience in the telecommunications industry?," Journal of Regulatory Economics, Springer, vol. 38(3), pages 227-257, December.
    7. Littlechild, Stephen, 2012. "The process of negotiating settlements at FERC," Energy Policy, Elsevier, vol. 50(C), pages 174-191.
    8. Andrzej T. Szablewski, 2018. "Kolejny etap ewolucji koncepcji i praktyki regulacji ekonomicznej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 49-72.
    9. Chakravorty, Shourjo, 2015. "A study of the negotiated-settlement practice in regulation: Some evidence from Florida," Utilities Policy, Elsevier, vol. 32(C), pages 12-18.
    10. Fellows, G. Kent, 2011. "Negotiated settlements with a cost of service backstop: The consequences for depreciation," Energy Policy, Elsevier, vol. 39(3), pages 1505-1513, March.
    11. Havyatt, David, 2022. "Toward consumer-centric energy network regulation: Australia's experience," Utilities Policy, Elsevier, vol. 78(C).
    12. Stephen Littlechild, 2012. "Merchant and regulated transmission: theory, evidence and policy," Journal of Regulatory Economics, Springer, vol. 42(3), pages 308-335, December.
    13. Davies, Ryan J. & Hevert, Kathleen T., 2020. "Stay-out adjustments and multi-year regulatory rate plans," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 105-114.
    14. Chakravorty, Shourjo, 2020. "The association between a regulated utility's allowed revenue increase and future operating cost: Some evidence from Florida," Utilities Policy, Elsevier, vol. 64(C).

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