"Second-Best" Adjustments to Externality Estimates in Electricity Planning with Competition
AbstractSome public utility commissions use monetary place-holders to reflect externality values in the financial evaluation of utility investments. This approach can be justified as a "second-best" policy tool if existing environmental regulation can be taken as given. This paper addresses two possible unintended consequences of this policy: the effect on the price-marginal cost gap and the potential substitution towards unregulated generation. We compute a "second-best adder" to correct for externalities in electricity planning in three regional case studies using a normative model of economic efficiency. Such adders are found to differ from externality estimates by 10-20 percent or more.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Land Economics.
Volume (Year): 73 (1997)
Issue (Month): 2 ()
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Web page: http://le.uwpress.org/
Other versions of this item:
- Burtraw, Dallas & Palmer, Karen & Krupnick, Alan, 1995. ""Second-Best" Adjustments to Externality Estimates in Electricity Planning with Competition," Discussion Papers dp-96-04, Resources For the Future.
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