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On the Use of 'Adders' by Public Utility Commissions


  • John Tschirhart


State public utility commissions are developing programs to reduce emissions from electric generation facilities. Programs call for minimizing the total cost of meeting future demands for power, where pollution damages are part of the total cost. In the process of choosing new generation sources, dirtier technologies are handicapped relative to cleaner technologies through the use of "adders" which are meant to measure damages. However, the damage costs are left at the planning stage; they are not included in electricity rates. This practice coupled with standard rate setting procedures may lead to inferior outcomes.

Suggested Citation

  • John Tschirhart, 1994. "On the Use of 'Adders' by Public Utility Commissions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 121-128.
  • Handle: RePEc:aen:journl:1994v15-01-a07

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    References listed on IDEAS

    1. Hendry, David F, 1986. "Econometric Modelling with Cointegrated Variables: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 201-212, August.
    2. Campbell, John Y. & Shiller, Robert J., 1988. "Interpreting cointegrated models," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 505-522.
    3. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-228, August.
    4. Walls, W. David, 1993. "A Cointegration Rank Test of Market Linkages with an Application to the U.S. Natural Gas Industry," University of California Transportation Center, Working Papers qt6sj0961h, University of California Transportation Center.
    5. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
    6. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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    Cited by:

    1. Dallas Burtraw & Karen Palmer & Alan J. Krupnick, 1997. ""Second-Best" Adjustments to Externality Estimates in Electricity Planning with Competition," Land Economics, University of Wisconsin Press, vol. 73(2), pages 224-239.
    2. Burtraw, Dallas & Krupnick, Alan J., 1996. "The second-best use of social cost estimates," Resource and Energy Economics, Elsevier, vol. 18(4), pages 467-489, December.

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    JEL classification:

    • F0 - International Economics - - General


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