IDEAS home Printed from https://ideas.repec.org/a/ucp/jnlbus/v63y1990i2p165-86.html
   My bibliography  Save this article

The Financial Effects of Fuel Adjustment Clauses on Electric Utilities

Author

Listed:
  • Golec, Joseph

Abstract

During the 1970s, fuel adjustment clauses (FACs) were adopted by many electric utilities as a means of adjusting electricity prices when per-unit fuel costs changed. Recently, many state regulators have questioned the need for FACs since fuel costs have become more stable. Some have been reluctant to abolish FACs because of fear that an electric utility's financial risk will increase and with it the cost of capital for the utility. This article shows empirically that the risk effects of FACs may be quite small, and that risk could actually decline if an FAC is removed. However, a wealth effect may exist that should be considered before an FAC is abolished. Copyright 1990 by the University of Chicago.

Suggested Citation

  • Golec, Joseph, 1990. "The Financial Effects of Fuel Adjustment Clauses on Electric Utilities," The Journal of Business, University of Chicago Press, vol. 63(2), pages 165-186, April.
    • Handle: RePEc:ucp:jnlbus:v:63:y:1990:i:2:p:165-86
    DOI: 10.1086/296501
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/296501
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    File URL: https://libkey.io/10.1086/296501?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
    2. repec:vuw:vuwscr:18946 is not listed on IDEAS
    3. Guthrie, Graeme, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Working Paper Series 18946, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jnlbus:v:63:y:1990:i:2:p:165-86. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.jstor.org/journal/jbusiness .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.