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Integrating Purchased Power Into the Resource Portfolio—an Exercise in Mitigating Risks by Kent Foster is a Engineering article available to read on EtoBox.

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Suppose an independent generator, 15 years into a 20-year contract, sought an extra payment for the final five years. The utility buyer would point to the contract, not pay more carrots. The franchise obligation is no less binding. Utilities always say their "franchise obligation" is sturdier than the independents' "contract obligation." Now the shoe is on the other foot. If a legal monopoly can redefine its franchise obligation with each inconvenient task, themisnolimitoncarrots. Arguments for "incentives" fo cus on the utility's interests rather than its obligations. The law of regulation is the opposite. The regulatory question is not 'How do we make utilities whole?" but "How do we set prices at competitive levels?" In a competitive market, the loser is never "made whole"; it just tries harder. w Endnotes: 1. Incentive advocates call for a "return on purchased power." That is a logical impossibility. Return is associated with an investment. Purchased power is an expense. Mixing these concepts clouds the debate. Even if one accepted the debt equivalency argument, one never would talk about a "return on debt." 2.

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Author

Kent Foster

Publisher

Elsevier Science; Elsevier ; Elsevier BV (ISSN 1040-6190)

Published

1993

Language

EN

Field

Engineering (Physical Sciences)