[en] What are the factors and circumstances that have made some plants more valuable to others than to their original owners? What is currently keeping nuclear plants, with their relatively low operating cost and environmental impacts, at the bottom of the heap? Why will some nuclear plants have significantly higher market values in the future while others will fail? What circumstances are likely to change in the near future that could significantly alter this market? In this article, the authors address these questions and attempt to provide insights into the unique market for nuclear power. The authors will proceed by first introducing the components of generation asset valuation, then discussing recent experiences with the sales of non-nuclear and nuclear power plants. Next, the authors will provide some explanation for why non-nuclear assets are enjoying a robust market while the market for nuclear plants remains immature. Finally, the authors present an analysis of the future value of nuclear power and a view of one road to take to get there

[en] Most of the concerns about physical transmission rights relate to the ability to implicitly or explicitly remove that transmission capacity from the market-place. Under a very strict form of physical right, owners could simply choose not to sell it if they don't want to use it. Modifications that require the release of spare capacity back into an open market could potentially alleviate this problem but there is concern that such releases would not occur far enough in advance to be of much use to schedulers. Similarly, the transmission capacity that is made available for use by non-rights holders can also be manipulated by the owners of transmission rights. The alternative form, financial transmission rights, provide to their owners congestion payments, but physical control of transmission paths. In electricity markets such as California's, even financial transmission rights could potentially be utilized to effectively withhold transmission capacity from the marketplace. However, methods for withholding transmission capacity are somewhat more convoluted, and probably more difficult, for owners of financial rights than for owners of physical rights. In this article, the author discusses some of the potential concerns over transmission rights and their use for the exercise of various forms of market power

[en] Blind faith is unlikely to produce a free market that is competitive. Substituting markets for traditional regulation is only one choice among many policy instruments to achieve a goal of lower prices; such substitution should not be in itself a goal. (author)

[en] Should we as a society adopt policies to internalize external environmental costs? Of course we should. But we should do it correctly. State public utility commissions (PUCs) that are using numerical 'externality adders' reflecting global and regional environmental impacts in the resource planning and selection process are doing it wrong. The use of these adders is likely to lead to higher electricity prices without a commensurate improvement in environmental impacts in the resource planning and selection process are doing it wrong. The use of these adders is likely to lead to higher electricity prices without a commensurate improvement in environmental quality. Alternative approaches for dealing with environmental damages or externalities exist that can lead utilities to take account of the environmental costs associated with the generation of electricity more effectively and at lower cost. This article discusses what an externality is and why the use of environmental adders by PUCs in the resource selection process, while well intentioned, is a bad idea. The author discusses how the most egregious errors associated with the use of adders can be corrected if PUCs insist on using them. Finally, he outlines an alternative approach that state PUCs can pursue which will better serve the electricity customers they are supposed to protect and promote a cleaner environment at the lowest reasonable cost. The author emphasizes that this is not a debate about whether or not environmental costs should be factored into the investment and operating decisions of firms that produce pollution. Rather, it is about how it should be done and whether state PUCs are in a particularly good position to do it well, given their expertise, legal authorities, other responsibilities and scarce resources

[en] With compliance deadlines approaching in three years, utility, environmental and financial planners and their regulators are in the process of grappling with the requirements imposed, and opportunities created, by the acid rain program established under Title 4 of the Clean Air Act amendments of 1990. The novel element of the program - emissions or allowance trading through a nationwide allowance market - presents great challenges for utilities and their regulators. Perhaps the foremost challenge is establishing the allowance market. If state utility commissions subject utilities' compliance strategies to traditional after-the-fact prudence reviews, as tradition would impel them to do, the attendant regulatory risks are likely to push utilities toward more conservative compliance schemes that underuse allowance trading (as the exchange at the head of this article demonstrates). If that happens, the market will fail to develop, and its full potential for environmental benefit at least cost will go unrealized. This, in turn, is likely to strengthen the case for non-market regulatory mechanisms - a vicious circle. In this paper, the authors suggest a way out of this

[en] The next several years promise to bring changes in the structure of the electricity industry which will drive utilities away from capital-intensive options. The escalation in nuclear operating costs and the fall in fossil fuel prices could sharply alter the economics of older plants. The continued aging of nuclear plants could reveal additional problems and lead to additional regulation, thus forcing costs further upward. Taken together with the serious and unresolved problems of nuclear waste, the higher-than-expected operating cost of nuclear plants, and the erosion of the regulatory bargain, the future of nuclear power in the U.S. appears dim

[en] This article is not concerned with the pros and cons of transforming a no-entry market into a market with unrestricted entry. The concern, instead, is with establishing the economic conditions under which stranded costs afflict the incumbents in a no-entry market undergoing a transformation to a market with unrestricted entry. What matters is an incumbent's cost structure in comparison to an entrant's cost structure. Section 1 presents a general model for a restructured electricity industry. Section 2 provides the 2 x 2 x 2 version of the model in which an incumbent and an entrant compete for the business of two customers. The intermediate bottleneck services are supplied by a regulated monopolist that does not behave anticompetitively in an effort to favor the incumbent. Section 3 contains the graphical analysis of the 2 x 2 x 2 model that is restricted to economic activity in a competitive generation market. Section 4 discusses the results of the graphical analysis that are pertinent to regulatory authorities. Section 5 sets out the conclusions derived from the analysis

[en] The Regional Greenhouse Gas Initiative among Northeastern states is expected to lead to an increase in the price of electricity in the region and beyond. In the RGGI region, changes in the value of electricity-generating assets may be positive or negative, while changes outside the Northeast are virtually always positive. For stakeholders in the industry, the change depends on the portfolio of assets held by affected firms. (author)

[en] The tax laws have greatly diminished the importance of utility preferred stock. But with utility construction programs expected to rise, it is an opportune time to see if preferreds can be an attractive option again. As recently as 1980, preferred stock financing by electric utilities comprised 55% of all U.S. corporate preferred stock issued. By 1989, this percentage had declined to under 12%. In dollar amounts, electric utility preferred stock financing had decreased by two-thirds over the same time period. The author analyzes just why this decline occurred and what it portends for the future

[en] The criticisms that followed the first allowance trades remain a mystery - why, if trading produces efficiencies, has the public been critical? Perhaps there is a better reason to support trading