We overbuild, run short, then overbuild again. You'd think we'd learn, because when the forecasts aren't accurate, when overcapacity plagues the industry, companies fail. Can we get the forecasts...
As long as we're talking about "stranded costs," why not consider the "unearned gains" accrued during construction? Namely (em the allowance for funds used during construction (AFUDC) representing capitalized financing costs that built up to such high levels back in the 1970s, during the peak of the last construction cycle for baseload electric generating plants.
One can argue the policy: Did those 70's-era rules on AFUDC extract unwarranted economic rents for nuclear construction? Good or bad, those costs are sunk. But don't be surprised if you find AFUDC floating to the surface when regulators get down to business on stranded-cost policy. t
Patrick Keenan drew this graph freehand in pen and ink in a moment of artistic inspiration, but says he intends to keep his day job as vice president of equity research at Tucker Anthony, Institutional Equity Services, Princeton, NJ.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.