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Mailbag

Fortnightly Magazine - October 1 1996

I am shocked that a respected and learned analyst of the utility industry like Charles Studness would espouse a position that stranded-cost recovery is somehow "un-American" ("Stranded-cost Recovery: It's Un-American," Financial News, July 15, 1996, p. 43).

Contrary to the claims of Mr. Studness, recovery of stranded cost is a fundamental right protected by the U.S. Constitution. Simply stated, the utility investors who provided the capital to build the utility infrastructure, in anticipation of a continuation of a regulated monopoly franchise, are clearly entitled to return of and on their investment if public policy decides that the utility industry should move to a competitive retail market, as it seems will happen. To do otherwise would represent a taking of private property.

Mr. Studness also expresses surprise that advocates of stranded-cost recovery have fared so well in the debate surrounding this issue. I'm not surprised. Those advocates have equity and fair play, as well as the Constitution, on their side.

Joseph Paquette, Jr.

Chairman of the Board

PECO Energy Co.

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