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Fortnightly Magazine - January 15 1997

Mitigating Transition Costs: The Utility's Role

Lester W. Baxter, Stanton Hadley, and Eric Hirst

How a sample electric company could reduce risk of loss by upgrading performance to industry benchmarks. Competition in electric generation will expose utility costs that exceed those of alternative suppliers. Roughly speaking, these above-market ("transition") costs should track the difference between the new market price and the embedded cost set by traditional cost-of-service regulation.

The problem has attracted no shortage of proposals.

In Brief...

Sound bites from state and federal regulators.

Natural Gas Briefs

Gas Rate Indexing. Alabama continues its a rate stabilization and equalization (RSE) procedure for Alabama Gas Corp. (rates adjusted quarterly to conform return on equity to a preset range). Commission says RSE plan has helped company address recent gas market changes such as supply diversification, system bypass, and competition. Docket No. 25600, Oct. 7, 1996 (Ala.P.S.C.).

Gas Motor Vehicles. Peoples Natural Gas Co.

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