In his article, "The Flawed Case for Stranded Cost Recovery" (Feb. 1, 1995), Charles Studness made many good points. Yet he omitted to mention one critical factor that influenced several utilities in the late 1970s to go ahead with new coal and nuclear capacity: the Carter Administration's 1978 Fuel Use Act, mandating that utilities cease burning natural gas by 1989.
For many companies operating in the south central United States, this requirement meant conversion or replacement of most existing capacity. Conversion to fuel oil increased already high risks of supply interruption and runaway costs. And although many gas-burning units were indeed converted to oil, management "prudence" dictated the addition of at least some plants dependant on secure indigenous coal and uranium, energy sources that also promised longer-term fuel price stability.