Where Should We Go from Here?"
Lester Lave, Jay Apt, and Seth Blumsack
Electricity market restructuring is widely seen as having
failed. Many of the same groups who pressed for deregulation now find
themselves seeking re-regulation. But re-regulation will reintroduce the
flaws and problems that led people to seek deregulation; in addition,
re-regulation will introduce the additional problem of how to value
competitive market assets for inclusion in the regulated rate base. We
reject calls for re-regulation. Our alternative is to solicit offers for
long-term contracts that specify fixed and generating prices for each
plant. The contracts would specify the number of times a generator could
be asked to shut down, as well as the availability and reliability of the
unit. Units whose offers are accepted would be paid their fixed offer if
they complied with the terms of the contract and their generation offer
for each MWh they were asked to supply.
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