Regulation of the Electric Industry
The electric industry is subject to a wide range of regulation and the impacts of this regulation are critical for understanding the industry. As discussed in Chapter 3, many parts of the industry value chain are thought to be natural monopolies. Economic theory and public policy require price regulation for these functions to provide for a fair profit for utilities and cost based prices for customers. The operations of the industry have large impacts on the environment and these impacts are also subject to regulatory oversight. In addition, the interruption of electric service has large negative impacts on customers and regulation sets ground rules for the reliability of electric power systems. Regulating ...
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