An evaluation of economists' influence on electric utility rate reforms

by Jan Paul Acton

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Considerable changes occurred in electricity rate levels and rate structures during the 1970s. This paper reviews economists' contributions in influencing the arguments put forth and the data provided. Economists contributed in estimating the probable effects of time-of-use rates on residential customers and in the choice and application of suitable evaluation criteria to alternative rate structures. The author concludes that, although economists participated in the design, implementation, and analysis of residential rate experiments, their contributions as a profession fell far short of what they should have been. Similarly, economists have made limited contributions to the quantitative analysis of benefits and costs of alternative rates. The author concludes that economists still have a possibly significant contribution to make in evaluating new rate forms for residential and large customers.

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