Table Of ContentPublic Utility Regulation
Recent Economic Thought Series
Warren J. Samuels, Editor
Michigan State University
East Lansing, Michigan, U.S.A.
Previously published books in the series:
Feiwel, G., Samuelson and Neoclassical
Economics
Wade, L., Political Economy: Modern Views
Zimbalist, A, Comparative Economic Systems:
Recent Views
Darity, W., Labor Economics: Modern Views
Jarsulic, M., Money and Macro Policy
Samuelson, L., Microeconomic Theory
Bromley, D., Natural Resource Economics:
Policy Problems and Contemporary Analysis
Mirowski, P., The Reconstruction of Economic
Theory
Field, A, The Future of Economic History
Lowry, S., Pre-Classical Economic Thought
Officer, L., International Economics
Asimakopulos, A, Theories of Income
Distribution
Earl, P., Psychological Economics:
Development, Tensions, Prospects
Peterson, W., Market Power and the Economy
Mercuro, N., Law and Economics
This series is devoted to works that present divergent views on the
development, prospects. and tensions within some important research
areas of international economic thought. Among the fields covered are
macromonetary policy, public finance, labor and political economy. The
emphasis of the series is on providing a critical, constructive view of
each of these fields, as well as a forum through which leading scholars
of international reputation may voice their perspectives on important
related issues. Each volume in the series will be self-contained; together
these volumes will provide dramatic evidence of the variety of economic
thought within the scholarly community.
Public Utility Regulation
The Economic and Social Control of Industry
edited by
Kenneth Nowotny
New Mexico State University
David B. Smith
New Mexico State University
Harry M. Trebing
Michigan State University
....
"
Kluwer Academic Publishers
Boston / Dordrecht / London
Distributors
for North America: Kluwer Academic Publishers, 101 Philip Drive,
Assinippi Park, Norwell, Massachusetts, 02061, USA
for all other countries: Kluwer Academic Publishers Group, Distribution
Centre, Post Office Box 322, 3300 AH Dordrecht, The Netherlands
Library of Congress Cataloging-in-Publication Data
Public utility regulation: the economic and social control of industryl
edited by Kenneth Nowotny, David B. Smith, Harry M. Trebing.
p. cm. - (Recent economic thought series)
Includes index.
ISBN-13: 978-94-010-7632-6 e-ISBN-13: 978-94-009-2508-3
001: 10.1007/978-94-009-2508-3
1. Public utilities - Government policy - United States.
I. Nowotny, Kenneth. II. Smith, David Brian. III. Trebing, Harry
Martin, 1926- . IV. Series.
HD2766.P84 1989
363.6'9073 - dc20 89-8062
CIP
Copyright © 1989 by Kluwer Academic Publishers
Soflcover reprint of the hardcover 1s t edition 1989
All rights reserved. No part of this publication may be reproduced, stored
in a retrieval system or transmitted in any form or by any means,
mechanical, photocopying, recording, or otherwise, without the prior
written permission of the publisher, Kluwer Academic Publishers, 101
Philip Drive, Assinippi Park, Norwell, Massachusetts 02061
Contents
Contributing Authors vii
Acknowledgments ix
Introduction
David B. Smith
2
The Economics of Public Utility Regulation: An Overview 9
Kenneth Nowotny
Commentary by William M. Dugger 28
3
Pricing and the Electric Utility Industry 35
J. Robert Maiko and Philip R. Swensen
Commentary by John Wenders 78
4
Telecommunications Regulation - The Continuing Dilemma 93
Harry M. Trebing
Commentary by Basil L. Copeland, Jr. 131
5
Natural Gas Pipelines and Monopoly 137
Curtis Cramer
Commentary by W. W. Sharkey 155
v
vi CONTENTS
6
Urban Water Supply: The Divergence Between Theory and Practice 163
Patrick C. Mann
Commentary by Alfred L. Parker 1 79
7
Natural Monopoly Measures and Regulatory Policy 185
Douglas Gegax
Commentary by Ronald R. Braeutigam 217
8
The Contribution of Economic Theory to the Regulatory Process:
Strengths, Weaknesses, and Future Directions 223
Marilyn C. O'Leary and David B. Smith
Index 239
Contributing Authors
Ronald R. Braeutigam Patrick C. Mann
Department of Economics Department of Economics
College of Arts & Sciences West Virginia -University
Northwestern University Morgantown, WV 26506-6025
Evanston, IL 60201
Kenneth Nowotny
Basil L. Copeland, Jr.
Center for Public Utilities
123 Corvallis Drive
New Mexico State University
No. Little Rock, AR 72118
Box 3MPD
Las Cruces, NM 88003
Curtis Cramer, Chairman
Department of Economics
University of Wyoming Marilyn O'Leary
Laramie, WY 82071 8 Tumbleweed, NW.
Albuquerque, NM 87120
William M. Dugger
Department of Economics Alfred L. Parker, Chairman
DePaul University Department of Economics
25 E. Jackson University of New Mexico
Chicago, IL 60604 Albuquerque, NM 87131
Douglas Gegax
W. W. Sharkey
Department of Economics/30001
Bellcore
New Mexico State University
435 South Street
Las Cruces, NM 88003-0001
Morristown, NJ 07960
J. Robert Maiko
Department of Business Administration David B. Smith, Director
College of Business Center for Public Utilities
UMC-35 New Mexico State University
Utah State University Box 3MPD
Logan, UT 84322 Las Cruces, NM 88003
vii
viii CONTRIBUTING AUTHORS
Philip Swensen, Chairman John Wenders
Department of Business Administration Department of Economics
College of Business University of Idaho
UMC-35 Moscow, ID 83843
Utah State University
Logan, UT 84322
Harry M. Trebing, Director
Institute for Public Utilities
113 Olds Hall
Michigan State University
East Lansing, MI 48824
Acknowledgments
The editors wish to thank our contributors who have shown infinite
patience and goodwill during the preparation of this collection. The three
of us excepted, the work our contributors have produced is of the first
rank. We would also like to acknowledge the enthusiasm of Warren
Samuels, Series Editor, who urged this work on us from the start, and
Zachary Rolnik who accepted all of our excuses.
IX
Public Utility Regulation
