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Utility Diversification

Diversification by public utility companies is a topic in which I have had a longstanding interest. The second volume of my Economics of Regulation, for example, contains a 73-page chapter largely devoted to this subject. I have taken the occasion to reread that discussion, and have observed with interest-and some amusement-how similar the issues were as I saw them then to the issues with which the National Association of Regulatory Utility Commissioners is grappling today. The entire chapter consists of the advantages and possible benefits of utility company diversification, on the one side, and the possible drawbacks and dangers, on the other. The first of these could well have been written by the utility companies today; the other, by those regulators and members of the public at large who are resolutely opposed to any such dilutions of the public utility concept. My own not very striking conclusion was that "The balance of social advantage will obviously vary from one industry to another [p. 268].... There is no single optimum pattern or combination for all situations [p. 324]...."

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Energy Specializations: Electricity – Policy and Regulation

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q42: Alternative Energy Sources, D22: Firm Behavior: Empirical Analysis, D21: Firm Behavior: Theory, L94: Electric Utilities, G11: Portfolio Choice; Investment Decisions, L95: Gas Utilities; Pipelines; Water Utilities

Keywords: Public utility companies, Regulation, Utility company diversification

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-9

Published in Volume 4, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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