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Performance-Based Pricing for Nucleaer Power Plants

State public utility commissions in the United States have implemented incentive regulations to promote the operating efficiency of nuclear power plants. This paper surveys these incentive programs, focusing on the perfomance-based pricing approach. Our findings suggest that the performance-based price should be set between the electric utility's avoided cost and the marginal cost of generating electricity at the nuclear power plant.

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Energy Specializations: Nuclear Power – Markets and Prices; Nuclear Power – Policy and Regulation; Electricity – Policy and Regulation

JEL Codes: L98: Industry Studies: Utilities and Transportation: Government Policy, D40: Market Structure, Pricing, and Design: General, L94: Electric Utilities, Q41: Energy: Demand and Supply; Prices, L11: Production, Pricing, and Market Structure; Size Distribution of Firms, D44: Auctions, Q42: Alternative Energy Sources

Keywords: Nuclear energy, electric utilities, regulation, electricity prices, performance

DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No4-3

Published in Volume16, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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