Book contents
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
14 - Limiting Principles for Stranded Cost Recovery
Published online by Cambridge University Press: 29 October 2009
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
Summary
THE PRECEDING CHAPTERS define deregulatory takings and demonstrate the equivalence that exists between damages for breach of the regulatory contract, just compensation for a taking of property, changes in investor expectations, and (under certain conditions concerning the stand-alone cost of substitute technologies) the efficient pricing of network access. Such an analysis would not be complete without specifying the limits on stranded cost recovery. What conditions are sufficient for a regulatory action to constitute a deregulatory taking? What conditions are necessary for a deregulatory taking? The answers to those questions will give regulators, legislators, and judges guidance as to whether eliminating taxicab medallions, agricultural production quotas, or occupational licensure, to take three common examples, would engender compensable stranded costs. The answers also will clarify whether stranded costs are more likely to arise in one regulated network industry (such as electricity) than in another (such as local exchange telephony). We emphasize at the outset that the questions addressed in this chapter are subtle on both legal and economic grounds, and they will likely acquire greater complexity as the restructuring of network industries continues to unfold. As with any question of first impression, the delineation of limiting principles for stranded cost recovery will be an iterative process that will likely take a number of years to achieve convergence. Our analysis in this chapter is therefore not the final word, but only the beginning of what we are confident will be an extended undertaking.
- Type
- Chapter
- Information
- Deregulatory Takings and the Regulatory ContractThe Competitive Transformation of Network Industries in the United States, pp. 449 - 494Publisher: Cambridge University PressPrint publication year: 1997