An appropriate starting point for a comprehensive analysis of the electric utility industry is with costs and their determinants. There are two reasons for beginning with this topic. First, costs are an inherently important dimension of performance, and one for which the effects of ownership, integration, and competition are of considerable interest. In addition, costs are a major determinant of the other facet of performance, namely, prices. An understanding of costs therefore provides the foundation for the price analysis that follows.
KeywordsVertical Integration Utility Cost Electric Utility Distribution Output Incentive Regulation
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