Modest proposal for the partial deregulation of electric utilities

This article proposes that electric utilities be allowed to create subsidiaries to build and operate certain controversial power-generation projects as if they, the subsidiaries, were in whole or in part small power producers, with the utilities purchasing the projects' power at their own avoided-cost rates. The author argues that the proposal could accomplish, at least in part, three worthwhile goals: (1) it would present electric utilities with much-more-desirable and unbiased incentives when they evaluate the economics of proposed generation projects; (2) it would present electric utilities with incentives to estimate their avoided costs for Public Utility Regulatory Policies Act Section 210 purposes as accurately as possible; and (3) it would avoid some of the most-substantial objections that have been raised against more-sweeping proposals for deregulation of electric-power generation.