Using a simple model of regulation, we analyze impacts of changes in the regulatory framework of electric utilities on the relative efficiency of resource allocation. The Regional Clean Air Incentives Market program in Southern California established ownerships on air pollution credits in 1994. We have been providing an internet-based market for credits exchange for each quarter since April 1994. We report the unique features of the market and its performance. The transition to a fully competitive retail power market depends on a myriad of factors through a process which is largely political and highly uncertain.
States vary widely in terms of the pace of decision making and issues in restructuring.
We use a case study to evaluate the risk-mitigation potential of renewable energy technologies. It illustrates how an investment decision is affected when the attributes of fuel costs, environmental costs, modularity, lead time, location flexibility, availability, initial capital costs and investment reversibility are included in the evaluation.