Discussion: “Stranded Costs and Competitive Forces in the Electric Utility Industry”

Stranded costs in the electric utility industry—the past costs incurred by incumbent utilities that could not be recovered in a competitive market environment—have been a troubling and troublesome policy issue for electricity deregulation. Although electricity deregulation surely would have proceeded slowly in any event,¹ the stranded cost question—who (customers? shareholder-owners?) will absorb the losses in the forthcoming competitive environment?—has clearly slowed the process even further.