In 1986, Pacific Gas and Electric (PG & E), a private company, the utility most of Northern and Central California, facing the loss of many of the largest and best customers. The threat did not come from conservation, general economic depression, or competing utilities, but customers have to create yourself, or operate their own small power plants begin. PG & E is estimated that industrial and commercial customers, responsible for 28 percent of sales, soon find it cheaper, Gener … Read more »

In 1986, Pacific Gas and Electric (PG & E), a private company, the utility most of Northern and Central California, facing the loss of many of the largest and best customers. The threat did not come from conservation, general economic depression, or competing utilities, but customers have to create yourself, or operate their own small power plants begin. PG & E is estimated that industrial and commercial customers, responsible for 28 percent of sales, sometimes find it cheaper to produce energy on site as PG & E to pay rates. The situation puzzled PG & E regulators, the California Public Utilities Commission (CPUC), perceived that industrial prices only at the expense of private customers or the utility’s financial health could be reduced. In addition, the region hit surplus of generating capacity that new power plants just a bad situation even worse. In fact, the CPUC has also been struggling with a glut of third generation, the utilities required, wanted to buy set by the CPUC in the model contracts ago. The case is, with a focus to illustrate issues of regulation of a natural monopoly on understanding the potential marginal cost. While the case was designed to highlight the dilemmas of the regulatory authorities, it may also be mediated by the usefulness of perspective. HKS case number 713.0.
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from
Carl Danner,
Jose Gomez-Ibanez,
John Meyer
19 pages.
Release Date: 1 January 1986. Prod #: HKS536-PDF-ENG
Competitive Bypass of Pacific Gas and Electric HBR case solution

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