Excess electric generating capacity

A review of recent excess capacity decisions reveals that some public utility commissions have developed a new approach by eliminating the return on common equity associated with excess capacity. This approach, and the return on investment adjustment accomplished by rate base exclusions, raises the issue of the appropriate basis upon which to calculate either adjustment. This article discusses the tests and remedies for excess capacity, focusing on the emerging ''calculation of return exclusion'' and ''short-term excess capacity'' issues.