Policy makers have begun to restructure and deregulate the sale of electric power after decades of regulated monopoly status. Retail electric power competition appears imminent for Texas, and certain utility investments are expected to be unrecoverable in a competitive power market, and therefore stranded. This report analyzes the causes of stranded costs in an overview of regulation and proposes an evenhanded approach to recover, which neither penalizes utilities for reasonably relying on regulators nor rewards them with undeserved gains. Partial cost recovery is explored as an equitable solution to resolving the stranded investment dilemma.
-- Author's foreword.