Economic, Political, and Social Influences on Electric Utility Regulation in the Georgia Public Service Commission

By Kamerschen, David R.; Reynolds, Jeff | The Journal of Social, Political, and Economic Studies, Spring 2000 | Go to article overview
Save to active project

Economic, Political, and Social Influences on Electric Utility Regulation in the Georgia Public Service Commission


Kamerschen, David R., Reynolds, Jeff, The Journal of Social, Political, and Economic Studies


Regulation is a dynamic and complex issue that has sparked controversy recently and deserves a closer look. While this paper concentrates on regulation in one state (Georgia) and in one specific industry (electric utilities), we believe that it has application for other states and other regulated industries. We find that economic, political, and social factors affect state regulation. The economic variables affect private efficiency relations, the political variables. affect governmental power relations, and the social variables affect private equity or fairness relations. In our opinion, for the short-run at least, some kind of regulation is still necessary. However, it is instructive to consider some alternatives. In our view, the best current alternative is reorganized commission regulation coupled with partial or semi-deregulation rather than government ownership or complete deregulation.

Key Words: Georgia Public Service Commission, natural monopoly, subadditivity, pure discrimination, deregulation, privatization, electric utilities; economic, political and social influences.

In 1877, Munn vs. Illinois gave states the right to regulate price charges by firms whose economic power tempted them to exploit their customers. The court ruled that, "When private property becomes affected with a public interest, the owner must submit to such controls as might be established for the common good" (see e.g. Denning and Mead, 1990, p. 21). By 1914, more than half the states in the U.S. had public utility commissions controlling electric rates and services. By 1976, all states having investor-owned or private electric power companies had state regulation. Privately owned plants generate and sell a majority of the power in Georgia, and these are regulated by the Georgia Public Service Commission (GPSC).

The GPSC has been criticized and praised for its regulatory actions and policies. Several relevant questions have been asked about GPSC regulation in general and the electric utility industry in particular. Why are public interest and natural monopoly given as the primary justifications for GPSC regulation, and what are their rationales? What effects do economic, political and social variables have on the decision-making and regulatory procedures of the GPSC? What are the benefits and costs of the GPSC's regulation of the electric utility industry, and what are the alternatives? The most important issue to the consumer is whether the ratepayer residential, commercial, and industrial - can obtain equitable rates along with reasonable service. The most important issue to the utility is whether it can earn a reasonable rate of return by operating efficiently. And the most important issue to the GPSC is whether it can balance the economic, political and social factors so as to generate efficient and equitable prices and profits. The economic, political and social variables need to be examined and alternatives explored. The economic variables affect private efficiency relations, the political variables affect governmental power relations and the social variables affect private equity or fairness relations. With regard to all the questions, complexities, and dynamics of regulation, Gormley (1983, p. 27) sums it up admirably when he says, "The regulator needs the patience of Job, the wisdom of Solomon and the optimism of Sisyphus." While this paper concentrates on regulation in one state (Georgia) and in one specific industry (electric utilities), we believe that it has application for other states and other regulated industries.

Origins and Functions of the GPSC

The GPSC is one of the oldest commissions in the United States, created by the Act and Resolutions of the General Assembly of the State of Georgia in 1879 as the Railroad Commission of Georgia (see NARUC, 1989). The term of office was fixed at six years, which is still true today. In 1907, the number of commissioners, elected by the state, was increased from three to five.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Economic, Political, and Social Influences on Electric Utility Regulation in the Georgia Public Service Commission
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?