Regulatory Studies

GUERNSEY economists perform studies and provide expert testimony in regulatory proceedings on a wide range of issues.  We are knowledgeable in the areas of cost of capital, restructuring and deregulation provisions, and rate policies in the electric and natural gas industries at both the retail and wholesale levels. We have experience performing specific studies to serve as the basis for evaluating proposals before state and federal regulators. Some of our previous studies have looked at market competition, transition to zonal/nodal markets and the implementation of rules to protect market competition and stranded costs.

Angie Salyer 405-416-8203

Relevant Projects:

The following are examples of some of our regulatory studies projects:

Evaluation of Locational Marginal Pricing Markets
GUERNSEY economists evaluated the potential for market abuse from proposed transition to competitive locational marginal pricing in the wholesale power market. Our testimony assessed the likely market consequences from the proposed regulatory rules.

Market Analysis of Cost-Based Rates
In order to assess the competitive implications of cost-based rates in a utility’s control area, we applied the common Herfindahl-Hirschman Index and market concentration analysis.  
 
Evaluation of FERC “Supply Margin Assessment” Methodology
GUERNSEY economists performed a study which led to testimony concerning the applicability of FERC’s SMA methodology as a replacement for the “hub and spoke” test used previously. Analysis showed how utilities with significant market shares operating in highly concentrated markets could pass the proposed SMA test and avoid mitigation.

Estimate of Stranded Costs
GUERNSEY economists used financial and comparable asset sales data to estimate stranded costs incurred by generators as a result of retail competition proposal.

Related Publications:

The following are examples of publications which are relevant to our regulatory studies:

“Asymmetric Price Responses, Market Integration, and Market Power: A Study of the U.S. Natural Gas Market,” Forthcoming in Energy Economics, 2007, Murry, Donald A. and Zhu, Zhen.

“An Empirical Analysis of U.S. Natural Gas Market Power,” Proceedings of 24th International Association of Energy Economists Meetings, July 2004, Murry, Donald A. and Zhu, Zhen.

“The Potential Impact of The ‘Standardized Market Design’ on Oklahoma’s Electric Power Infrastructure.” State Policy & Economic Development in Oklahoma: 2003, pp 81-87, Murry, Donald A.

"Econometric Analysis of Gas, Hydro and Coal Unit Sales Reveals Qualitative Distinctions in Pricing," The Competitive Edge, Vol. 4, No. 1 (C. H. Guernsey & Company), June 2002, Ledgerwood, Shaun.

 “Cascading Caution:California Crisis Delays Deregulation.” Public Utilities Fortnightly, September 1, 2001, Oller, Jeremy, D and Murry, Donald A.

“Electric Energy Deregulation Experiences and Some Lessons for Oklahoma,” in State Policy & Economic Development in Oklahoma, 2001, pp. 81-94, Murry, Donald A.

"Customers Slow to Exercise Choice in Deregulated Markets," The Competitive Edge, Vol. 2, No. 2 (C. H. Guernsey & Company), December 2000, Ledgerwood, Shaun.
 
"Simulation Models Not a Fix for FERC’s Merger Analysis Problems," The Competitive Edge, Vol. 1, No. 4 (C. H. Guernsey & Company), June 1999, Ledgerwood, Shaun.
 
“The Economic Impact of Open Access and Unbundling in the Gas Distribution Sector,” presented at The Oklahoma Gas Association Annual Conference, September 30, 1997, Murry, Donald A.

"Market Forces, LDC Deregulation and the Efficiency/Equity Tradeoff," presented at The Oklahoma Corporation Commission Symposium on Restructuring the Oklahoma Energy Utility Industry, Oklahoma City, OK, October 17, 1995, Murry, Donald A.

"An R&D Policy for Regulated Natural Gas and Electric Utilities," Public Utilities Fortnightly, Vol. 127 No. 4, Feb 15, 1991, Murry, Donald A., Groten, Barnet, and Chambless, Jack.

"The Clean Air Act: Emissions Trading and Regulated Markets," The Economics Committee, Edison Electric Institute, Chicago, IL, June 4, 1992, Murry, Donald A.

Other Related Publications:

“Equality of Interest Rates Revisited: The Multi-Country Evidence,” Forthcoming in International Economic Journal, Zhu, Zhen with Chiou Wei Song Zan.

"Time-Varying Forward Bias and the Expected Excess Returns," Journal of International Financial Markets, Institutions and Money, 2002, Zhu, Zhen.

"Sources of Export Fluctuations: Empirical Evidence From Taiwan and South Korea, 1981-2000," with Chiou Wei Song Zhang, Journal of Asian Economies, 2002, Zhu, Zhen.

"Are Long-Term Bond Yields Excessively Volatile?" Journal of Economic Studies, Vol. 28, No. 4, pp 433-445, 2001, Zhu, Zhen.

"The Effect of Exchange-Rate Risk on Exports: Some Additional Empirical Evidence," Journal of Economic Studies, Vol. 28, No. 2, pp 106-121, 2001, Zhu, Zhen.