Explaining the perverse incentives of cost-of-service regulation to audiences who are only familiar with normal businesses: it is always sublime.https://twitter.com/MNEnergyForum/status/1087852116486565894 …
In normal companies, book value depreciation is based on an asset's expected economic life. But, utilities use longer technical life instead. New gas utility assets will be paid for over 60 to 80 years yet many will become uneconomic sooner than that. The result: Stranded Assets.