PUBLIC ELECTRIC POWER AND ECONOMIC WASTE

The objective of this paper is to examine some aspects of the planning and pricing practices of the publicly owned electric utilities and to indicate how the economic welfare of the country could be improved through changes in these practices. We shall deal with two related sets of questions. First, what are the alterations made in the investment policies of the electric utilities that are a result of their exemption from corporation income taxation and the presence of a government guarantee of their debt? Second, what are the distributive and efficiency implications of the utilities’ policies in Canada of pricing electricity so as to cover average financial costs instead of the marginal social costs of production?