Sub-Optimal Generation Portfolio Variance with Rate of Return Regulation‪.‬

1. Introduction The US electric utility industry is currently in the middle of a massive transition from being a highly regulated industry to one that is partially deregulated. In the past, companies in the industry were vertically integrated with three distinct functional sectors: generation, transmission, and distribution. Those functions are being unbundled, either by regulatory fiat, or by the actual sell-off of assets. In the future, US consumers will have a rich array of choices with regard to generation sources, while the tranmission and distribution (T & D) sectors, and will still continue to be regulated by either state or federal commissions. (1)