ABSTRACT
A relatively young regulator discussing the "new economics in energy" is bound to be aware of an age-old paradox first described by Plato. The phenomenon of rising costs of incremental supplies of energy has become a fact of life for most energy utilities. In 1975, the Michigan Consolidated Gas Company suggested that a surcharge be placed on each unit of gas sold and that the proceeds be paid directly to residential customers as a bonus for implementing conservation measures. The Niagara-Mohawk Gas Company of New York currently uses a novel and reportedly successful program to augment their gas supply during periods of shortage. In Michigan, the Lake Superior District Power Company recently suggested that the gas turbines currently being used to pump gas through pipelines be replaced by electrically driven pumps. Many economists argue that the cost of more expensive new sources of energy should be "rolled in" to the costs of all energy sold to all customers.
