Stranded Benefits

As in the case of stranded assets, the values of assets could be affected in a positive way by a policy change. Because of advantage of location or excellent operating performance, a generating unit might have a market value in excess of its book value. If the current cash flows obtained from the plant are based on historical book value rather than the market value, the owner of the asset might be in a position to receive higher cash flows under a scenario involving deregulation. This raises the issue of who has claims on the increased value: the stranded benefits. The term has been used by some in reference to a completely different issue. Socially beneficial programs and goals could be compromised or abandoned by a restructured electric industry; e.g., fuel diversity, environmental protection, energy efficiency, programs for low-income ratepayer assistance. Thus, such benefits could be lost or ‘stranded’ under a policy change.