Embedded Costs Exceeding Market Prices (ECEMP)

Cost associated with utility investment incurred pursuant to a regulatory or contractual obligation. Also costs reflected in cost-based rates that exceed the price of market alternatives. ECEM becomes ‘stranded costs‘ when they exceed the amount that can be recovered through the asset’s sale. Whether such costs should be recovered by utility shareholders is a problematic regulatory question. Transition costs are stranded costs charged to utility customers as a fee or surcharge once an asset is sold or separated from a vertically integrated utility. See competitive transition costs.