SULFUR-DIOXIDE COMPLIANCE OF A REQUIRED UTILITY

Electric utilities can reduce sulfur dioxide emissions through a varie ty of strategies, and the cost of abatement can be minimized using tra dable permits as under the Clean Air Pier Amendments of 1990. Previous theoretical work has analyzed effects of public utility commission re gulations on a utility's choice between permits and a single continuou s ''abatement technology.'' Our numerical model considers discrete cho ices among three abatement technologies. Using illustrative parameters , we find that regulatory rules could more than double the cost of sul fur dioxide compliance. They can even make costs with allowance tradin g higher than coals with command and control regulation. (C) 1997 Acad emic Press.