Glossary (Body of Knowledge on Infrastructure Regulation)

Stranded assets:: When changes in public policy have a significant impact on the cash flows that can obtained from productive assets, those assets are less valuable than before the policy change. For example, if allowing additional entry into the production of electricity means that 'old' plants are operated for fewer hours per year, the net cash flows associated with those plants decline. Analysts can debate whether (and when) regulatory policy changes could have been anticipated, and factored into investment decisions. On the practical side, if a restructuring initiative is adopted, policy-makers try to address the issue of how to deal with the lost economic values stemming from the policy change. Some U.S. states have imposed competitive transition charges to have consumers bear some of the burden of moving to a new market structure and regulatory framework. See stranded costs.

Interactive Glossary