Regulatory Risk: Economic Principles and Applications to Natural Gas Pipelines and Other Industries, by A. Lawrence Kolbe, William B. Tye and, Stewart C. Myers. Boston: Kluwer Academic Publishers, 1993. 345 pages.
Messrs. Kolbe, Tye, and Myers are highly skilled and thoughtful economists. Their thoroughness, analytical abilities, and appreciation for economic subtleties are well demonstrated in Regulatory Risk: Economic Principles and Applications to Natural Gas Pipelines and Other Industries. The authors present a lengthy and detailed argument that in setting rates of return, regulators must specifically recognize the risk of potential disallowances on the grounds that costs have been imprudently incurred or assets have turned out not to be used and useful. In the context of the arcane world of regulated rate-of-return analysis, the work is professional, well documented, and quite systematic, particularly in regard to natural gas pipelines
