Regulators have traditionally required extensive economic analyses when public utilities have requested rate hikes, additional generating capacity, expanded distribution capability, or power purchases. The regulators have then judged the requested action in terms of the economics of the situation. However, economic analyses often do not take into account environmental effects, social impacts, and the risks and uncertainties associated with changing economic and social climates. Moreover, although economic analyses can produce meaningful results concerning the production of electricity (the supply side of the service), they can fail when applied to the consumption of electricity (the demand side).
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