Power industry economics
Economic studies are performed to determine the selection of an alternative from several that will be the most economical while still being technically acceptable. Within this framework, utilities have to make decisions affecting an investment which will have an operating life equal to half the life expectancy of a man. This will require a different approach to economic studies than the private sector. In addition, utilities are a regulated industry which means that another body will set the maximum rate of return on their investment. The application of the discounted cash flow method by present worthing future expenses to a given time and developing an equivalent annual revenue requirement enables the utilities to compare the different alternatives's yearly financial requirements. It allows summing the costs for capital, operation and maintenance and fuel on the same basis. The present worth method also permits factoring into the analysis escalation for operating and maintenance and fuel. Whether this is accomplished by a tabular or mathematical solution, a sensitivity analysis will eliminate some of the uncertainty in the decision making process. The economic significance of the answers developed by the application of the principles outlined will have no meaning without the skill and experience of the person making the analysis. It will require his knowledge and sound judgement on how to apply the principles and interpret the results for the problem at hand.
- Research Organization:
- Gilbert/Commonwealth, Jackson, Michigan
- OSTI ID:
- 5082408
- Report Number(s):
- CONF-770631-
- Journal Information:
- Trans. Am. Assoc. Cost Eng.; (United States), Conference: 21. American Association of Cost Engineers annual meeting, Milwaukee, WI, USA, 26 Jun 1977
- Country of Publication:
- United States
- Language:
- English
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20 FOSSIL-FUELED POWER PLANTS
POWER GENERATION
ECONOMIC ANALYSIS
CHARGES
COST
ELECTRIC UTILITIES
INVESTMENT
MAINTENANCE
OPERATING COST
PLANNING
POWER PLANTS
ECONOMICS
PUBLIC UTILITIES
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200106 - Fossil-Fueled Power Plants- Economics