An analysis of electric utility embedded power supply costs

Conference · Wed Jul 01 04:00:00 EDT 1998

OSTI ID:20050583

Kahal, M; Brown, D

There is little doubt that for the vast majority of electric utilities the embedded costs of power supply exceed market prices, giving rise to the stranded cost problem. Beyond that simple generalization, there are a number of crucial questions, which this study attempts to answer. What are the regional patterns of embedded cost differences? To what extent is the cost problem attributable to nuclear power? How does the cost of purchased power compare to the cost of utility self-generation? What is the breakdown of utility embedded generation costs between operating costs - which are potentially avoidable--and ownership costs, which by definition are ``sunk'' and therefore not avoidable? How will embedded generation costs and market prices compare over time? These are the crucial questions for states as they address retail-restructuring proposal. This study presents an analysis of generation costs, which addresses these key questions. A computerized costing model was developed and applied using FERC Form 1 data for 1995. The model analyzed embedded power supply costs (i.e.; self-generation plus purchased power) for two groups of investor-owned utilities, 49 non-nuclear vs. 63 nuclear. These two subsamples represent substantially the entire US investor-owned electric utility industry. For each utility, embedded cost is estimated both at busbar and at meter.

• Research Organization: Exeter Associates (US)
• OSTI ID: 20050583
• Report Number(s): CONF-971214--
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPUTER CALCULATIONS
COMPUTERIZED SIMULATION
ELECTRIC POWER INDUSTRY
OPERATING COST
PRICES