Electricity pricing alternatives in the Pacific Northwest: an analysis of impacts

Thesis/Dissertation · Tue Dec 31 23:00:00 EST 1985

OSTI ID:5358779

Asante, E O

The recognition that the three main elements of electricity demand, electricity supply, and pricing are closely related makes it important to evaluate the impacts of alternate pricing policies. The Pacific Northwest Electricity Supply (PNWES) model was developed in this study and used to investigate the consequences of alternative pricing policies in the Pacific Northwest. The model consists of a system of four equations, a demand function, cost/supply function, a pricing equation and a market clearance equation which is solved simultaneously using the Newton Method. The three pricing policies analyzed are system average cost (SATC), long-run incremental cost (LRIC), and short-run marginal cost (SRMC). A comparison of outcomes based on LRIC pricing and SRMC pricing with those of SATC pricing shows that use of marginal-cost pricing results in more-efficient use of generating resources than does conventional average-cost pricing. However, if there is no income-redistribution mechanism, the implementation of marginal-cost-pricing policies in the region will result in a massive transfer of income from customers to the utilities. It is inferred from the results that, on the basis of the efficiency criterion, regulators should not hesitate to recommend the adoption of long-run incremental pricing policy in the region.

• Research Organization: Washington State Univ., Pullman (USA)
• OSTI ID: 5358779
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
296000* -- Energy Planning & Policy-- Electric Power
ECONOMIC ELASTICITY
ELECTRIC POWER
FEDERAL REGION X
MARGINAL-COST PRICING
MATHEMATICAL MODELS
NORTH AMERICA
POWER
POWER DEMAND
PRICES
USA