Public-utility pricing regulation: A general-equilibrium simulation
A general-equilibrium computational model is used to examine the equilibrium resulting from an economy characterized by a public utility producing both inputs to other producers and a final good to consumers. Various equilibria are investigated, each of which assumes that the public utility is subjected to different regulated price structures including average cost, marginal cost, fully-distributed cost, and Ramsey pricing. For each of these pricing policies, the questions addressed are: (1) what are the resulting relative price changes; (2) what is the change in production; (3) what is the resulting change in the demand for electricity; and (4) who gains and who loses under each policy One shows that marginal-cost pricing is not always superior to average-cost pricing in terms of consumer welfare. With marginal-cost pricing, the gainers and losers depend upon how the losses incurred by the utility are distributed among various income groups. Another result was that cogeneration with prices set to average cost caused both a decline in aggregate welfare as well as a decline in the total production of the economy.
- Research Organization:
- Boston Coll., Chestnut Hill, MA (United States)
- OSTI ID:
- 7019927
- Country of Publication:
- United States
- Language:
- English
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32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
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CALCULATION METHODS
COGENERATION
DEUS
DUAL-PURPOSE POWER PLANTS
ECONOMIC IMPACT
MARGINAL-COST PRICING
MATHEMATICAL MODELS
POWER GENERATION
POWER PLANTS
PRICES
PRICING REGULATIONS
PRODUCTION
PUBLIC UTILITIES
REGULATIONS
SOCIAL IMPACT
STEAM GENERATION