Handbook of Electric Power Calculations, Third Edition
A powerful calculations tool for electric power engineers and technicians, this book offers essential, step-by-step procedures and examples for solving a wide array of electric power problems.
TABLE OF CONTENTS Handbook of Electric Power Calculations, Third Edition
Section 19: ELECTRIC ENERGY ECONOMIC METHODS
Gerald B.Shebl [*]
Professor
Electrical and Computer Engineering
lowa State University
INTRODUCTION
This work is divided into the following sections: business structure, general economic theory, production costing, opportunity costs and resources, project selection, and uncertainty. The first section outlines the division of the previously vertically structured electric power industry into a horizontally structured industry to foster competition without the presence of market power. The second section outlines different competitive economic conditions as the industry reregulates. The third section defines how to calculate the production cost for short-term financial statements. The fourth section discusses opportunity costs and demonstrates some deterministic approximations commonly used. The fifth section reviews the basic techniques to select projects for capital expansion. It is assumed that the potential projects are simulated for each year of operation. However, the examples are simplified for the sake of presentation. The sixth section introduces the concept of uncertainty and how to more accurately account for the risks of operation and of capital expansion.
[*]Some of the material originally by Bjorn M. Kaupang, General Electric Company.
REREGULATED ENVIRONMENT
New legislation calls for competition in the power industry, from the wholesale level to the retail level. New market structures are sought to search for a good business environment that would ultimately satisfy the regulatory bodies, customers, and suppliers. One approach is the application of brokerage systems to the power industry to promote competition. To accomplish competitive markets, the vertically integrated utilities shall be broken up. Figure 19.1 shows the framework of the...
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