Rodney Stevenson

Engineering foundations for the determination of security costs

Power system security is characterized by using distances to system operational limits (including voltage collapse limits, stability limits, line and transformer overloads, and generator limits). It uses the point of collapse method based on the singularity of the power flow Jacobian to define an operational limit boundary in load demand space. Distances to this boundary are then translated into probabilistic measures of likelihood of system failure: probability of normal status, expected demand not served, expected unserved energy, and, ultimately, expected outage cost. Sensitivities of these measures to load and generation changes (important for operational decisions and real-time pricing) are also described. A numerical example is presented. Computational issues are discussed. >

Electric Utility Least-Cost Planning Making It Work within a Multiattribute Decision-Making Framework

Abstract Least-cost planning is transforming the planning process traditionally used in the electric utility industry. As compared to the traditional planning process, least-cost planning broadens the participation by multiple parties and widens the range of the planning options that are assessed. Its integrative nature opens consideration of multiple planning objectives (such as social, environmental, and economic objectives) in evaluating demand-side and supply-side options. Economic rationales for least-cost planning are found in neoclassical and institutional economic thought. Multiattribute decision analysis provides an analytical and decision-making framework for least-cost planning; it can be used to identify issues, objectives, preferences, and expected consequences of planning options.

Automatic adjustment clauses and allocative efficiency in public utilities

Abstract This paper presents a formal analysis of the efficiency effects of automatic adjustment clauses (AACs) is regulated industries. Using a two-input model of ex ante/ex post input choice and a general putty-clay technology, we analyze the relative extent of allocative distortions due to each of three alternative regulatory policies—periodic rate review with and without an AAC, and an AAC without any rate review—for the case of a regulated firm that chooses an ex post technology to maximize the present value of future profits. Our results indicate that the economic rationale for using AACs in industries already subject to intermittent rate review is not unambiguous, even in the face of severe cost inflation, and is particularly sensitive to the magnitude of the price elasticity of demand for output and the rate and direction of input price changes. We are forced to conclude that the use of AACs in regulated industries such as electric power, while originally justified on the basis of financial viability, may well carry significant economic costs in the form of allocative inefficiency that may outweigh the benefits.

Market forces and planning by regulation : Conflicts and complementarities

Abstract The US electric utility industry is being shaped by two seemingly competing policy directives. Federal policy has embraced a movement towards greater reliance on market forces (selective deregulation) as a means to shape electric utility industry growth and development. Indeed, many utilities would like to be free of regulatory control and to be able to price their services on the basis of what the market will bear. Simultaneously, regulatory policy in many states has placed greater reliance on planning: particularly with the use of advance plans, least-cost plans, or integrated resource plans. The purpose of this paper is to consider the movement towards deregulation and the need for planning in the electric utility industry. The various policy initiatives that would be necessary to protect planning and promote effective competition are discussed.

Environmental Compliance and U.S. Industrial Productivity Growth

While the decade of 1970s is generally known for the chronic oil shortages and the dramatic ris in the price of oil a significant slow down in rate of growth of productivity has also marked this and the subsequent decade of 1980s in the U.S. Though many studies have provided insight into the effect of these higher oil prices on industrial output and input demands etc., the reasons for this productivity slow down still remains somewhat of mystery. Complicating the task of unraveling this mystery is the fact that 1970s was also marked as a period of unprecedented tight environmental regulations as Congress passed a series of Amendments to the Clean Air Act Legislation during this period. As a result, many industries have faced substantial increases in cost of compliance due to the new environmental regulations. Though environmental regulation is generally believed to impair growth empirical research on the subject has been rather slow so that the real impact of these tighter environmental regulations on industrial productivity is not yet clearly understood.

Environmental Compliance Cost and Productivity Growth: the Case of U.S. 2-Digit Manufacturing Group

While the decade of 1970s is generally known for the chronic oil shortages and the dramatic ris in the price of oil a significant slow down in rate of growth of productivity has also marked this and the subsequent decade of 1980s in the U.S. Though many studies have provided insight into the effect of these higher oil prices on industrial output and input demands etc., the reasons for this productivity slow down still remains somewhat of mystery. Complicating the task of unraveling this mystery is the fact that the 1970s also marks a period of unprecedented tight environmental regulations as a series of Amendments to the Clean Air Act Legislation were passed by U.S. Congress. Consequently many industries have faced substantial increases in cost of compliance with new environmental regulations. While environmental regulations are generally believed to impair growth empirical research on the subject has been rather slow so that the real impact of these tighter environmental regulations on industrial productivity is not yet clearly understood.