# Electricity Cost Modeling Calculations

A "quick look up guide," Electricity Cost Modeling Calculations places the relevant formulae and calculations at the reader's finger tips. In this book, theories are explained in a nutshell and then the calculation is presented and solved in an illustrated, step-by-step fashion. A valuable guide for new engineers, economists (or forecasters), regulators, and policy makers who want to further develop their knowledge of best practice calculations techniques or experienced practitioners (and even managers) who desire to acquire more useful tips, this book offers expert advice for using such cost models to determine optimally-sized distribution systems and optimally-structured power supplying entities. In other words, this book provides an Everything-that-you-want-to-know-about-cost-modelling-for-electric-utilities (but were afraid to ask) approach to modelling the cost of supplying electricity. In addition, the author covers the concept of multiproduct and multistage cost functions, which are appropriate in modelling the cost of supplying electricity. The author has done all the heavy number-crunching, and provides the reader with real-world, practical examples of how to properly quantify the costs associated with providing electric service, thus increasing the accuracy of the results and support for the policy initiatives required to ensure the competitiveness of the power suppliers in this new world in which we are living.

The principles contained herein could be employed to assist in the determination of the cost-minimizing amount of output (i.e., electricity), which could then be used to determine whether a merger between two entities makes sense (i.e., would increase profitability). Other examples abound: public regulatory commissions also need help in determining whether mergers (or divestitures) are welfare-enhancing or not; ratemaking policies depend on costs and properly determining the costs of supplying electric (or gas, water, and local telephone) service. Policy makers, too, can benefit in terms of optimal market structure; after all, the premise of deregulation of the electric industry was predicated on the idea that generation could be deregulated. Unfortunately, the economies of vertical integration between the generation.

Audience
Power Engineers, Electrical Engineers, Energy Engineers, Energy Economist, Environmental Engineers, Mechanical Engineers, and Industrial Engineers

Hardbound, 358 Pages

Published: August 2010

ISBN: 978-1-85617-726-9

## Contents

1. Introduction
2. The Theory of Natural Monopoly
3. The U.S. Electric Markets, Structure, and Regulations
4. The Economics (and Econometrics) of Cost Modeling
5. Case Study: Breaking up Bells
6. Cost Models
7. Case Study: Can Rural Electric Cooperatives Survive in a Restructured U.S. Electric Market? An Empirical Analysis
8. A Test of Vertical Economies for Non-Vertically Integrated Firms: The Case of Rural Electric Cooperatives
9. Load Forecasting - The "Demand" for Electricity
10. Efficient Pricing of Electricity
11. Case Study: The California Debacle (or What Not to Do)