Divestiture policy and operating efficiency in U.S. electric power distribution

Divestiture of generation assets by vertically integrated electric utilities has been a key element of restructuring in the U.S. The resulting generation sector has received much attention, but the standalone distribution sector that has been simultaneously created has received very little. This paper addresses the effects of divestiture policy on the operating efficiency of the resulting distribution utilities. Using data envelopment analysis to measure operating efficiency, we examine 73 utilities in the period 1994–2003 and find that the major divestitures that were required by state regulators had large adverse effects on efficiency, whereas utilities that divested at their own initiative had at worst neutral efficiency outcomes. These results raise serious questions about one of the centerpieces of electricity restructuring.     

A market mechanism for electric power transmission

As competition is introduced into the electric power industry, access and pricing policy for transmission will play a pivotal role in shaping future market structure and performance. The externalities associated with the loop flow phenomenon in an electric power network constitute a significant barrier to the formation of efficient markets for electricity and transmission services. In this paper, we present a new approach to the design of an efficient market mechanism for transmission access that resolves these externalities. Under a trading rule that combines the Coasian and the Pigouvian principles to resolution of externalities, property rights are defined so that a competitive market could be established for transmission services and electricity to achieve a social optimum within a power pool. We characterize a dynamic trading process which is Lyapunov stable and always converges to a competitive equilibrium. Finally, we discuss some practical applicability and long-term investment issues.The authors are indebted to Charles Clark, Shmuel Oren, Pravin Varaiya, Robert Wilson, Felix Wu, and two referees for helpful comments and suggestions and particularly to William Hogan for many incisive comments and constructive suggestions. An earlier version of this paper was presented at the Annual Meeting of International Association of Energy Economists in Washington D.C., June 20, 1995, and at the Joint LBS/IFORS International Symposium on Energy Models for Policy and Planning in London on July 18–20, 1995. This paper does not represent the views of EPRI or its members. The authors remain solely responsible for the errors in this paper.     

Efficient menu structures for pricing interruptible electric power service

A menu of interruptible service offerings provides a means for matching the reliability of electric power to the preferences of consumers with diverse interruption costs. Appropriately designed pricing induces a distribution of customer service selections such that the welfare loss (i.e., total interruption cost) of all customers is minimized, when averaged over a distribution of shortfall situations. This paper derives one and two dimensional price menus that consider lost service time and interruption frequency as separate attributes. The relative efficiencies of three types of menus are compared and discussed.     

Entry into the electric power industry

Entry of new firms into the electric power industry is becoming commonplace. The entrants typically are unregulated firms that compete with regulated electric utilities only in the generation stage of the latter's vertically integrated structure. Because of the asymmetric regulatory treatment of the incumbents and entrants, there is the possibility of biases either against efficient entry or for inefficient entry. A model of a vertical integrated utility subject to rate-of-return regulation is used to illustrate the biases, and several implications for regulatory policy are discussed.     

资产的不同分类与权利配置

在传统的产权经济学中,认为企业资源所具有专用性的大小是企业权利的源泉,企业的控制权应当由重要的专用性资产的所有者掌握。这一论点引起了诸多争议,从资产专用性、依赖性、惟一性分类的角度出发,企业权利的配置需要进行进一步探讨。     

中国生物质发电问题探讨

生物质能是一种脱颖而出的新能源,生物质发电产业前景广阔.中国生物质发电产业蜿蜒前行,任重道远.为了促进生物质发电产业在中国健康持续、又好又快地发展,笔者建议:第一,做好资源调查和评价,精心编制发展规划;第二,培育生物质发电产业链;第三,完善生物质发电的标准与规范;第四,完善我国生物质发电定价和费用分摊机制;第五,推行并完善绿色配额制度;第六,制定促进生物质发电产业发展的财税政策和投融资政策,建立稳定的投入机制;第七,支持技术研究开发和设备制造,加强生物质发电产业技术创新;第八,开展生物质发电的宣传和培训工作,等等.     

Regulatory regimes in the electric power industry: Implications for capacity

We construct a model of the electric power industry which consists of two utilities faced with uncertain demand and a variety of regulatory regimes. Two technologies are considered, base-load and peaking, and the transfer of bulk electricity among utilities is permitted. The purpose of the paper is not to determine optimal regulatory regimes but to provide a framework for analyzing existing and contemplated regulatory initiatives. The conclusions are that long run survival mandates an authorized rate of return above the cost of capital and that excess investment will result. Furthermore, it is highly unlikely that current regulatory instruments such as Used and Useful, distribution of profits from bulk sales, and pricing of wholesale electricity can lead to a socially optimal capital stock.     

Bidder cost revelation in electric power auctions

Competitive auctions for electric power sources whose operation will be based upon economic dispatch raise new challenges for auction designers. The efficient selection and operation of such generation sources requires revelation of bidder types over two-dimensions, fixed and variable costs. The way in which fixed and variable prices are combined into a net score, which determines the winning bids, plays a key role in influencing bidders behavior. This paper analyzes bidder strategies and develops necessary conditions of bid scoring systems for the existence of equilibrium strategies that will result in efficient operations. Existing and proposed bid scoring systems are examined using our results.     

The costs of distribution in the UK life insurance market

The cost of direct and independent distribution in the UK life insurance sector over the period 1990–1997 is examined. This is a novel contribution to the literature that until now has focused almost solely on distribution in the non-life sector. Unlike the non-life sector the distribution of life insurance is complicated by the existence of investor protection policies. Which in the UK are believed to have increased the use of independent agents. Using a pooled data set of 44 companies between 1990 and 1997, this study finds little evidence for such a view. Cost benefits are found for firms focusing in one mode of distribution. From a modelling of the distribution decision this finding maybe attributed to firms choosing distribution systems which match the transactional problems associated with their product mix and/or mode of corporate governance.     

Portfolio risk management and carbon emissions valuation in electric power

The context is an electric power company with regulated load obligations and a spot market for energy sales and purchases, as well as liabilities incurred by carbon emissions from generation units or power contracts controlled by the company. Against the backdrop of the existing carbon cap and trade system in the European Union, this paper develops a framework for integrating energy portfolio risk management with liabilities associated with the company’s carbon emissions. The multi-period VaR-constrained portfolio approach of Kleindorfer and Li (Energy J 26(1): 1–26, 2005) is first extended to cover the implied liabilities arising from carbon emissions. This entails some changes to account for the fact that dispatch/bidding/execution decisions will be affected by carbon liabilities for some generation units and contracts. The paper then develops a dynamic programming framework for optimizing the timing of carbon trades (i.e., the timing of the acquisition of the required carbon certificates to cover carbon emissions liabilities of the company), given banked credits or allocations of carbon credits at the start of the planning period and the emissions liabilities resulting from the company’s joint energy and carbon portfolio optimization problem.     

Network costs and the regulation of wholesale competition in electric power

We characterize the cost function for electric power transmission. It is complex and non-linear, exhibiting scale economies over its range. The social planning problem for network transmission expansion is illustrated with a simple numerical example. The regulatory problem for joint generation and transmission cost minimization is addressed. It is shown that information asymmetries about the transmission cost function can lead to coordination losses when there is competition in the generation segment. We parametrize the tradeoff between potential coordination losses in transmission planning and benefits of competition and examine some potential alternatives for improved regulation of the transmission planning process.     

The institutional change under lobbying and the distribution of power

In this paper, we develop a model of institutional change of land property right in China, which include the influences of lobbying and the political power division in 1978. The model illustrates how extra gains are produced under different institutions and how lobbying and political power division can affect the change. It is clear that the institutional innovation has something to do with the leaders’ legal income, the cost of institutional change and the conversion rate. Given the pattern of leader’s power division, it is the best way for the people in rural areas to change their institutional framework, and it is efficient to mix local and central governmental policies. And lobbying and leading power division can affect the direction and the course of institutional changes that would lead different result among different areas. __________ Translated from Nankai jingji yanjiu 南开经济研究 (Nankai Economic Research), 2007, (6): 17–32     

Disability insurance and unemployment insurance as substitute pathways

In this article, we estimate the degree of substitution between enrolment into Disability Insurance (DI) and Unemployment Insurance (UI) in the Netherlands. Starting in the 1990s many policy measures aimed at reducing DI enrolment, and increase labour force participation. We quantify whether these policy measures have led to a reduction in hidden unemployment in DI. A side effect of the reforms may be increased pressure on UI. Therefore, we simultaneously estimate reverse substitution, that is, hidden disability in UI. To this end, we employ a sample of firms in the Dutch AVO database from the period 1993 to 2002. Using instrumental variables in a bivariate Tobit specification, we identify the hidden components in both respective schemes. The estimation results indicate that about 3% of all dismissals took place through DI, which implies that about one quarter of the DI enrolments observed in our sample in fact consists of hidden unemployment. We find no evidence for reverse substitution of disabled persons ending up in UI.     

强化提升电力企业资金全过程管理的能力

随着市场经济的迅速发展,我国的电力企业市场也在突飞猛进地发展,并对于企业效益的提升起着至关重要的作用。与此同时,也存在着相应问题,需要合理运用良好管理方法,做好企业的资金管理与控制,以此来迎合这新时代背景下竞争激烈的电力市场,有效实现资金内部控制,减少资金使用的随意性。因此,加强资金管控已成为许多企业平稳、顺利转型的关健。基于此,就运用什么方法,如何运用这些方法进行细致讲解,提出相关的方法策略及改善建议。     

Integration of unemployment insurance with retirement insurance

This paper analyzes a social insurance system that integrates unemployment insurance with a pension program, allowing workers to borrow against their future wage income to finance consumption during an unemployment episode and thus improving search incentives while reducing the risks arising from unemployment. This paper identifies the conditions under which integration improves welfare and the factors which determine the optimal degree of integration. We show that when the duration of unemployment is very short compared to the period of employment or retirement, the optimal system involves exclusive reliance on pension-funded self-insurance. This system imposes a negligible risk burden for workers while avoiding attenuating search incentives. We also argue that joint integration of several social insurance programs with a pension program through an individual account is desirable unless the risks are perfectly correlated with each other.     

从流动比率指标谈电力企业流动资金管理

流动资金的重要性在于每一次周转可以产生营业收入及创造利润,因而流动资金的周转是为企业盈余的直接创造者.流动资金只有不断地在企业中不断地周转不断地流动,企业才能保持生产经营的持续性.但长期以来电力企业流动资金不足不仅给企业的正常生产经营构成威胁,而且关系到国计民生,因此加强电力企业流动资金管理已是当务之急.本文通过研究流动比率与流动资金不足的关系,对电力企业流动资金管理现状进行分析,进而提出解决的对策.