Marginal cost and second-best pricing for water services

This paper examines the pricing strategy of water services relative to marginal cost and second-best pricing rules, which is a principal concern of utility commissions. The water utility is viewed as a multiproduct firm providing residential and nonresidential services, and a translog multiproduct cost function is estimated for a cross section of U.S. water utilities. Marginal costs are estimated and combined with demand elasticities to simulate second-best prices for water services. Results show that while the existing price structure is quite different from the one suggested by marginal costs, it does not depart substantially from the second-best optimum.     

To which fiddle does the reculator dance? some empirical evidence

This paper presents an empirical test of the economic theory of regulation which holds that regulators behave as optimizers facing pressures from opposing interest groups. The data employed pertain to the decisions made in the early 1970's by state public service commissions to award or reject automatic fuel adjustment clauses for 34 electric utilities located in the northeast. A probit model of this binary decision outcome is specified, incorporating those variables suggested by the economic theory of regulation. The results obtained provide empirical support for that theory. Moreover, the results strongly reject what has come to be known as the simple capture theory of regulation which holds that regulators unerringly dance to the industry's fiddle.     

On the incidence of commissions in auction markets

We analyze the welfare consequences of an increase in the commissions charged by intermediaries in auction markets. Commissions are similar to taxes imposed on buyers and sellers, and standard economics suggests that both sellers and buyers are made worse off by the tax. However, we show that when the buyers' participation constraint binds and when sellers set optimal reservation prices, the level of commissions correlates to participation and reservation prices in such a way that participating buyers strictly gain from higher commissions.     

Regulating commissions in markets with advice

The paper explores the implications of regulating commissions in markets with advice. It provides a review of recent contributions dealing with policies that mandate disclosure, impose caps on commissions, restrict the steepness of commissions, or require the deferral of commissions.     

Singapore share recommendations using technical analysis

Recent statistical studies of the Singapore Stock Exchange generally conclude that the market is weak-form efficient. This means that technical analysis or the study of past share prices cannot reliably forecast future prices and lead investors to returns which exceed the market. This article reports on a study of 292 technical analysis-based investment recommendations made over a five year period, November 1979 to April 1984, by a Singapore investment advisory firm. The objective was to test whether this firm was able to use technical analysis to select common share investments which would allow investors to earn an excess return. After adjusting for trading commissions, market trends, and risk, the recommended shares did not outperform the market. Thus, the results correspond with what would be expected in a weakly efficient market.     

放松规制后电力企业技术创新与制度激励研究

分析了在放松规制的环境下,电力企业进行技术创新所面临的市场及制度环境,并剖析了造成企业技术创新困境的制度原因。为了激励电力企业进行技术创新,实现企业绩效与社会福利的双赢,本文从促进市场化及加强规制者可信性承诺两方面提出了政策建议。     

The Effects of Average Norm Model Regulation: The Case of Electricity Distribution in Sweden

Following the reform of energy sectors, some countries have used engineering norm models in incentive regulation of network utilities. In 2003, Sweden adopted this approach to regulation of electricity distribution networks. This paper examines whether the norm models represent the real networks and create incentives for performance improvement. We analyse data from 138 network concession holders between 2000 and 2007. The results show that norm models are not adequate representations of real networks. Also, utilities that perform better than their norm models tend to behave opportunistically. Finally, we find that private utilities respond more strongly to incentives.     

Brokerage commissions and margin requirements: With special reference to Japan

In Japan, brokerage commissions and margin requirements are currently regulated by the Ministry of Finance. However, commissions may soon be deregulated. This paper examines several economic factors which determine commissions and margins in a deregulated environment. The analysis is motivated by the observations that for Japan's securities companies, 1) brokerage commissions constitute a large component of their revenues; 2) margin transactions account for a significant proportion of their trading volume; 3) their gross income exhibits a great deal of volatility; 4) income tax is one of their two largest expenses; and 5) they face a significant tax asymmetry.While executing an unmargined long transaction for a customer is a riskless activity, executing either a margined long or a short transaction exposes the firm to some risk and possibly negative profits. While the commission charged by a brokerage firm for executing a riskless (unmargined) long transaction is simply equal to the marginal cost of producing the firm's total number of transactions, it is demonstrated that the gross commission charged for executing either a margined long or a short transaction includes two other components. The first additional component is a risk/tax premium that is determined by the brokerage firm's tax rate and degree of tax asymmetry, the security's volatility, and the customer's margin deposit. The second additional component is the premium required for the implicit put option associated with a margined long transaction, or for the implicit call option associated with a short transaction. The option falls in-the-money if the security's price changes significantly, so that it is optimal for the customer to default on his contract with the brokerage firm.The determinants of the customer's optimal margin, for both long and short transactions, are also examined. The benefit to the customer of depositing a higher margin is that his commission cost declines. For example, with short transactions a higher margin increases the exercise price of the implicit call option, causing both the risk/tax premium and the implicit option premium to decline. However, a higher margin may increase the customer's opportunity cost of capital. Consequently, the optimal margin increases with the firm's tax rate and degree of tax asymmetry, and decreases with the customer's opportunity cost of capital. An increase in the security's volatility has an ambiguous impact on the optimal margin.The authors are from York University, Canada and International University of Japan, respectively. Part of this paper was written while the first author was on leave at Kyoto University, Japan. We acknowledge helpful comments by Richard Arnott, Lawrence Harris, Hiromitsu Ishi, Eliakim Katz, Johannes Raaballe and Lim Kian Guan (the editor).     

Directors' Pay in the Privatized Utilities

This exploratory paper examines the relationship between the remuneration of the highest paid director and company performance in the privatized utilities. Four conclusions regarding the structure of top directors' pay emerge from the analysis. First, the salary plus bonus remuneration of top directors in the privatized utilities has increased by 12 per cent per annum since 1990. Second, average employee pay in these utilities has grown by about 3.1 per cent per annum over the same period. This suggests that top pay growth in the privatized utilities has outstripped that of the average worker since 1990. Third, the analysis cannot isolate a robust statistical relationship between directors' compensation and measures of pre-dated company performance. Finally, directors' share option dealings can sometimes considerably inflate their overall compensation.
Taken together, these findings implicitly question the current efficacy of remuneration committees for determining boardroom pay in the privatized utilities. One solution, which may enable shareholders more accurately to assess executive performance, is for complete disclosure of all components of directors' pay in the company accounts.     

The rise of Facebook-based communication in the energy sector

In the case of public utilities, the development of stakeholder communication through Facebook is not focused in the existing body of literature. Yet, it is especially these developments that are essential for scholars and practitioners as they highlight the way stakeholder communication in the energy sector will change. The aim of this paper is to contribute to this lack of research by investigating developments in the ways German and Austrian public utilities use Facebook to communicate. Responding to the research objectives, two empirical studies were conducted. In 2014 as well as 2015 an online survey was sent to 850 German and 30 Austrian utilities. The results highlight the rising importance of Facebook in the energy sector. The share of public utilities using Facebook is constantly increasing. Additionally, during the twelve months investigated, the interactivity and frequency of Facebook-based communication rose. Utilities are progressively willing to invest more personnel and monetary resources to administer their accounts. As the numbers of fans increase, users seem to value the information provided by utilities on Facebook.     

质量经营：供电企业的现实选择

针对制约供电企业质量经营的诸因素,提出了质量经营必须实行标准化与个性化的统一.在此基础上,文章还例举了供电企业质量经营的一些基本策略.     

Shock Value: Bill Smoothing and Energy Price Pass‐Through

Energy prices are volatile, affect every consumer and industry in the economy, and are impacted by regulations including gas taxes and carbon pricing. Like the pass‐through literature in general, the growing energy pass‐through literature focuses on marginal prices. However, multi‐part pricing is common in energy retail pricing. I examine the retail natural gas market, showing that while marginal prices exhibit full or nearly full pass‐through, fixed fees exhibit negative pass‐through. This is consistent with the stated desire by utilities and regulators to prevent ‘bill shock.’ I discuss implications for pass‐through estimation and for proposed alternative pricing structures for regulated utilities.     

Regulation and Measuring Cost-Efficiency with Panel Data Models: Application to Electricity Distribution Utilities

This paper examines the performance of panel data models in measuring cost-efficiency of electricity distribution utilities. Different cost frontier models are applied to a sample of 59 utilities operating in Switzerland from 1988 to 1996. The estimated coefficients and inefficiency scores are compared across different specifications. The results indicate that while the average inefficiency is not sensitive to the econometric specification, the efficiency ranking varies significantly across models. The reasonably low out-of-sample prediction errors suggest that panel data models can be used as a prediction instrument in order to narrow the information gap between the regulator and regulated companies.     

Reforming the lifeline program: Regulatory federalism in action?

This paper considers whether common national standards for determining participants' eligibility and designating service providers in the Lifeline program are preferable to a decentralized system where state utility commissions have greater influence over these program parameters. Two recent decisions of the Federal Communications Commission (FCC), a 2016 Order and its reversal in March 2017, on the designation of Eligible Telecommunications Carriers to provide broadband Lifeline service, centered on this question. Statistical analysis of program data demonstrates that state-by-state variations in enrollment may be attributed to state-level policy actions, after controlling for alternative demographic and economic explanations. This paper concludes that national standards may reduce state-by-state variations in program participation rates.     

Estimating Size and Scope Economies in the Portuguese Water Sector Using the Most Appropriate Functional Form

Contrary to the usual method of most studies that apply parametric methodologies, the current study does not assume a priori a functional form to represent the cost function. Instead, a large number of functional forms are tested in order to find the most appropriate functional form for the true cost structure of utilities. The sample focuses on water utilities operating in Portugal during the period 2002–2008. The results show that there are substantial economies of output density, economies of size, and economies of scope (in the joint supply of water supply and wastewater services) and, therefore, there are huge advantages in utilities merging.     

Marketing versus public relations in selling nuclear power

All too often, the terminology and practices of public relations are used when marketing is what is really needed. This misapplication appears most often when a concept, an idea, or an intangible product is involved. Webster defines public relations as: relations with the general public through publicity; those functions of a corporation, organization, branch of military service, etc., concerned with informing the public of its activities, policies, etc., and attempting to create favorable public opinion.This definition implies a general, ongoing effort to supply information supporting the image of an organization. There is, however, a considerable difference between this kind of activity and the specific, overt process of marketing. This difference has been particularly apparent in attempts of public utilities to “sell” nuclear power plants. Utilities, of course, are monopoly suppliers and, as such, must seek a favorable image in the community. Thus, when public opposition to nuclear power plants mounted, many utilities responded with stepped-up public relations programs; the method they knew best. This article examines the experience of several utilities in locating nuclear plants and suggests how marketing techniques might be used in selling this intangible product.     

浅谈标杆管理在供电企业中的运用

介绍了标杆管理的概念及在供电企业中运用的几种主要类别,分析了标杆管理对于供电企业的重要作用,探讨了标杆管理在供电企业中的具体实施步骤和运用中应注意的几个问题.     

The involvement of utilities in the development of broadband infrastructure: A comparison of EU case studies

Energy companies and other utility providers have been often involved in the provision of telecommunications services. Nevertheless, their contribution to broadband development has varied significantly over time. In the late 1990s, both local and national utilities in the European Union (EU) engaged in the provision of broadband networks, but only few of them managed to establish themselves as major broadband providers. More recently, new projects involving national utilities have been announced in several EU countries, opening new scenarios for utilities’ contribution to Next Generation Access (NGA) development. This paper identifies and explores the factors affecting the entry and the success of utilities in the EU broadband market, through the comparison of four case studies from four EU countries (Germany, Italy, Sweden and the UK). The evolution of utility involvement in the EU broadband markets is assessed against the interaction of market, technology and policy factors, focusing on the impact of policy and regulatory measures. As a result, this paper provides fruitful insights into the relevance and effectiveness of public interventions in broadband markets. Across the four case studies, public support and public ownership emerged as the main drivers for the involvement of utilities in EU broadband markets, with regulatory measures and economies of scope exerting a limited and decreasing influence. However, the contribution of utilities has varied significantly across the cases studied, reflecting the different approaches taken at national and local level to support broadband development, in spite of the common regulatory framework.     

供电企业理念识别系统设计

企业文化是企业信奉并付诸于实践的价值理念,是企业的灵魂。据此主要介绍了供电行业的企业理念及其构成,重点设计了诸如企业愿景、企业精神、价值观、服务理念等内容,对供电企业有所启示或帮助。     

Land Development Regulation: A Case Study of Dallas and Houston, Texas

This paper compares the approaches to land development regulation in Dallas and Houston and attempts to measure the impact of regulation on lot prices in the two cities. Land development in Dallas appears to be subject to a greater degree of regulation than in Houston, especially with respect to zoning and the provision of utilities. In Houston, utilities are provided by Municipal Utility Districts which give developers greater flexibility in subdivision site selection. Other regulations concerning land use, platting, road financing and environment are examined for their impact on development costs in the two cities. The paper closes with a "full" lot cost comparison for selected subdivisions in Dallas and Houston. Lot prices are found to be lower in Houston. The difference is largely explained by differences in regulation and a transfer of cost from the private to the public sector.