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The Efficient Design of Contracts To Purchase Cogenerated Powers

Author

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  • Edward C Hall
  • John E. Parsons

Abstract

This paper analyzes long-term power purchase contracts between an electric utility and a cogenerating facility and suggests ways to improve them. It discusses the best way to construct the contract payment structure in light of the given avoided cost structure; analyzing in detail the harmful incentives to low maintenance and how to avoid them. The paper concludes that the method it describes can be used to aid in the better design of contract provisions that will remedy the problem of incentives to low maintenance.

Suggested Citation

  • Edward C Hall & John E. Parsons, 1990. "The Efficient Design of Contracts To Purchase Cogenerated Powers," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 105-116.
    • Handle: RePEc:aen:journl:1990v11-02-a06
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    Cited by:

    1. Hendalianpour, Ayad & Liu, Peide & Amirghodsi, Sirous & Hamzehlou, Mohammad, 2022. "Designing a System Dynamics model to simulate criteria affecting oil and gas development contracts," Resources Policy, Elsevier, vol. 78(C).
    2. G. Alan Comnes & Edward P. Kahn & Tim N. Bekien, 1996. "The Performance of the U.S. Market for Independent Electricity Generation," The Energy Journal, , vol. 17(3), pages 23-39, July.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

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