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OR Practice—An Analysis of Baltimore Gas and Electric Company's Technology Choice

Author

Listed:
  • Ralph L. Keeney

    (University of Southern California, Los Angeles, California)

  • John F. Lathrop

    (Strategic Insights, Cupertino, California)

  • Alan Sicherman

    (Lawrence Livermore National Laboratory, Livermore, California)

Abstract

The Baltimore Gas and Electric Company (BGE) must select a strategy for adding 600 megawatts of electric generating capacity at the Perryman site near Baltimore to come on-line in the 1990s. This paper reports an analysis that evaluates strategies involving either a conventional coal facility or one of three technologies not currently available commercially. A key issue is whether the perceived advantages of the new technologies are worth the risks of not having, the generation capacity early enough to meet load growth. The analysis evaluates strategies using several BGE objectives, including customer cost, shareholder return, corporate image, health and safety, and feasibility. These objectives are combined by means of an evaluation function that uses corporate value tradeoffs, elicited first from analysts in the Generation Planning Unit and then refined in interviews with five BGE senior executives. Uncertainties addressed in the analysis include load growth, time when a new technology becomes available, and construction and licensing delay. The analysis is partially based on preliminary input information, but designed for iterative use incorporating better information. The computer software for the model has been transferred to BGE to be used to provide insights into technology choice problems.

Suggested Citation

  • Ralph L. Keeney & John F. Lathrop & Alan Sicherman, 1986. "OR Practice—An Analysis of Baltimore Gas and Electric Company's Technology Choice," Operations Research, INFORMS, vol. 34(1), pages 18-39, February.
    • Handle: RePEc:inm:oropre:v:34:y:1986:i:1:p:18-39
    DOI: 10.1287/opre.34.1.18
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    Citations

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    Cited by:

    1. Logan, Douglas M., 1990. "5.4. Decision analysis in engineering-economic modeling," Energy, Elsevier, vol. 15(7), pages 677-696.
    2. Ralph L. Keeney, 2002. "Common Mistakes in Making Value Trade-Offs," Operations Research, INFORMS, vol. 50(6), pages 935-945, December.
    3. Jano-Ito, Marco A. & Crawford-Brown, Douglas, 2017. "Investment decisions considering economic, environmental and social factors: An actors' perspective for the electricity sector of Mexico," Energy, Elsevier, vol. 121(C), pages 92-106.
    4. Ed Cook & Jason R. W. Merrick, 2023. "Technology Implementation at Capital One," Interfaces, INFORMS, vol. 53(3), pages 178-191, May.
    5. Fry, Phillip C. & Rinks, Dan B. & Ringuest, Jeffrey L., 1996. "Comparing the predictive validity of alternatively assessed multi-attribute preference models when relevant decision attributes are missing," European Journal of Operational Research, Elsevier, vol. 94(3), pages 599-609, November.
    6. Bose, Utpal & Davey, Anne M. & Olson, David L., 1997. "Multi-attribute utility methods in group decision making: Past applications and potential for inclusion in GDSS," Omega, Elsevier, vol. 25(6), pages 691-706, December.
    7. Zhou, P. & Ang, B.W. & Poh, K.L., 2006. "Decision analysis in energy and environmental modeling: An update," Energy, Elsevier, vol. 31(14), pages 2604-2622.

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