IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v9y1988i1p103-114.html
   My bibliography  Save this article

Inefficiency of Avoided Cost Pricing of Cogenerated Power

Author

Listed:
  • Chi-Keung Woo

Abstract

Section 210 of the Public Utility Regulatory Act of 1978 requires that the rates paid to qualifying small power production facilities (QFs) should be "just and reasonable" and "shall not discriminate against qualifying cogenerators." However, the rates should not "exceed the incremental cost to the electric utility of the alternative electric energy." Armed with this federal regulation, the California Public Utilities Commission (CPUC) in July 1985 issued Decision No. 85-07-022 for the Phase I of the Order-Instituting-Rulemaking No. 2 (OIR-2) arguing that privately owned electric utilities should pay QF's the cost of owning and operating a power plant that can be displaced by QF production. The total avoided cost is the difference between total cost of utility generation before QF production and after QF production (see Appendix 1 of the CPUC decision).

Suggested Citation

  • Chi-Keung Woo, 1988. "Inefficiency of Avoided Cost Pricing of Cogenerated Power," The Energy Journal, , vol. 9(1), pages 103-114, January.
    • Handle: RePEc:sae:enejou:v:9:y:1988:i:1:p:103-114
    DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-9
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol9-No1-9
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol9-No1-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jae-Cheol Kim & Byong-Hun Ahn, 1990. "On the Economics of Cogeneration: Pricing and Efficiency in Government Owned Utilities," The Energy Journal, , vol. 11(1), pages 87-100, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 22, Edward Elgar Publishing.
    2. Hugh Sibly & Richard Tooth, 2014. "The consequences of using increasing block tariffs to price urban water," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 223-243, April.
    3. Fuente, David & Kabubo-Mariara, Jane & Kimuyu, Peter & Mwaura, Mbutu & Whittington, Dale, 2017. "Assessing the Performance of Alternative Water and Sanitation Tariffs: The Case of Nairobi, Kenya," EfD Discussion Paper 17-21, Environment for Development, University of Gothenburg.
    4. David Encaoua & Michel Moreaux, 1987. "L'analyse théorique des problèmes de tarification et d'allocation des coûts dans les télécommunications," Revue Économique, Programme National Persée, vol. 38(2), pages 375-414.
    5. Schlereth, Christian & Stepanchuk, Tanja & Skiera, Bernd, 2010. "Optimization and analysis of the profitability of tariff structures with two-part tariffs," European Journal of Operational Research, Elsevier, vol. 206(3), pages 691-701, November.
    6. Brennan, Timothy J., 2000. "The Economics of Competition Policy: Recent Developments and Cautionary Notes in Antitrust and Regulation," Discussion Papers 10716, Resources for the Future.
    7. Chisari, Omar O. & Rodríguez-Pardina, Martín, 1998. "Algunos determinantes de la inversión en sectores de infraestructura en la Argentina," Series Históricas 7445, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Bernard, Jean-Thomas & Roland, Michel, 2000. "Load management programs, cross-subsidies and transaction costs: the case of self-rationing," Resource and Energy Economics, Elsevier, vol. 22(2), pages 161-188, May.
    9. Chi-Keung Woo & Dewy Q. Seeto, 1988. "Optimal Off-peak Incremental Sales Rate Design in Electricity Pricing," The Energy Journal, , vol. 9(1), pages 95-102, January.
    10. Rao, Narasimha D., 2013. "Distributional impacts of climate change mitigation in Indian electricity: The influence of governance," Energy Policy, Elsevier, vol. 61(C), pages 1344-1356.
    11. Castro Rodríguez, Fidel, 1997. "Wright tariffs in the spanish electricity industry: The case of residential consumption," UC3M Working papers. Economics 6074, Universidad Carlos III de Madrid. Departamento de Economía.
    12. Martin Chick, 2011. "The 3 Rs: Regulation, risk and responsibility in British utilities since 1945," Business History, Taylor & Francis Journals, vol. 53(5), pages 747-760, August.
    13. Beard, T. Randolph & Sweeney, George H. & Gropper, Daniel M., 1995. "Subsidy free pricing of interruptible service contracts," Energy Economics, Elsevier, vol. 17(1), pages 53-58, January.
    14. Braouezec, Yann, 2016. "On the welfare effects of regulating the number of discriminatory prices," Research in Economics, Elsevier, vol. 70(4), pages 588-607.
    15. Hörcher, Daniel & Graham, Daniel J., 2020. "MaaS economics: Should we fight car ownership with subscriptions to alternative modes?," Economics of Transportation, Elsevier, vol. 22(C).
    16. Arturo Vásquez & Raúl García & Edwin Quintanilla & Julio Salvador & David Orosco, 2012. "Acceso a la Energía en el Perú : Algunas Opciones de Política," Working Papers 29, Osinergmin, Gerencia de Políticas y Análisis Económico.
    17. Brown, Toby & Faruqui, Ahmad & Grausz, Léa, 2015. "Efficient tariff structures for distribution network services," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 139-149.
    18. Robert Albon, 1989. "The Revenue and Efficiency Implications of Timed Local Calls," Australian Journal of Management, Australian School of Business, vol. 14(2), pages 115-126, December.
    19. Henrique Monteiro, 2005. "Water Pricing Models: a survey," Others 0510002, University Library of Munich, Germany.
    20. Farhad Daruwala & Frank T. Denton & Dean C. Mountain, 2017. "One Size May Not Fit All: Welfare Benefits And Cost Reductions With Differentiated Household Electricity Rates In A General Equilibrium Model," Department of Economics Working Papers 2017-03, McMaster University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:9:y:1988:i:1:p:103-114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.