Marginal costs of electricity vary by time and location. Past researchers attributed these variations to factors related to electricity generation, transmission and distribution. Past authors, however, did not fully analyze the large variations in marginal distribution capacity costs (MDCC) by area and time. Thus, the objectives of this paper are as follows: (1) to show that large MDCC variations exist within a utility's service territory; (2) to demonstrate inter-utility variations in MDCC; and (3) to demonstrate the usefulness of these costs in determining demand for distributed generation (DG).
BohnR.E. (1984). “Optimal pricing in electrical network over space and time.” Rand Journal of Economics15(3): 360-376.
2.
CPUC (1992). Decision 92-12-057for Application 91-11-036 by Pacific Gas and Electric Company, San Francisco, California.
3.
DixitA. (1992). “Investment and Hysteresis.” Journal of Economic Perspectives6(1): 107-132.
4.
DoyleC.MaherM. (1992). “Common carriage and the pricing of electricity transmission.” The Energy Journal13(3): 63-94.
5.
FeinsteinC.OransR.ChapelS. (1995). “The distributed utility: A new electric utility planning and pricing paradigm.” Working paper, Energy and Environmental Economics, San Francisco, California.
6.
HoganW. (1993). “Markets in real electric networks require reactive prices.” The Energy Journal14(3): 171-200.
7.
JohansenL. (1972). Production Functions, North Holland, Amsterdam.
8.
ListonC. (1993). “Price-cap regulation and rate-of-return regulation.” Journal of Regulatory Economics5(1): 25-48.
9.
MannP.C. (1980). “A note on capital indivisibility and the definition of marginal costs.” Water Resources Research16: 603-604.
10.
NERA (1977). How to Quantify Marginal Costs: Topic 4, Electric Rate Design Study, National Economic Research Associates, New York, New York.
11.
OransR.WooC.K.SwisherJ.N.WiersmaB.HoriiB. (1992). “Targeting DSM for transmission and distribution benefits: A case study of PG&E's Delta district.” Report No. TR-100487, Electric Power Research Institute.
12.
OransR.WooC.K.HoriiB. (1993). “Targeting demand side management for electricity transmission and distribution benefits.” Managerial and Decision Economics15: 169-175.
13.
OransR. et al. (1994a). Designing Profitable Rate Options Using Area- and Time-Specific Costs, Report No. TR-104375, Electric Power Research Institute.
14.
OransR., (1994b). “Demand side management and electric power exchange.” Resources and Energy Economics16: 243-254.
PG&E (1991). Marginal Costs, Testimony submitted to California Public Utilities Commission for 1993 Test Year General Rate Case, San Francisco, California.
SpulberD.F. (1992). “Optimal noriiineai pricing and contingent contracts.” International Economic Review33(4): 747-772.
19.
SchererC.R. (1976). “Estimating peak and off-peak marginal costs for an electric power system: an ex ante approach.” Bell Journal of Economics7(2): 575-602.
20.
TshirhartJohn (1994). “On the use of adders by Public Utilities Commissions.” The Energy Journal15(1): 121-128.
21.
VarianH. (1992). Microeconomic Analysis, Norton, New York, New York.
22.
WilsonR. (1989). “Efficient and competitive rationing.” Econometrica57(1): 1-40.
23.
WooC.K. et al. (1994a). “Emission costs, consumer bypass and efficient pricing of electricity.” The Energy Journal15(3): 43-54.
24.
WooC.K., (1994b). “Area- and time-specific marginal capacity cost of electricity distribution.” Energy-The International Journal 19(12): 1213-1218.
25.
WooC.K. (1990). “Efficient electricity pricing with self-rationing.” Journal of Regulatory Economics2(1): 69-81.
26.
WooC.K.PuppR.L.GlyerD. (1991). Voluntary Interruptible Pricing Program (VIPP): An Integrated Approach to Electricity Reliability Pricing, Report submitted to Niagara Mohawk Power Corporation.
