transmission system management and pricing new paradigms and international comparisons the transmission system once the necessary but nearly invisible component of the electric power system is now the focus of physical electrical and financial attention of the utility and more significantly their potential suppliers customers this paper has three primary objectives the first is to present a discussion of a new paradigm for the electric power industry the second is to review transmission pricing options specifically those utilizing either long run lrmc or short run srmc marginal cost based approaches the third is to provide a review of innovative approaches to transmission asset management and finance as seen from international experience

the geography of market failure edge effect externalities and the location and production patterns of organic farming abstract perceptions of increasing land scarcity and negative impacts of chemical based agriculture have led to increasing concern regarding the sustainability of food systems incompatible production processes among farming systems may lead to spatial conflicts and production losses between neighboring farms and the magnitude of such losses may depend not only on the scale of each activity but also on patterns of land use such conflicts can be classified as edge effect externalities spatial externalities whose marginal impacts decrease as distance from the border generating the negative impact increases this paper tests the hypothesis that edge effect externalities have influenced the location and production patterns of certified organic farms using data from california central valley certified organic farmers using concepts from landscape ecology and spatial statistics we investigate difference in parcel geometry and surrounding land uses between organic and non organic parcels using a generalized method of moments gmm spatially autoregressive econometric model we demonstrate that both parcel geometry and surrounding land uses influence the probability of a given parcel being certified organic we conclude with suggestions for policies to encourage development of organic farming regions

an integrated framework for cost allocation in a multi owned transmission system this paper describes a methodology for allocating transmission costs among users of a centralized transmission service in the proposed approach the share of each participant is proportional to its impact on power system transmission investment requirements this allocation rule provides incentives for all participants to remain in the pool and ensures revenue reconciliation it is shown that under some simplifying assumptions the proposed scheme reduces to a modified mw mile rule thus providing some insight on that method s economic basis other issues such as credits for counterflows and distortions due to economies of scale are also addressed the methodology is illustrated in case studies with the brazilian power system

marginal pricing and supplement cost allocation in transmission open access the application of marginal costing to transmission pricing in open access schemes requires the collection of a supplement to finance the transmission systems the paper describes the application of marginal cost based pricing in the chilean power system and the difficulties faced in allocating the supplement among parties involved alternative methods for defining the allocation are formulated generalized generation and load distribution factors for cost allocation are formulated and implemented the methods are applied to allocate payments for transmission services provided by the transmission network and by a distribution company

optimal monetary policy responses to relative price changes abstract an optimizing model with a flexible price sector and a sticky price sector is presented to analyze the effects of relative price changes on inflation fluctuations the relative price of the flexible price good represents a shift parameter of the new keynesian phillips curve the optimal monetary policy is to target sticky price inflation rather than a broad inflation measure although stabilizing the relative price around its efficient value is one of the appropriate goals of the central bank stabilizing sticky price inflation is sufficient for achieving this goal an optimal monetary policy for a small open economy is also discussed

transmission use of system charges based on trade offs between short run operation cost and long run investment cost previous studies on long run network charges assume that network reinforcement would be required when the loading level of a circuit reaches its designed capacity such assumption works well for a passive distribution network but is not valid for transmission networks as they have active congestion management capabilities transmission network operators normally can only justify for network investment when congestion costs exceed network expansion costs this trade off between operational cost and investment cost is not considered in any of the existing long run marginal or incremental cost pricing lric or lrmc

the extent of resource use inefficiencies in cotton production in pakistan s punjab an application of data envelopment analysis abstract this paper attempts to identify sources of resource use inefficiency for cotton production in pakistan s punjab the use of a non parametric method data envelopment analysis dea is developed to study the relative technical and allocative efficiencies of individual farms which use similar inputs produce the same product and operate under comparable circumstances in the cotton wheat system of pakistan there are a considerable number of farms that are both technically and allocatively inefficient the use of dea shows that the technique provides a clear identification of both the extent and the sources of technical and allocative inefficiencies in cotton production however both the interpretation of the farm level results generated and the projection of these results to a higher level require care given the technical nature of the agricultural production processes

transmission network cost allocation based on equivalent bilateral exchanges this paper presents a novel methodology for allocating the cost of a transmission network to its users based on the principle of equivalent bilateral exchanges which states that after all physical laws governing the flow of power have been met each demand is assigned a fraction of each generation and each generator is assigned a fraction of each demand in a uniform manner transmission cost allocation based on this principle presents several advantages namely independence from the choice of the slack bus recognition of counter flows and transmission use charges that are stable and always positive

comparing the profitability of organic and conventional production in family farming empirical evidence from brazil abstract several studies have compared the profitability of organic and conventional producers but present very conflicting results although in the majority of these papers selection bias due to observables is accounted for the possibility of selection based on unobservables has been largely overlooked in this paper we compare these two types of producers using a large and unique data of about 4 2 million family farmers in brazil standard propensity score matching techniques are used together with the procedure recently developed by oster forthcoming to address concerns about omitted variables our results confirm the working hypothesis that organic producer s profits are lower than conventional ones

a probabilistic approach for determining the optimal amount of transmission system usage over the past decade electric power systems have been restructured based on different models to introduce competition among market participants transmission open access for suppliers and customers is one of the most prevailing unbundling services usually a connection tariff is established based on different market factors including the actual usage of the transmission network in brazil most vertically integrated companies owned by the federal and state governments were unbundled and new transmission companies are being created these companies make their assets available to the independent system operator designated as operador nacional do sistema eleacutetrico ons one of the main objectives of ons is to manage transmission services over a certain voltage level to ensure nondiscriminatory access to the grid all transmission users including regional distribution companies pay wheeling transmission charges at each delivery or connection point with the major brazilian network administrated by ons this paper presents a methodology for determining the optimal amount of transmission system usage atsu that must be contracted by a regional distribution company at each connection point in the proposed approach the maximum flow at each connection is represented as a random variable in order to obtain the distribution probability of the transmission charges as a function of the atsu parameter besides providing the optimal amounts to be contracted the proposed probabilistic methodology allows quantifying the risks of violation of each contract and estimating possible penalties all methodology development steps are described and illustrated through numerical examples an application to a typical brazilian regional distribution company is also discussed

allocation of transmission fixed charges an overview the application of marginal cost in pricing the transmission services has shown not effective mainly due to revenue reconciliation problems to overcome this a set of other methods derived from the mw mile rule has been suggested to allocate transmission fixed costs this paper compares such methods known as embedded cost methods in a centralized transmission network environment although these methods actually share the total cost and are very simple they are usually rejected due to the lack of a good economic reasoning the economic issue and the impact on the system expansion planning of such allocation are addressed in this paper some examples with the brazilian transmission system illustrate the results derived from this analysis

inflation dynamics during the financial crisis using confidential product level price data underlying the u s producer price index ppi this paper analyzes the effect of changes in firms financial conditions on their price setting behavior during the great recession that surrounds the financial crisis the evidence indicates that during the height of the crisis in late 2008 firms with weak balance sheets increased prices significantly relative to industry averages whereas firms with strong balance sheets lowered prices a response consistent with an adverse demand shock these stark differences in price setting behavior are consistent with the notion that financial frictions may significantly influence the response of aggregate inflation to macroeconomic shocks we explore the implications of these empirical findings within a general equilibrium framework that allows for customer markets and departures from the frictionless financial markets in the model firms have an incentive to set a low price to invest in market share though when financial distortions are severe firms forgo these investment opportunities and maintain high prices in an effort to preserve their balance sheet capacity consistent with our empirical findings the model with financial distortions relative to the baseline model without such distortions implies a substantial attenuation of price dynamics in response to contractionary demand shocks

a load flow based method for calculating embedded incremental and marginal cost of transmission capacity this paper describes the principles of a load flow based method for allocating the cost of transmission capacity the method estimates the usage of each transmission facility with cost defined on a per facility basis embedded incremental and marginal cost of transmission capacity are defined and compared to each other a discussion of other load flow based methods and their application to marginal cost is included

organic farmers or conventional farmers where s the money abstract there is growing evidence that organic farming is a rapidly expanding economic sector in the u s however an unanswered question is whether organic farmers are better off than conventional farmers when it comes to farm household income using large farm level data and a matching estimator this study explores the relationship between organic certification and farm household income with its various components contrary to expectations certified organic farmers do not earn significantly higher household income than conventional farmers though certified organic crop producers earn higher revenue they incur higher production expenses as well in particular certified organic producers spend significantly more on labor insurance and marketing charges than conventional farmers the results suggest that the lack of economic incentives can be an important barrier to conversion to organic farming

new estimates of climate demand evidence from location choice abstract we develop and apply to census data a new method for estimating climate demand the method is useful for ranking quality of life based upon a willingness to pay criterion our two major findings are that the willingness to pay quality of life index is correlated with the hedonic approach s ranking but that the migration approach generates much larger estimates of willingness to pay for a more moderate climate this finding is relevant for evaluating the economic impact of global warming

adoption of agricultural innovations as a two stage partial observability process in this paper we reconsider the appropriateness of certain statistical analyses in innovation adoption studies and suggest that partial observability models may sometimes be more useful the proposed models allow for a flexible specification of the process of adoption from one stage to two stages facilitate the modelling of non adopters and remedy the violation of the assumption of full information an application to the adoption of organic cultivation in greece demonstrates the relative merits of the proposed analysis

an aumann shapley approach to allocate transmission service cost among network users in electricity markets this work presents a new methodology for the allocation of transmission service cost among network users in energy markets the proposed method is based on an optimization game theoretic framework aumann shapley that retains the desirable properties of other existing methodologies such as the average participations factors apf and long run marginal costs lrmc the approach is shown to be computationally feasible and presents desirable characteristics in terms of economic coherence and isonomy computational results are presented for the brazilian power system and compared with those obtained by three other methodologies lrmc apf and the current method adopted in brazil

farmers objectives as determinants of organic farming adoption the case of catalonian vineyard production this article assesses the decision to adopt organic farming practices we use duration analysis da to determine why farmers adopt organic farming practices and what influences the timing of adoption we extend previous studies by including farmers objectives risk preferences and agricultural policies as covariates in the da model the analytical hierarchy process is used as a multicriteria decision making methodology to measure farmers objectives the empirical analysis uses farm level data from a sample of vineyard farms in the spanish region of catalonia farmers objectives are found to influence the conversion decision moreover farmers who are not risk averse are more likely to adopt organic farming results point to the policy changes that have been most relevant in motivating adoption of organic practices

nodal price control a mechanism for transmission network cost allocation this paper presents an approach for the allocation of transmission network costs by controlling the nodal electricity prices the proposed approach introduces generation and nodal injection penalties into the traditional economic dispatch so as to create nodal price differences that recover the required transmission revenue from the resulting congestion rent as a consequence the new electricity prices reflect not only the marginal costs of production subject to transmission constraints but also the capital costs of the network this is the approach commonly adopted with most commodities whose price includes the unit cost of the good itself as well as the transportation cost from the production centers to the final consumer

five facts about prices a reevaluation of menu cost models are price decreases 3 the frequency of price increases covaries strongly with inflation whereas the frequency of price decreases and the size of price increases and price decreases do not 4 the frequency of price change is highly seasonal it is highest in the first quarter and then declines 5 we find no evidence of upwardsloping hazard functions of price changes for individual products we show that the first second and third facts are consistent with a benchmark menu cost model whereas the fourth and fifth facts are not

inflation targeting what inflation rate to target abstract in an economy with nominal rigidities in both an intermediate good sector and a finished good sector and thus with a natural distinction between cpi and ppi inflation rates a benevolent central bank faces a tradeoff between stabilizing the two measures of inflation a final output gap and unique to our model a real marginal cost gap in the intermediate sector so that optimal monetary policy is second best we discuss how to implement the optimal policy with minimal information requirement and evaluate the robustness of these simple rules when the central bank may not know the exact sources of shocks or nominal rigidities a main finding is that a simple hybrid rule under which the short term interest rate responds to cpi inflation and ppi inflation results in a welfare level close to the optimum whereas policy rules that ignore ppi inflation or ppi sector shocks can result in significant welfare losses

marginal pricing of transmission services an analysis of cost recovery this paper presents an in depth analysis of network revenues computed with marginal pricing and in particular it investigates the reasons why marginal prices fail to recover the total incurred network costs in actual power systems the basic theoretical results are presented and the major causes of the mismatch between network costs and marginal revenues are identified and illustrated with numerical examples some tutorial and others of realistic size the regulatory implications of marginal network pricing in the context of competitive electricity markets are analyzed and suggestions are provided for the meaningful allocation of the costs of the network among its users

the new chilean transmission charge scheme as compared with current allocation methods we describe the new method used in chile to allocate transmission charges among generating companies and customers as defined in law 19 940 of march 2004 also known as ley corta or short law we show that the new chilean transmission charge scheme is a hybrid based on marginal cost pricing identification of use through economic benefits and flow identification methods and last a postage stamp to redistribute almost all the charges that customers have to pay we also estimate the direct per kilowatthour charge that customers will pay and discuss its effect on location and expansion signals

technical efficiency of alternative farming systems the case of greek organic and conventional olive growing farms abstract olive growing is a major farming activity in greek agriculture this paper analyzes empirically the technical efficiency of organic and conventional olive growing farms using a stochastic production frontier methodology and a translog functional specification findings indicate that the organic olive growing farms examined exhibit a higher degree of technical efficiency relative to their production frontier than do conventional olive growing farms reasons may include lower profit margins and restrictions on inputs permitted thus forcing organic farmers to be more cautious with input use however both input and output oriented technical efficiency scores are still relatively low for both types of olive farming thus there is considerable scope for cost reducing and farm income improvement in both farming modes this could prove crucial for the long run viability and the future course of the sector

cost of wheeling methodologies the cost of wheeling and the methodology by which it is computed is a high priority problem throughout the power industry due to the growth in transmission facilities the cost differentials between utility companies and the dramatic growth in nonutility generation capacity this paper contains descriptions and summaries of computational procedures and data requirements of four embedded cost methodologies two long run incremental cost methods and the short run marginal cost method four methodologies are also presented for allocating the wheeling costs among a number of wheels when simultaneously present on a company s system as required for the standard long run incremental cost method

conversion subsidies for organic production results from sweden and lessons for the united states organic conversion subsidies used in europe are less likely to be politically acceptable in the united states where organic agriculture development is market driven persistent barriers to conversion in the united states include limited availability of and access to production and market information training in management systems and cost of conversion related investments by determining whether these factors affect the requirement of a subsidy to convert we can suggest whether u s policy makers need to provide subsidies to encourage conversion and identify policy variables consistent with market based approaches that could stimulate conversion a utility difference model is used with swedish data to analyze factors that determine whether a subsidy is required to motivate organic conversion the results show that farmers requiring subsidies manage larger less diversified farms and are more concerned with organic inspection quality and adequacy of technical advice access to more market outlets and information sources substitutes for payment level in the farmer s utility function indicating that services rather than subsidies may be used to encourage organic agriculture to the extent that conditions are similar in the u s organic sector market based programs such as cost sharing for conversion and market access improvement should stimulate growth of this industry 2000 elsevier science b v all rights reserved

the costs of wheeling and optimal wheeling rates wheeling is the transmission of electrical energy from a buyer to a seller through a transmission network owned by a third party this paper provides a theoretically sound yet practical to implement basis for setting wheeling rates these wheeling rates are based on marginal costs determined by losses and effects of line flow and voltage magnitude constraints adjusted up or down as necessary to account for embedded capital costs i e revenue reconciliation simple numerical examples are provided to illustrate interesting phenomena such as negative wheeling rates which yield positive net revenue comparisons with present day wheeling rates show that major differences exist the wheeling rates of this paper yield a no lose situation for the buying selling and wheeling utilities

available transmission capability sell firm or interruptible available transfer capability atc is an important parameter for all companies participating in the power transaction activities one aspect of the atc analysis relates to the following important questions what part of the posted atc should be bought sold as firm and what as an interruptible nonfirm capacity in the emerging competitive electricity market this will perhaps be one of the crucial problems faced by the market participants this problem has not been discussed in the literature yet and is considered in this paper by calculating the optimal split between firm and interruptible atc using a dc load flow model and monte carlo optimization approach

a possible explanation of the missing deflation puzzle following the great recession despite large and persistent slowdown in economic activity the fall in inflation was modest this is known as the missing deflation puzzle in this paper we develop and estimate a new keynesian model to provide an explanation for the puzzle the new model allows for time varying volatility in cross sectional idiosyncratic uncertainty and accounts for changes in intermediate input prices we show that inflation did not fall much because intermediate input prices were increasing

energy price shocks and the macroeconomy the role of consumer durables so far the literature on dynamic stochastic general equilibrium models with energy price shocks uses energy on the production side only in these models energy shocks are responsible for only a negligible share of output fluctuations we study the robustness of this finding by explicitly modeling private consumption of energy at the household level in addition to energy use at the firm level to account for total energy use in the economy additionally we distinguish between investment in consumer durables and investment in capital goods the model economy is calibrated to match total energy use and durable goods consumption as observed in the u s data simulation results indicate that despite higher total energy use this economy has an even smaller proportion of output fluctuations attributable to energy price shocks productivity shocks continue to be the primary force behind business cycle fluctuations the driving force behind our results is that the household now has the flexibility to rebalance its investment portfolio specifically the energy price hike is absorbed by reducing durable goods investment more than investment in capital goods thereby cushioning the hit to future production at the expense of current consumption hence our model better matches the consumption volatility observed in the data jel classification e32 q43

framework for assessing the economic efficiencies of long run network pricing models this paper presents a framework for assessing the economic efficiency of different long run network pricing models the aim is to provide a quantifiable efficiency measure that will inform regulators network operators and network users when an alternative pricing model is contemplated the efficiency measure is derived from the long term network development costs that flow from a dynamic interaction between network pricing and planning that is the response of network users to differing charging models the consequential network investment and new financial incentives that follow reinforcement of the network to illustrate the approach the framework has been used to assess the relative efficiency of three broad class of distribution pricing models in a study undertaken for the great britain gb s regulator for gas and electricity markets in england wales and scotland ofgem the study contemplated three pricing models that are used in practice the efficiency assessment in the ofgem study was conducted on a pseudo distribution reference network on the assumption that the results from the reference network could be scaled up to the national level then the assessment suggests that by moving from the present drm model to the more economic lric approach gb distribution network operators could save in the region of pound200 m over the next 20 years in their network investment costs this paper draws heavily on the project undertaken for ofgem but any views expressed are solely those of the authors

differential uncertainties and risk attitudes between conventional and organic producers the case of spanish arable crop farmers the growing importance of economic factors in farmers decision to go organic has raised interest in characterizing the economic behavior of organic versus conventional farms published analyses so far have not considered differential uncertainties and farmers risk preferences between conventional and organic practices when comparing these techniques our article attempts to assess this issue we use a model of farmer decision under risk to analyze the differential values between spanish cop organic and conventional farms and to assess the incentives for adoption of organic practices results show that organic and conventional farms do have different abilities to control production risk as well as different risk preferences organic price premiums and subsidies are found to be powerful instruments to motivate adoption of organic techniques

to certify or not to certify separating the organic production and certification decisions this article separates the decision to be certified organic into the decision to use organic practices and the subsequent decision to certify those practices using data from a survey of us fruit and vegetable producers we document that many producers are using organic practices but choosing not to certify philosophical beliefs and perceived risk of losses due to disease weeds and insects have the largest impact on the decision to use organic practices producers who use organic practices and direct market are less likely to certify moreover we find that the certification process discourages certification

the economic dispatch with consideration of transmission service charge for a generation company summary form only given as follows this paper presents a novel economic dispatch strategy for a generation company which owns several units with different fuel costs efficiency and locations and has a bilateral contract with several large customers the proposed strategy not only considers the generation cost but also takes into account the wheeling charge for the use of the transmission system a modified megawatt mile method is proposed to calculate the wheeling cost in this paper finally the calculation result of economic dispatch for a generation company with two units and their loads in a real power system is demonstrated

fitting observed inflation expectations abstract the paper provides evidence on the extent to which inflation expectations generated by a standard christiano et al 2005 smets and wouters 2003 type dsge model are in line with what observed in the data we consider three variants of this model that differ in terms of the behavior of and the public s information on the central banks inflation target allegedly a key determinant of inflation expectations we find that i time variation in the inflation target is needed to capture the evolution of expectations during the post volcker period ii the variant where agents have imperfect information is strongly rejected by the data iii inflation expectations appear to contain information that is not present in the other series used in estimation and iv none of the models fully capture the dynamics of this variable

a new methodology for cost allocation of transmission systems in interconnected energy markets this paper presents a new methodology for allocating transmission system costs in single or interconnected energy markets initially the proposed method allows the decomposition of the total transmission cost into two components the first corresponds to the utilized network capacity estimated at a specified operating condition and the second refers to the transmission capacity available but not used in the system a technique for decomposing nodal tariffs per subsystem guarantees the applicability of the method to interconnected markets from the proposed procedure it is possible to determine the responsibility of each participant or group of participants in the use of any specified set of transmission elements the flexibility of this method allows the establishment of criteria based on economic and technical aspects for cost allocation of internal circuits of each subsystem as well as of the tie elements between the subsystems important characteristics of the proposed methodology such as transparency impartiality and flexibility are analyzed and illustrated based on numerical applications with the ieee reliability test system experience with the brazilian transmission network is also discussed