modeling economies of scale the case of us electric power companies modeling and validating the existence of technical progress within the neoclassical production function specification has been facilitated through the translog functional form however attempts to separate out the effects of technical progress and returns to scale has been limited this study develops and presents a model for testing the existence of these two separate effects using data from a sample of us electric power companies the analysis found that for these electric utilities there existed increasing returns to scale and technical progress that was energy using but capital neutral however scale effects were found to be a dominant factor in lessening the impact of declining average productivity

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

economics of scale versus technological change an aggregate product function for switzerland in estimating a production function for an economy constant returns to scale has been a traditionally maintained hypothesis in modelling switzerland s gross output as a function of labor capital and imports a general functional form is selected which displays increasing returns to scale and is not hicks neutral it is a technology which is labor saving import saving and capital using this paper also quantifies the mismeasurements associated with using a constant returns to scale model to estimate such variables as own elasticities of demand elasticities of substitution impacts on factor income and rate of technical progress

technical efficiency of french nuclear energy plants this article analyses the efficiency of french nuclear energy plants belonging to edf electricity of france from 2004 to 2008 with a dea data envelopment analysis model the convexity model is used to investigate the technical efficiency of a representative sample of nuclear plants the results indicated that some plants have undergone an improvement in technical efficiency while others have regressed in terms of technical efficiency policy implications related to the results are discussed

the organizational economics of power brokers and centrally dispatched power pools introduction economic and the political or normative components of pool structure power pools are partnerships among corporately unaffiliated electric utility compansubsidy free cost allocation ies formed to realize cost savings through mutual cooperation there are many ways in solutions to the first organizational probwhich cooperation can reduce the collective lem are described as tight or loose fedcosts of the utilities in a region including joint eral energy regulatory commission 1981 system planning and emergency energy excramer and tschirhart 1983 in some rechange but one aspect of cooperation is comgions of the united states particularly in the mon to all power pools within a geographinortheast individual firms have yielded subcal region and at any given time some utilities stantial amounts of authority over their own typically experience higher short run margeneration facilities establishing computerginal costs than others owing to differences of controlled dispatching of the region s plants plant mix or instantaneous loads when the regardless of ownership to realize the greatest firms with low marginal costs increase their reduction in energy costs in other regions production and sell this economy energy to notably florida utilities have chosen to retain the higher cost firms the poolwide cost of their autonomy and institute an information generation is decreased ertclearinghouse or energy broker to facilitate owing to this opportunity for cost savings short run power transactions that reduce the the firms in a region are confronted with an pool s energy costs cohen 1982 no matter organizational problem having two compowhat organizational form is used a pool must nents 1 what should the firms do to realize also agree on a method to allocate the costs of the opportunity for savings and 2 how pooled production and experience has should the savings be allocated among the shown that the matter of determining an pool members the first question is technical equitable allocation of system costs can be solved by accounting for the costs of producone of the principal impediments to the fortion and the costs of transaction under altermation and maintenance of power pooling native organizational arrangements cramer agreements uri 1976 federal energy reguand tschirhart 1983 gegax and tschirhart latory commission 1981 1984 the second is normative and must be recently economists have taken an interanswered in terms of the notions of justice or est in the equity properties of alternative cost fairness held in common by pool members allocation mechanisms the equity concept the solution of the organizational problem employed in most studies is the notion of therefore requires a political economy subsidy freedom faulhaber 1975 taken framework for organizational analysis zald from cooperative game theory an allocation 1970 in which attention is given to both the of a power pool s generation costs is subsidy free if no individual or subgroup of pool mem

review of inventory systems with deterioration since 2001 abstract this paper presents an up to date review of the advances made in the field of inventory control of perishable items deteriorating inventory the last extensive review on this topic dates back to 2001 goyal s k and giri b c recent trends in modeling of deteriorating inventory european journal of operational research 134 1 16 since then over two hundred articles on this subject have been published in the major journals on inventory control indicating the need for a new review we use the classification of goyal and giri based on shelf life characteristics and demand characteristics contributions are highlighted by discussing main system characteristics including price discounts backordering or lost sales single or multiple items one or two warehouses single or multi echelon average cost or discounted cash flow and payment delay

a security constrained bid clearing system for the new zealand wholesale electricity market this paper reports upon the mathematical models and implementation of the scheduling pricing and dispatch spd application for the new zealand electricity market nzem spd analyzes bids for energy offers reserve offers and energy demands and recognizes explicitly the effects on bid clearing due to transmission congestion network losses reserve requirements and ramp rate limits advanced lp solution methods are utilized to solve the large scale constrained optimization problem results on a 67 bus test system and the nzem are included

incentive contracts and competitive bidding an increasing segment of economic activity is taking place in nonmarket situations in which economic agents act outside the traditional markets or create markets to deal with specific resource allocation problems one such problem involves the selection by a buyer of a contractor using a competitive bidding process competitive bidding is used extensively by the government for the selection of suppliers of goods and services and for the sale of resources such as offshore oil leases firms may use competitive bidding for the selection of certain suppliers of factor inputs and may attempt to sell certain products in markets in which competitive price quoting is the established market mechanism this paper is concerned with a bidding process in which a firm has an opportunity to bid on a project under the terms of an incentive contract incentive contracts

economies of scale and technological progress in electric power production the case of brazilian utilities abstract this paper examined the cost structure of the electricity generation companies in brazil during the period 2000 2010 by using a translog cost function that imposes no restrictions on production technology and allows for the existence of non homotheticity the hypothesis that economies of scale are a typical feature of the generation market in brazil and in general are not exhausted at lower levels of production is not rejected this result supports the vision that indivisibilities restrict efficiency gains from free market competition in the brazilian electricity generation and most of the last restructuring in the industry regulation was based on this assumption furthermore over the sample period technological progress led to cost reductions in electric power supply these technological improvements take the form of both a neutral technological effect as well as a non neutral fuel effect which prevails over the capital and labor saving technical changes

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

consumer payment minimization in power pool auctions this paper presents a new methodology within the framework of centralized optimization for calculating optimal generation schedules that minimize energy payments by power pool consumers this paper addresses issues related to market structure and the operation of power pools such as bid evaluation generator no load and start up cost recovery generator unit operating constraints and market clearing price determination unlike conventional unit commitment algorithms that minimize total energy production costs the method presented here minimizes payments by power pool consumers a payment minimization objective leads to a different unit commitment and dispatch solution and lower market clearing prices additionally optimal allocation of generator no load and start up costs over the scheduling period is integrated in the bid evaluation process leading to a further reduction in consumer payments

optimization based inter utility power purchases effective power transaction decisions can result in significant savings since marginal generation costs of neighboring utilities could be quite different transactions however are coupled with the scheduling of units through system demand and reserve requirements and are confined by many accustomed rules how to make effective transaction decisions is therefore a very difficult problem in this paper an optimization based method for the integrated consideration of power purchase transactions and the scheduling of thermal units is presented based on the augmented lagrangian decomposition and coordination method after the system wide demand and reserve requirements are relaxed by using lagrange multipliers and penalty coefficients the overall problem is decomposed into purchase and thermal subproblems for a purchase subproblem the optimal purchase level for each purchase interval is first determined the subproblem is then efficiently solved by using the dynamic programming approach without discretizing purchase levels thermal subproblems are solved by extending the author s previous method the multipliers and penalty coefficients are then updated at the high level so that system demand and reserve requirements are gradually satisfied over iterations numerical testing results based on modified northeast utility s data show that the algorithm is efficient and significant savings can be obtained

the implementation of an energy brokerage system using linear programming the authors focus on the economics involved in energy transfers the function of an energy brokerage system is to establish interchange schedules between participating utilities in such a manner as to maximize the resulting savings a brokerage system that uses linear programming lp is presented to maximize the savings or profits to each utility subject to import and export constraints the cost quotations can also be determined using an lp formulation two examples to illustrate this formulation are given

application of auctions as a pricing mechanism for the interchange of electric power the expected move to a market based electric power industry will significantly change electric utility operations these changes will fundamentally alter the pricing of electric power how this pricing will be accomplished is a key issue traditionally embedded cost based methods have been used spot pricing has received attention as a possible approach in a market based electric power environment another market based approach is the use of auctions this paper presents the application of a sequential sealed bid and sealed offer auction to the pricing of electric power by using linear programming

an energy brokerage system with emission trading and allocation of cost savings an energy brokerage system can achieve lower emission levels for interconnected electric utilities in a cost effective way the paper presents a linear programming formulation of an energy brokerage system in an operational planning framework emission trading among utilities is envisaged to achieve emission reduction targets the power and emission buy sell quotes for individual utilities are computed and communicated to a central broker the broker determines the power and emission interchange schedule which maximizes the power system savings for all participating utilities the shapley value criterion is proposed for allocation of cost savings among the utilities this criterion reflects the true marginal contribution of a utility to the aggregate system savings and hence is superior to the existing methods of cost savings allocation

a general index of technical change this paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology specifically when panel data are available for firms in an industry time specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting this approach offers numerous advantages over the traditional time trend representation of technical change for example the general index can serve as the basis for analysis of the determinants of technical change results for a sample of 30 electric utilities over the period 1951 78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak load demands

price taker bidding strategy under price uncertainty this paper provides a framework to obtain the optimal bidding strategy of a price taker producer an appropriate forecasting tool is used to estimate the probability density functions of next day hourly market clearing prices this probabilistic information is used to formulate a self scheduling profit maximization problem that is solved taking advantage of its particular structure the solution of this problem allows deriving a simple yet informed bidding rule results from a realistic case study are discussed in detail

productivity growth technical change and economies of scale of korean fossil fuel generation companies 2001 2012 a dual approach abstract this paper examines total factor productivity tfp growth technical change and economies of scale measure of korean fossil fuel power generation companies gencos between 2001 and 2012 for the empirical investigation we estimated the cost function along with specification tests in order to find the most appropriate empirical model empirical results show tfp deterioration technical regress and economies of scale for the study period the optimal size of the korean gencos was also found which is employed in developing policies regarding tfp growth and technical advance

the translog production function and variable returns to scale this paper examines existing methods of estimating the translog production function and provides a general framework that allows for variable returns to scale the model is based on the inverse input demand function and embeds a nonhomothetic production technology previous estimation methods are valid only for homogeneous technologies with fixed scale effects estimation results for u s manufacturing show that neither homotheticity and homogeneity nor constant returns to scale is a proper characterization of the underlying structure of production thereby vindicating the empirical relevance of the inverse demand framework that entails a nonhomothetic technology copyright 1992 by mit press

rational inefficiency adjustment costs and sequential technologies abstract in this paper we propose a novel approach to estimate the rational inefficiency of decision making units in the presence of adjustment costs using sequential definitions of the production technology we show how cost inefficiency can be decomposed into rational and residual inefficiency as well as inefficiency caused by technical change furthermore we estimate lower bounds for the unobserved adjustment costs based on unexploited cost reductions due to rational inefficiency these adjustment costs are used to evaluate the feasibility of exploiting cost reductions caused by residual inefficiency we demonstrate the empirical applicability of our model by estimating and decomposing the cost inefficiency of u s coal fired power plants using panel data which cover the period between 1994 and 2009

strategic bidding in an energy brokerage this focus of this paper is to present a framework in which strategies may developed for the individual participants in an energy brokerage such a framework is expected to be important with the increasing interest in electricity market structures such as the energy brokerage that deregulation has produced to illustrate the process of strategic bidding a simple suboptimal bidding strategy is presented with the aid of a numerical example the bidding strategy must be suboptimal because of the amount of unknown information about the other bidders further tuning of this strategy will be required before application to realistic scenarios