Energy Pricing Economics and Principles 1st Edition by Roger L Conkling ISBN 9783642154904 by Roger L. Conkling 9783642154904, 3642154905 instant download after payment.

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ISBN 13: 9783642154904
Author: Roger L Conkling

This book describes the processes through which rates for energy consumption are derived, ranging from initial analyses of the supply and demand parameters to the final forms and levels of end-use consumer prices. The author argues against aggressive accounting procedures, and suggests criteria for choosing firm's position on pending public policy issues. A handbook on energy formulae for non-professionals is included in the book. The author is adjunct professor at the University of Portland.

Energy Pricing Economics and Principles 1st Table of contents:

1 Introduction
1.1 Distinguishing Between Cost and Price
1.2 Cost and Price in Our Daily Vocabulary
1.3 The Credibility of Cost
1.4 Total Cost of the Operation as a Whole
1.5 Joint-Product Costs
1.6 Price Relationships: The Baker Revisited The Quantity Discount
1.7 The Economics of Fixed (Overhead) Costs
1.7.1 Production Within the Capability of Existing Plant
1.7.2 Where Plant Expansion Is Required
1.8 A Closer Look at Two-Part Pricing
1.9 Competitive Pricing (Value to the Purchaser)
1.10 From Wonderland to Reality
1.10.1 The Baker
1.10.2 The Utility
1.10.3 A Broader Horizon
1.10.4 Benefits vs. Costs
1.11 Cost and Price-A Primer
1.12 Conclusions, If Any
2 The Cost Approach to Pricing: The Direction of Cost
2.1 Preface
2.2 Fixed and Variable Costs
2.2.1 The ''Readiness to Serve'' Concept
2.2.2 The ''Use of Service (Product)'' Concept
2.2.3 Relative Proportion of Fixed and Variable Costs
2.3 Decreasing, Constant, and Increasing Costs Conditions
2.4 Decreasing Costs
2.4.1 The Static Hypothesis
2.4.2 The Dynamic Hypothesis
2.5 The Base System
2.6 Future Additions
2.6.1 Decreasing Fixed-Cost Scenario
2.6.2 Constant Fixed-Cost Scenario
2.6.3 Increasing Fixed-Cost Scenario
2.7 The Small Base-Load Plant
2.8 The Peaking or Firming-Up Plant
2.9 Power Purchases by Electric Utilities from Non-utility Sources, Bypass, and Discounts
2.9.1 Purchase by a Utility
2.9.2 Construction by the Utility of Its Own Plant
2.9.3 Purchase of IPP Power
2.9.4 Bypass of the Utility
2.9.5 An Alternative to Bypass: A Discounted Price
2.9.6 Arrested or Contracted Output
2.9.7 Summary of Findings
2.10 Variable Costs
2.10.1 The Dominance of Variable Costs
2.10.2 The Uncertainty of Variable Costs
2.10.3 High Capital/Low Operating Costs vs. Low Capital/High Operating Costs
2.11 Matters of Judgment
2.12 A Note on Generating Plants
2.13 A Note on the Level of Costs
3 The Cost Approach to Pricing: Joint Cost Allocations
3.1 Direct and Joint/Common Costs
3.2 Cost Causation
3.2.1 The Classification of Customers
3.2.2 The Classifications of Services
3.2.3 The Classification of Costs
3.3 Utility Cost Allocation Theory
3.4 The Functionalization of Costs
3.5 Methods of Allocation
3.5.1 The ''Coincident Demand Peak-Responsibility'' Method
3.5.2 The ''Non-coincident Demand Peak-Responsibility'' Method
3.5.3 Other Peak-Responsibility Methods
3.5.4 Various Other Methods
3.5.5 The ''Phantom Customer'' Method
3.5.6 The Nordin Proposal
3.5.7 Edison's Improvements
3.6 Distribution
3.7 Rate Schedule Divisions of Cost
3.7.1 Demand Costs
3.7.2 Customer Costs
3.7.3 Commodity Costs
3.7.4 The ''Perfect'' Rate
3.8 Suballocations
3.9 The Total Cost and Incremental Cost Methods
3.9.1 Marginal Costs
3.9.2 Use of the Incremental Cost Method
3.10 The Separable Costs-Remaining Benefits Method of Cost Allocation in Federal Multi-purpose Pro
3.11 Limits on the Ascertainment of Costs
3.12 Definitions of Cost
4 The Cost Approach to Pricing: The Tenneco Pattern
4.1 Tenneco Pattern
4.2 The Issues
4.3 The Regulatory Scheme in Brief
4.4 Assignment of Fixed and Variable Costs
4.4.1 The Seaboard Formula
4.4.2 The United Formula
4.4.3 The Modified Fixed--Variable (MFV) Formula
4.4.4 The Straight Fixed--Variable (SFV) Formula
4.4.5 Comparison of the Formulae
4.5 The Demand Charge
4.6 Zoning
4.6.1 A ''Postage-Stamp'' Approach
4.6.2 The Zoning Alternatives
4.6.3 Which Alternative Is the Best?
4.6.4 The Legal Standards
4.6.5 The Commission's Appraisal Yardsticks
4.6.6 Commission Precedents
4.6.7 The Commission's Findings and Orders
4.7 A Resume
4.8 The Minimum Bill
4.9 Tenneco Allocations for Rate Design
4.9.1 Step 1: The Company-Wide Cost of Service
4.9.2 Step 2: Functionalization of the Cost of Service
4.9.3 Step 3: Classification of Functional Costs as Fixed or Variable
4.9.3.1 Unadjusted Fixed and Variable Charges
4.9.3.2 Straight Fixed Variable
4.9.3.3 Seaboard
4.9.3.4 United
4.9.3.5 Modified Fixed Variable
4.9.3.6 Comparative Results
4.9.4 Step 4: Classification of Costs as Demand or Commodity
4.9.5 Step 5: Classification of Transmission Sector Costs
4.9.6 Step 6: Distance-Related Costs
4.9.6.1 Distance-Sensitive Costs
4.9.6.2 Non-distance-Sensitive Costs
4.9.7 Step 7: The New York Zone
4.9.8 Step 8: Per-Unit Rate Elements
4.9.9 Step 9: Total System Costs Revisited
4.9.10 Closing Reminders
5 The Value Approach to Pricing: Demand Influence
5.1 Preface
5.2 Value of Service Defined
5.3 Cost vs. Value in Juxtaposition
5.4 The Upper and Lower Limit of Rates Concept
5.5 Economic Demand
5.6 Direct and Derived Demand
5.7 Option Demand
5.8 The Price Elasticity of Demand
5.9 The Crucial Importance of Price Elasticity
5.9.1 Electric---Washington Public Power Supply System (WPPSS)
5.9.2 Gas---Producer-Pipeline Take-or-Pay Contracts
5.10 The Revenue Effects of Elasticity
5.11 Immediate, Short-Run and Long-Run Price Elasticities of Demand
5.12 Repression and Stimulation
5.13 The Principle of Diminishing Utility
5.14 Economics of Pricing on a Value of Service Basis
5.15 Monopoly Pricing
5.16 The Theory of Class Price
5.16.1 Price Differentiation
5.16.2 Reasonable Price Differences
5.16.3 Determination of Rate Classifications Under Value and Combined Cost-Value Approaches
5.16.4 Combined Value and Cost Bases
5.17 Bases of Rate Classes
5.18 The Cost and Value Approaches Compared
5.19 Unreasonable Discrimination
5.19.1 The FERC Lists
5.19.2 Statutory Prohibitions
5.20 Predatory Pricing
5.21 Is There a Problem?
5.22 Concluding Observations on Cost vs. Value
5.23 Marketing and Advertising
5.23.1 Civic Participation
5.23.2 Marketing
5.23.3 Giveaways
5.23.4 Advertising
6 The Value Approach to Pricing: Planning for Demand
6.1 Units of Measurement
6.2 Procedure
6.3 Planning: Short-Run Demand Forecasts
6.3.1 Natural Gas
6.3.2 Electric
6.3.3 Common Issues
6.4 Planning: Long-Range Demand Forecasts
6.4.1 The Purpose of the Forecast
6.4.2 The Strategic Plan
6.4.3 The Supply Forecast
6.4.4 Matching Supply and Demand
6.4.5 The Input Assumptions
6.4.6 Other Market Share Considerations
6.4.7 Availability and Reliability
6.4.8 Finally, the Factor of Governmental Policy
6.5 Final Results
6.5.1 The Single Forecast vs. a Range
6.5.2 The Components of the Forecast
6.5.3 Testing the Forecast
6.5.4 Reliance on Forecasts
6.6 Public Policy Forecasts
6.6.1 Errors in Public Policy
6.6.2 Omissions in Public Policy
6.7 Concluding Comments
6.7.1 Conflicting Forecasts
6.7.2 Guidelines
6.7.3 A Personal Note
6.7.4 Alternative Forecasts
6.7.5 Resolving Forecasting Conflicts
7 The Public Policy/Social Engineering Approach to Pricing
7.1 Californias Lifeline/Baseline Rate
7.1.1 The California Lifeline Philosophy
7.1.2 The Lifeline/Baseline Rate Schedule
7.1.2.1 Baseline Allowances
7.1.3 Pricing Procedure
7.1.3.1 Tier Differentials
7.2 Cost Components of Rates
7.3 Timed Pricing
7.3.1 Prior to 2000
7.3.2 Real-Time Pricing (RTP)
7.3.3 Now
7.4 The Color GREEN
7.4.1 Comparisons
7.4.2 Electric Utilities: Clean-Energy Programs
7.4.3 From the Printed Media
7.4.3.1 Renewable Energy -- Clean Energy
7.4.3.2 Wind
7.4.3.3 Solar
7.4.3.4 Biofuels
7.4.3.5 Tidal and Wave Power
7.4.3.6 Landfills (Methane)
7.4.3.7 Oil Sands
7.4.3.8 LNG
7.4.3.9 Coal
7.4.3.10 Nuclear
7.4.3.11 Transmission/The Grind
7.4.3.12 Meters
7.4.3.13 Light Bulbs
7.4.3.14 Vehicles
7.4.3.15 Buildings and Homes
7.4.3.16 Clean Energy
7.4.3.17 Green Power Purchase Plans
7.4.3.18 Politics and Regulation
7.5 Venture into Marginal Cost Regulation
7.5.1 Marginal Cost Defined
7.5.2 The Steppingstone
7.5.3 The Proxy, a Combustion Turbine
7.5.4 Levelization Out, RECC In
7.5.5 EPMC Adopted, EDP Dropped
7.5.6 Energy Reliability Index (ERI) Established
7.5.7 Excess Generating Capacity and the ERI
7.5.8 The Resource Plan and the ERI
7.5.9 Long-Run vs. Short-Run and the ERI
7.5.10 The Capacity Response Ratio (CRR)
7.5.11 VOS In, ERI Out
7.5.12 The Abrupt Halt
7.6 Wind Rates on an Integrated Electric System 11
7.6.1 A Primer on Wind and the Electric Grid
7.6.2 Amount of Wind Generation
7.6.3 Wind and Planning
7.6.4 Planning: Wind Generators
7.6.5 Planning: Persistence Models
7.6.6 The Generation Reserves
7.6.7 Costs
7.6.8 Balancing Measures
7.6.9 Points of Contention
7.6.10 Services Offered
7.6.11 Rate Design
7.6.12 Physical Specifications
7.6.13 What's Left Out
8 Introduction to Rates
8.1 The Unregulated Marketplace
8.2 The Marketplace Under Regulation
8.3 The Customer Viewpoint
8.4 The Management Viewpoint
8.5 The Public Viewpoint
8.5.1 The California PUC
8.5.2 The Federal Energy Regulatory Commission
8.6 Related Objectives
8.7 Some Expert Opinions
8.8 Definitions
9 Elements of Rate Design
9.1 Frequent Features
9.1.1 Minimums
9.1.2 Ratchets
9.1.3 Adjustment Clauses
9.1.4 Penalties and Discounts
9.1.5 ''Frozen'' Rates
9.1.6 Caps and Floors
9.2 The Blocking Principle
9.3 Postage Stamp vs. Zone Rates
9.4 All-Purpose vs. Special-Purpose Rates: Unbundling
9.5 Seasonal vs. Year-Round Rates
9.6 Rolled-in vs. Incremental Pricing/Old Customer vs. New Customer Rates
9.7 Rate-Level Changes Across-the-Board
9.8 The Fine-Print Provisions
9.9 Nota Bene
10 Traditional Types of Rate Forms
10.1 Introduction
10.2 Rate Elements Defined Again
10.3 Single-Part Rate Forms
10.3.1 Flat Rates
10.3.2 Metered Commodity Rates (Also Called Straight-Line Commodity Rates)
10.3.3 Metered Demand Rates
10.3.4 Single-Part Rate Forms and Rate Theory
10.3.4.1 Unblocked vs. Blocked Single-Part Rates: (Residential)
10.3.4.2 Adding a Separate Customer Charge
10.4 Two-Part Rate Forms
10.4.1 The Hopkinson Rate
10.4.1.1 Blocked vs. Unblocked Hopkinson Rates: Per-kWh Price Changes
10.4.1.2 Blocked vs. Unblocked Hopkinson Rates: The Impact of Size
10.4.1.3 The Hopkinson Demand/Commodity Tilt: Increasing the Demand Component
10.4.1.4 The Hopkinson Demand/Commodity Tilt: Decreasing the Demand Component
10.4.2 The Wright Rate
10.4.3 Comparison of Hopkinson and Wright Rate Forms
10.4.4 Two-Part Rate Forms and Rate Theory
10.4.4.1 The Demand Charge
10.4.4.2 Energy and Demand Costs/Charges in the Fuel and Hydro-electric System
10.5 Three-Part Rate Forms
10.5.1 The Doherty Three-Part Rate
10.5.2 The Lester Special-Investment Three-Part Rate
10.5.3 The Zanoff Three-Part Gas Pipeline Rate
10.6 Modifications of Rate Forms and Special Applications
10.6.1 Promotional, Incentive-Type Rates
10.6.2 The Objective Rate
10.6.3 Additions to Standard Rate Forms
10.7 Miscellany
10.7.1 A 194601950 Case History with Overtones for Today
10.7.2 Rate Forms and Rate Comparisons
10.7.3 A 1971 Gas Distributor and Pipeline Tariff
10.7.4 Some Concluding Observations
11 Tools of the Trade
11.1 Introduction
11.2 Knowing the Market: Load Curves
11.2.1 Load/Demand Curve
11.2.2 Season Usage Patterns
11.2.3 Duration Curve
11.2.4 Planning
11.3 Gauging the Market: Analysis Factors
11.3.1 Diversity and Diversity Factor
11.3.1.1 Applications
11.3.1.2 Calculating Diversity
11.3.2 Load Factor
11.3.2.1 Limitations
11.3.2.2 Applications
11.3.2.3 Relationship of Load and Diversity Factors
11.4 Capacity Factor
11.5 Utilization Factor
11.6 Demand Factor
11.7 Power Factor
11.8 A Note to the Rate maker
12 Matters of Judgment
12.1 Part 1: Dubious Accounting
12.2 Earlier Accounting Results
12.3 Current Accounting Results
12.3.1 Overstatements
12.3.2 Understatements
12.3.3 Special Issues
12.3.4 Potpourri
12.3.5 Three Tidbits over 10 Years
12.3.6 Debt Concealment
12.3.7 At the Borderline
12.4 An Appraisal
12.5 Difference: Utility and General Corporate Accounting
12.5.1 Lack of Uniformity
12.5.2 The Question of Prudence
12.5.3 AFUDC
12.5.4 Deferred Income Taxes
12.6 Part 2: The California Energy Crisis
12.7 1996: Assembly Bill 1890
12.8 Optimism Reigns: No Doubts (1996)
12.9 The Lull Before the Storm (19971999)
12.9.1 FERC's Approval
12.9.2 Sales of California Generation Capacity
12.9.3 The California PX
12.9.4 Acquisitions of Generating Capacity Beyond California
12.9.5 Other Notes of the Majors
12.9.6 Rate Reduction Bonds
12.10 The Storm Hits: The Energy Crisis (20002001)
12.10.1 PG&E Corporation and Edison International
12.10.2 Other Activities of PG&E Corporation and Edison International
12.10.3 The Special Case of Sempra Energy, Parent of San Diego Gas and Electric Company
12.11 Chronology: The Crisis and Its Aftermath (to Early 2002)
12.11.1 November 1999
12.11.2 August 2000
12.11.2.0 September 2000
12.11.2.0 October 2000
12.11.2.0 November 2000
12.11.2.0 December 2000
12.11.3 January 2001
12.11.3.0 February 2001
12.11.3.0 March 2001
12.11.3.0 April 2001
12.11.3.0 June 2001
12.11.3.0 September 2001
12.11.4 February 2002
12.12 Comments
12.12.1 The Fatal Contradiction
12.12.2 Regulatory and Economic Failures
12.12.3 The Divestiture of Generating Capacity by California Utilities
12.12.4 The Issue of Long-Term Contracts
12.12.5 The Uniform-Price Auction
12.12.6 The Neglect of Costs
12.13 From Storm to Turmoil
12.14 P.S. 2009
12.14.1 Pacific Gas and Electric Company
12.14.2 Edison International
12.14.3 Sempra Energy
12.14.4 Statutory Changes
12.14.5 CPUC Actions
12.15 Part 3: The 20082009 Recession
12.16 Toxic Assets in Action: The Beginning
12.16.1 The Securitization Process in Detail
12.16.2 The CDS
12.16.3 The CMBS
12.16.4 A Bond Called Jupiter
12.17 Disregarded History
12.18 Earlier Bailouts
12.19 The Financial Crisis
12.20 The Bailouts
12.21 A Conducive Environment
12.22 Causes
12.23 The Dow from September 10 to October 10, 2008
12.24 The Paths of the Giants
12.25 Regulation
12.26 2008 Statistics
12.27 Epilogue

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