Patterns of Transmission Investment

This paper examines a number of issues associated with alternative analytical approaches for evaluating investments in electricity transmission infrastructure, and institutional arrangements to govern network operation, maintenance and investment. The relationships between transmission investments driven by opportunities to reduce congestion and loss costs and transmission investment driven by traditional engineering reliability criteria are discussed. Reliability rules play a much more important role in transmission investment decisions today than do economic investment criteria as depicted in standard economic models of transmission networks. These models fail to capture key aspects of transmission operating and investment behaviour that are heavily influenced by uncertainty, contingency criteria and associated engineering reliability rules. I illustrate how the wholesale market and transmission investment frameworks have addressed these issues in England and Wales (E&W) since 1990 and in the PJM Regional Transmission Organization (RTO) in the U.S. since 2000.L51, L14, L43, L94

Transmission Policy in the United States

This paper provides an overview of the development of electric power transmission access, pricing and investment policies in the U.S. over the last 15 years and evaluates the current state of those policies. It includes a discussion of pre-liberalisation transmission access and pricing policies, the prevailing basic transmission access and pricing rules contained in Orders 888 and 889, FERC’s policies regarding Regional Transmission Organizations (RTO) as reflected in Order 2000, and FERC’s subsequent Standard Market Design (SMD) proposal. PJM’s market rules and transmission pricing, planning and investment policies are reviewed as an articulation of FERC’s RTO and SMD visions.Electricity, Transmission, Regulation, Deregulation

The Difficult Transition to Competitive Electricity Markets in the U.S.

This paper discusses the causes and consequences of state and federal initiatives to introduce wholesale and retail competition into the U.S. electricity sector from 1995. The development and performance of wholesale market institutions, the expansion of wholesale power trade, the entry of merchant generating capacity, and the financial collapse of the trading and merchant generating sector is discussed. Issues regarding the ability of evolving spot wholesale energy market institutions and market power mitigation mechanisms in the absence of some form of peak capacity obligation are discussed theoretically and evaluated empirically. The diffusion of retail competition and the performance of retail competition programs in eight states is examined empirically. The analysis leads to the overall conclusion that the development of efficient competitive wholesale and retail electricity markets continues to be a work in progress and faces many technical, institutional and political challenges in the U.S.

Why project size matters for contract choice in software development outsourcing

The contractual mechanism of software development outsourcing, typically either fixed-price (FP) or time-and-materials (T&M), determines the nature of incentives, risk sharing, and coordination between client and vendor. While software engineering considers project size as crucial for project planning and success, neither economic nor organizational theory considers size per se among the determinants of contract choice. In this paper, we address the gap between the centrality of project size in the software engineering literature and the attention it receives in software contracting research by modeling and testing the association between project size and contract choice. Existing empirical evidence indicates that FP contracts are appropriate for small development efforts whereas T&M contracts are suitable for larger projects, based on the reasoning that cost and schedule are difficult to estimate in larger projects. This prediction that size is directly associated with contract choice is the basis upon which two models are developed. The first model draws on the contracting efficiency approach to hypothesize that the effect of project size on contract choice is mediated by project detail. The second model draws on the contingency approach to software development risk management to hypothesize that the effect of project size on contract choice is moderated by project detail and vendor familiarity. We test these models using a large portfolio of software development contracts entered into by a leading European bank, and the results confirm that both mediation and moderation are at play

Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks

Modern theoretical principles to govern the design of incentive regulation mechanisms are reviewed and discussed. General issues associated with applying these principles in practice are identified. Examples of the actual application of incentive r egulation mechanisms to the regulation of prices and service quality for “unbundled” transmission and distribution networks are presented and discussed. Evidence regarding the performance of incentive regulation in practice for electric distribution and transmission networks is reviewed. Issues for future research are identified.regulation, incentives, networks, electricity, transmission, distribution

What Explains The Increased Utilization Of Powder River Basin Coal In Electric Power Generation?

This article examines possible explanations for increased utilization of Powder River Basin (PRB) coal in electric power generation that occurred over the last two decades. Did more stringent environmental policy motivate electric power plants to switch to less polluting fuels?Or, did greater use of PRB coal occur because relative price changes altered input markets in favor of this fuel. A key finding is that factors other than environmental policy such as the decline in railroad freight rates together with elastic demand by power plants were major contributors to the increased utilization of this fuel. © 2008 Agricultural and Applied Economics Association