Evaluation Of Investments For The Expansion Of An Electricity Distribution System
AbstractWhile the methodology for the evaluation of electricity generation investments is well developed, little work has been done on how to segregate and compare the costs and benefits of electricity distribution facilities. Distribution projects have been usually treated as a required technical part of a power system, with their specific costs and benefits rarely evaluated. As electricity systems become unbundled through privatization and competition, this historical treatment of electricity distribution investments must change. The purpose of this study is to develop and illustrate an integrated analysis of the electricity distribution investments where the financial, economic, stakeholder and risks aspects of the investment are all carried out in a constituent fashion. A major investment program that was undertaken to upgrade the distribution system of commission Federal de Electricidad (CFE) of Mexico from 1990-1994 will be the case to which this methodology is applied. Such projects produce a benefit stream that is multidimensional, it includes increased sales of electricity to new customers, a reduction of the rate of pilferage of electricity, energy savings due to reductions in transformers’ losses and a reduction in incidence of power shortages. Each of these components represents different financial and economic values to customers as well as to the utility, hence, must be considered separately in an investment appraisal. The results from this study indicate that this particular investment program was desirable from an economic perspective and from the point of view of the utility. In addition, the stakeholder analysis indicates that the economic externalities accrue largely to the government through a large positive fiscal impact, and to the electricity consumers who will now obtain access to a reliable service that is priced substantially below the amount they would have pay for it. While the project makes some customers very much better off, those whose consumption was previously unmetered will be made worse-off.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by JDI Executive Programs in its series Development Discussion Papers with number 1998-01.
Length: 64 pages
Date of creation: Dec 1998
Date of revision:
electric distribution; electricity investments; Mexico;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn P. Jenkins, 1985. "Public Utility Finance and Economic Waste," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 484-98, August.
- Ellen Seidensticker & Glenn Jenkins, 2000. "Public Sector Intervention in the Energy Sector," Development Discussion Papers 2000-02, JDI Executive Programs.
- Bicak, H.A. & Jenkins, G.P., 1999.
"Costs and Pricing Policies Related to Transporting Water by Tanker from Turkey to North Cyprus,"
689, Harvard - Institute for International Development.
- Hasan Bicak & Glenn Jenkins, 1999. "Costs And Pricing Policies Related To Transporting Water By Tanker From Turkey To North Cyprus," Development Discussion Papers 1999-07, JDI Executive Programs.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rafik Majidov).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.