IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Evaluation Of Investments For The Expansion Of An Electricity Distribution System

  • Glenn Jenkins


    (Queen's University, Kingston, On, Canada)


While 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.

If 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.

File URL:
Download Restriction: no

Paper provided by JDI Executive Programs in its series Development Discussion Papers with number 1998-01.

in new window

Length: 64 pages
Date of creation: Dec 1998
Date of revision:
Handle: RePEc:qed:dpaper:127
Contact details of provider: Postal: Kingston, Ontario, K7L 3N6
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Glenn Jenkins, 1994. "The Appraisal Of Investment Projects - A Teaching Approach," Development Discussion Papers 1994-05, JDI Executive Programs.
  2. Glenn P. Jenkins, 1985. "Public Utility Finance and Economic Waste," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 484-98, August.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:127. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bahman Kashi)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.