IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/127.html
   My bibliography  Save this paper

Evaluation Of Investments For The Expansion Of An Electricity Distribution System

Author

Listed:
  • Glenn Jenkins

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

  • HENRY LIM

Abstract

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.

Suggested Citation

  • Glenn Jenkins & HENRY LIM, 1998. "Evaluation Of Investments For The Expansion Of An Electricity Distribution System," Development Discussion Papers 1998-01, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:127
    as

    Download full text from publisher

    File URL: https://cri-world.com/publications/qed_dp_127.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Glenn P. Jenkins, 1994. "The appraisal of investment projects: A teaching approach," Journal of International Development, John Wiley & Sons, Ltd., vol. 6(1), pages 115-122, January.
    2. Glenn P. Jenkins, 1985. "Public Utility Finance and Economic Waste," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 484-498, August.
    3. Lester D. Taylor, 1975. "The Demand for Electricity: A Survey," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 74-110, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Ellen Seidensticker & Glenn Jenkins, 2000. "Public Sector Intervention in the Energy Sector," Development Discussion Papers 2000-02, JDI Executive Programs.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henry Lim & Glenn Jenkins, 2000. "Electricity Demand And Electricity Value," Development Discussion Papers 2000-01, JDI Executive Programs.
    2. Glenn Jenkins & HENRY LIM & GANGADHAR SHUKLA, 1999. "Evaluation Of An Expansion Of The Electricity Transmission System In Mexico," Development Discussion Papers 1999-05, JDI Executive Programs.
    3. Olmstead, Sheila M. & Michael Hanemann, W. & Stavins, Robert N., 2007. "Water demand under alternative price structures," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 181-198, September.
    4. Céline Nauges & Arnaud Reynaud, 2001. "Estimation de la demande domestique d'eau potable en France," Revue Économique, Programme National Persée, vol. 52(1), pages 167-185.
    5. Massimo Filippini, 1995. "Swiss Residential Demand for Electricity by Time-of-Use: An Application of the Almost Ideal Demand System," The Energy Journal, , vol. 16(1), pages 27-39, January.
    6. Acuña, Guillermo, 2017. "Elasticidades de la demanda de agua en Chile [Elasticities of water demand in Chile]," MPRA Paper 82916, University Library of Munich, Germany.
    7. Fuente, David & Kabubo-Mariara, Jane & Kimuyu, Peter & Mwaura, Mbutu & Whittington, Dale, 2017. "Assessing the Performance of Alternative Water and Sanitation Tariffs: The Case of Nairobi, Kenya," EfD Discussion Paper 17-21, Environment for Development, University of Gothenburg.
    8. Dergiades, Theologos & Tsoulfidis, Lefteris, 2008. "Estimating residential demand for electricity in the United States, 1965-2006," Energy Economics, Elsevier, vol. 30(5), pages 2722-2730, September.
    9. Massimo Filippini & Bettina Hirl & Giuliano Masiero, 2015. "Rational habits in residential electricity demand," IdEP Economic Papers 1506, USI Università della Svizzera italiana.
    10. Gautam, Tej K. & Paudel, Krishna P., 2018. "The demand for natural gas in the Northeastern United States," Energy, Elsevier, vol. 158(C), pages 890-898.
    11. Hendrik S. Houthakker, 1980. "Residential Electricity Revisited," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    12. Fell, Harrison & Li, Shanjun & Paul, Anthony, 2014. "A new look at residential electricity demand using household expenditure data," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 37-47.
    13. Ivan Faiella & Luciano Lavecchia, 2021. "Households' energy demand and the effects of carbon pricing in Italy," Questioni di Economia e Finanza (Occasional Papers) 614, Bank of Italy, Economic Research and International Relations Area.
    14. Pillai N., Vijayamohanan, 2008. "Forecasting Demand for Electricity: Some Methodological Issues and an Analysis," MPRA Paper 8899, University Library of Munich, Germany.
    15. Kevin Neels, 1982. "Reducing Energy Consumption in Housing: An Assessment of Alternatives," International Regional Science Review, , vol. 7(1), pages 69-81, May.
    16. Fullerton, Thomas M. & Juarez, David A. & Walke, Adam G., 2012. "Residential electricity consumption in Seattle," Energy Economics, Elsevier, vol. 34(5), pages 1693-1699.
    17. Renwick, Mary E. & Green, Richard D., 2000. "Do Residential Water Demand Side Management Policies Measure Up? An Analysis of Eight California Water Agencies," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 37-55, July.
    18. Bai, Y. & Dahl, C.A. & Zhou, D.Q. & Zhou, P., 2014. "Stockpile strategy for China׳s emergency oil reserve: A dynamic programming approach," Energy Policy, Elsevier, vol. 73(C), pages 12-20.
    19. Miguel Bacharach & William J. Vaughan, 1994. "Household Water Demand Estimation," IDB Publications (Working Papers) 25218, Inter-American Development Bank.
    20. Filippini, Massimo & Hirl, Bettina & Masiero, Giuliano, 2018. "Habits and rational behaviour in residential electricity demand," Resource and Energy Economics, Elsevier, vol. 52(C), pages 137-152.

    More about this item

    Keywords

    electric distribution; electricity investments; Mexico;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:127. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.