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Evaluation Of An Expansion Of The Electricity Transmission System In Mexico

Author

Listed:
  • Glenn Jenkins

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

  • HENRY LIM
  • GANGADHAR SHUKLA

Abstract

In the past, most evaluations of the electric utility investments have been based on the assumptions that the suppliers of electricity would provide the quantity of energy demanded at an acceptable level of reliability. The question addressed in most of the investment appraisals has been: “is this investment the least cost way to supply the electricity demanded?” In real life the situation is usually very different in most countries. Shortages, outages and deterred demand have been the rule, rather than the exception. This study of a major rehabilitation program by Comision Federal de Electricidad (CFE) of Mexico (Mexico Public Electric Utility) presents a practical method of analysis for an investment to rehabilitate an existing electricity transmission system. First, the analysis is done in an integrated fashion where the financial, economic, distributive, and risk aspects of the project are examined together on a consistent basis. Second, the value of each of the components of the supply improvement, i.e. reduction in shortages, outages, transmission losses, is considered separately and then combined in the overall appraisal. Third, the risks imposed on these investments from such macro-economic variables as changes in the real exchange rate and the rate of inflation are modeled, based on real world data, and combined with the risks inherent in the project inputs, such as fuel and investment costs to make an assessment of the overall risks associated with the undertaking of these investments.

Suggested Citation

  • 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.
  • Handle: RePEc:qed:dpaper:135
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    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. Lester D. Taylor, 1975. "The Demand for Electricity: A Survey," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 74-110, Spring.
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    Citations

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    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. Praktiknjo, Aaron J. & Hähnel, Alexander & Erdmann, Georg, 2011. "Assessing energy supply security: Outage costs in private households," Energy Policy, Elsevier, vol. 39(12), pages 7825-7833.
    3. Glenn Jenkins & Henry Lim, 1999. "An Integrated Analysis of a Power Purchase Agreement," Development Discussion Papers 1999-08, JDI Executive Programs.

    More about this item

    Keywords

    Mexico; electricity; rehabilitation; investment; generation; transmission; appraisal;

    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

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