Abstract
Electric utilities have a natural incentive to cooperate with each other resulting from the physical nature of generation. Cooperation lowers production costs and increases reliability of supply. From a physical standpoint, transmission makes cooperation possible because it provides the physical capability to transport power. From an organizational standpoint, coordination occurs through both corporate consolidation (mergers and holding companies) and cooperation among independent companies.
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Notes
Utility franchises are not always exclusive, although areas that are served by multiple utilities are fairly rare.
Differential operating costs can be due to different fuels, technologies, efficiencies, or environmental conditions, and are discussed in more detail along with other issues related to electricity production in Appendix A.
for λ—the lagrangian multiplier for the load constraint
Each generating unit’s output is limited by its capability or by the capacity of the unit
An alternative sometimes practiced is to site large energy-consuming industries near the hydroelectric facilities. An example is the aluminum plants in Massena, New York. near the New York Power Authority’s Robert Moses Dam on the Saint Lawrence River.
The Susquehanna River dropped 150 feet before emptying into the Chesapeake Bay. The flow of the river varied widely, from 750,000 sec.ft. to a low of 2,200 sec.ft.
The use of the term in this analysis does not imply that all power systems are information cartels.
This welfare analysis is consistent with the impact of outages on customer behavior and prospect theory discussed in the next chapter.
I have been unable to find a copy of this report. My knowledge of the report and its contents are through personal communication with Dr. Harvey Happ. The interpretation of the report’s impact is my own.
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© 1993 Springer Science+Business Media New York
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Pechman, C. (1993). The Dynamics of Inter-Utility Cooperation. In: Regulating Power. Topics in Regulatory Economics and Policy Series, vol 15. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-3258-3_4
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DOI: https://doi.org/10.1007/978-1-4615-3258-3_4
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