A financial model for publicly-owned electric utilities

Supply planning by electric utilities is fraught with uncertainty. An essential tool for the evaluation of the riskiness of alternative supply plans is a financial simulation model. Sophisticated models of investor-owned utilities have been employed by both regulatory bodies and utilities. However, such models have not been developed for publicly-owned utilities. This paper details the reasons why models of investor-owned utilities are inappropriate for use by publicly-owned utilities. A financial model of a publicly-owned electric utility is presented and applied. Finally, uses and abuses of financial models are discussed.