Transmission expansion in Argentina 3: The evolution of policy

Argentina's 1992 electricity reform introduced the Public Contest method, which made major expansions of the transmission system the responsibility of users rather than the transmission company or regulatory body. Policy evolved to allow incumbent transmission companies as well as users to propose expansions. In 1999 a second round of reforms envisaged financial transmission rights and At-Risk expansions to complement the Public Contest method, and to achieve more effectively the original aim of economic efficiency. In addition a Federal Transmission Fund was introduced with provision for expansions determined by federal and provincial governments. With a change of presidency in December 1999 the former modifications were mostly not implemented but a Federal Transmission Plan was launched. Especially since the economic crisis of early 2002, and the advent of a new presidency in 2003, the role of government has increased further, almost to the exclusion of the Public Contest and other methods. Extensive transmission expansions are now underway, reflecting federal financing and political pressures from outlying provinces, rather than users' decisions and economic considerations.     

Social cost-efficient service quality—Integrating customer valuation in incentive regulation: Evidence from the case of Norway

In order to overcome the perverse incentives of excessive maintenance reductions and insufficient network investments arising with incentive regulation of electricity distribution companies, regulators throughout Europe have started regulating service quality. In this paper, we explore the impact of incorporating customers’ willingness-to-pay for service quality in benchmarking models on cost efficiency of distribution networks. Therefore, we examine the case of Norway, which features this approach to service quality regulation. We use the data envelopment analysis technique to analyse the effectiveness of such regulatory instruments. Moreover, we discuss the extent to which this indirect regulatory instrument motivates a socially desired service quality level. The results indicate that internalising external or social cost of service quality does not seem to have played an important role in improving cost efficiency in Norwegian distribution utilities.     

Transmission expansion in Argentina 4: A review of performance

In 1992 Argentina's electricity reform provided an innovative approach to transmission expansion. In particular, major expansions were determined by the Public Contest method – that is, by votes of transmission users rather than by the transmission company or the regulatory body – and then put out to competitive tender. This paper reviews the overall performance of that policy. There was substantial new transmission investment, especially in control systems and transformers rather than extra-high-voltage lines: an achievement of the policy lies in making better use of the existing transmission system. The number and value of Public Contest transmission expansion projects were steadily growing over time until Argentina's economic crisis, particularly at sub-transmission level. Transactions costs were not a problem in the Public Contest method: the median number of voters was 5, and the process was generally characterised by harmony between participants rather than by discord. Distribution companies supported rather than obstructed the process, though there was scope to improve the provincial regulatory framework. There was effective competition to build and operate the expansions, with a median of 3 bids for each and the incumbent winning less than one fifth. Such competition roughly halved the cost of new lines. This contrasts with lines built under the present Federal Transmission Plan at two and a half times the previous cost.     

The development of a natural gas transportation logistics management system

Efficient management of the natural gas business chain – based on pipeline transmission networks and taking into consideration the interaction among the main players (e.g., shippers, suppliers, transmission companies and local distribution companies) – requires the use of decision-making support systems. These support systems maximise resources and mitigate contingencies due to gas supply shortfalls, operational contingencies from scheduled and non-scheduled equipment outages and market demand shortfalls. This study presents a practical use for technologies, such as a thermohydraulic simulation of gas flow through pipelines, a Monte Carlo simulation for compressor station availability studies, an economic risk evaluation related to potential revenue losses and contractual penalties and linear programming for the maximisation of income and the minimisation of contractual penalties. The proposed system allows the optimum availability level to be defined and maintained by the Transporter (by installing reserve capacity) to mitigate losses related to revenue and contractual penalties. It also economically identifies, quantifies and justifies the installation of stand-by compressor units that can mitigate the Transporter’s exposure to losses caused by capacity shortfalls as a consequence of scheduled and non-scheduled outages.     

基于动态网络数据包络分析模型的我国供电公司运营效率研究

为科学合理地测量和评价我国供电公司的运营效率,以分析我国电力体制改革中输配分离的必要性和可行性。应用动态SBM模型和动态网络SBM模型研究了我国31个省级供电公司2010~2012年的运营效率,分析了输配分离电力体制改革对各省级供电公司的影响,提出了在电力行业高速发展的情形下合理配置资源的方案,可为各省级电网公司应对输配分离政策提供决策参考。     

Output-based incentive regulation in electricity distribution: Evidence from Italy

Incentive regulation in electricity distribution is expected to enlarge its scope, from an input-oriented instrument to one that includes additional, output-based incentives. This creates a potential conflict with more traditional concerns for productive efficiency. In the case of Italy, together with input-oriented instruments, output-based incentives have been applied to indicators of quality for over a decade. Using micro-data from the largest Italian distribution company, we conduct an assessment of the effects of this regulatory framework. The aim of this work is threefold. First, we measure performance in terms of cost-efficiency and find that similar cost-reducing efforts were exercised in all distribution units. Second, we measure performance with respect to the overall regulatory framework. Using quality-related rewards and penalties, we find that more cost-efficient areas were also more successful in earning rewards/avoiding penalties: favorable external conditions have similar, positive effects on both cost and quality performance. Using the cost of the energy not supplied, we find no evidence of a conflict between cost efficiency and social cost efficiency. Results indicate, however, that itis preferable to use social costs when measuring a single unit's performance. From these results we derive specific policy indications.     

Federal incentives for energy development

This paper identifies and quantifies the incentives utilized by the Federal government to encourage the development of U.S. energy resources over the past half century. The incentives granted to the six major conventional sources of energy—nuclear energy, hydropower, coal, oil, natural gas, electricity—are categorized according to eight general types: creation (prohibition) of organizations, taxation, fees, disbursements, requirements, traditional government services, non-traditional government services, and market activity. It is found that through the fiscal year 1977 the Federal government has expended $211 billion for incentives to encourage energy resource development. These incentives were distributed in the following manner: commercial nuclear power, $18 billion; hydropower, $15 billion; coal, $10 billion; oil, $101 billion; natural gas, $16 billion; electricity transmission/distribution, $70 billion. The implications of these findings are discussed briefly.     

Quality frontier of electricity distribution: Supply security,best practices,and underground cabling in Finland

Electricity distribution is a prime example of local monopoly. In most countries, the costs of electricity distribution operators are regulated by the government. However, the cost regulation may create adverse incentives to compromise the quality of service. To avoid this, cost regulation is often amended with quality incentives. This study applies theory and methods of productivity analysis to model the frontier of service quality. A semi-nonparametric estimation method is developed, which does not assume any particular functional form for the quality frontier, but can accommodate stochastic noise and heteroscedasticity. The empirical part of our paper examines how underground cabling and location affect the interruption costs. As expected, higher proportion of underground cabling decreases the level of interruption costs. The effects of cabling and location on the variance of performance are also considered. Especially the location is found to be a significant source of heteroscedasticity in the interruption costs. Finally, the proposed quality frontier benchmark is compared to the current practice of Finnish regulation system. The proposed quality frontier is found to provide more meaningful and stable basis for setting quality targets than the average practice benchmarks currently in use.     

International benchmarking of electricity transmission by regulators: A contrast between theory and practice?

Benchmarking of electricity networks has a key role in sharing the benefits of efficiency improvements with consumers and ensuring regulated companies earn a fair return on their investments. This paper analyses and contrasts the theory and practice of international benchmarking of electricity transmission by regulators. We examine the literature relevant to electricity transmission benchmarking and discuss the results of a survey of 25 national electricity regulators. While new panel data techniques aimed at dealing with unobserved heterogeneity and the validity of the comparator group look intellectually promising, our survey suggests that they are in their infancy for regulatory purposes. In electricity transmission, relative to electricity distribution, choosing variables is particularly difficult, because of the large number of potential variables to choose from. Failure to apply benchmarking appropriately may negatively affect investors’ willingness to invest in the future. While few of our surveyed regulators acknowledge that regulatory risk is currently an issue in transmission benchmarking, many more concede it might be. In the meantime new regulatory approaches – such as those based on tendering, negotiated settlements, a wider range of outputs or longer term grid planning – are emerging and will necessarily involve a reduced role for benchmarking.     

Efficiency analysis of energy networks: An international survey of regulators

Incentive regulation for networks has been an important part of the reform agenda in a number of countries. As part of this regulatory process, incentives are put in place to improve the cost efficiency of network companies by rewarding good performance relative to a pre-defined benchmark. The techniques used to establish benchmarks are central to the efficiency improvements that are ultimately achieved. Much experience has been gained internationally in the application of benchmarking techniques and we now have a solid understanding of the main indicators of best practice. What we are lacking is a more complete understanding of the factors that influence choice of methods by regulators. In this paper, we present the results of an international survey of energy regulators in 40 countries conducted electronically between June and October 2008. Regulators from European, Australasian and Latin American countries are represented in the survey. Our results show that benchmarking techniques are now widespread in the regulation of gas and electricity networks. Best practice, however, is limited to a small number of regulators. We conclude by summarising existing trends and offering some recommendations on overcoming barriers to best practice efficiency analysis.     

Transmission expansion in Argentina 5: The regional electricity forum of Buenos Aires province

This paper supplements analyses of Argentine transmission expansions at the federal level by looking at experience in Buenos Aires province. A Regional Electricity Forum of distribution companies has drawn up and begun to implement a 10-year transmission expansion plan. Contrary to previous fears, getting agreement between the members on investment and cost sharing has not been unduly problematic. More challenging was getting approval of the provincial government on funding. Deferring tariff reductions and using the revenues for investment facilitated the process, and now some innovative financing arrangements are underway. Again contrary to some previous suggestions, the controversial Area of Influence method was extended rather than replaced. This overcame concerns about free-riding. Progress and investment have been severely curtailed by the economic crisis in 2001 and subsequent federal government policy. The arrangements nonetheless appear to be working well, and to be conducive to more efficient transmission expansion. This confirms that it is practicable and advantageous to allow users rather than the transmission company or the regulator to propose and determine transmission investment, even in a meshed rather than radial system. An appropriate regulatory framework is needed to approve that part of the total budget to paid by distribution business consumers, but this does not require the regulator to lead or monitor the detail of the process.     

Determinants of investment under incentive regulation: The case of the Norwegian electricity distribution networks

Investment in electricity networks, as regulated natural monopolies, is among the highest regulatory and energy policy priorities. The electricity sector regulators adopt different incentive mechanisms to ensure that the firms undertake sufficient investment to maintain and modernise the grid. Thus, an effective regulatory treatment of investment requires understanding the response of companies to the regulatory incentives. This study analyses the determinants of investment in electricity distribution networks using a panel dataset of 129 Norwegian companies observed from 2004 to 2010. A Bayesian Model Averaging approach is used to provide a robust statistical inference by taking into account the uncertainties around model selection and estimation. The results show that three factors drive nearly all network investments: investment rate in previous period, socio-economic costs of energy not supplied and finally useful life of assets. The results indicate that Norwegian companies have, to some degree, responded to the investment incentives provided by the regulatory framework. However, some of the incentives do not appear to be effective in driving the investments.     

增量配电网价格机制探讨及建议

目的 随着增量配电网项目数量的增多,投资主体的多样化,亟需形成完善的配电服务定价机制。 方法 新本文对增量配电网配电服务价格形成机制、分摊省级电网输电价格机制、接入公共电网价格机制等三个方面进行了梳理分析,对标杆电价法、竞标电价法和事后定价法三种配电定价方式的适用性与优缺点进行了研究。 结果 在分摊省级电网输电价格方面,对比了邮票法和节点电价两种方法的利弊,提出了针对性建议;在接入公共网络价格机制方面,提出了价格机制与资产界面划分的对应关系。 结论 通过研究增量配电网的价格形成机制,希望为我国电力体制改革发展提供有价值的参考。     

Behind the buzz [In My View]

The smart grid is a hot topic at utility executive meetings and broader transmission and distribution (T&D) utility forums across the country. The concept still elicits mixed reaction, but there is increasing agreement on a common defi nition of "smart grid," as well as an emerging confi dence that the smart grid embodies a set of technology investments that can transform the way service is delivered to customers. In addition to cost and service quality improvements, the smart grid is increasingly being linked to environmental goals, including attaining renewable-energy targets and reducing carbon emissions. A wide variety of players--venture capital companies, software and application providers, niche engineering firms--have entered the smart-grid value chain with material investments. Utilities are getting bolder in their program designs and in integrating smart-grid investments with their aspirations for energy effi ciency and renewables. State regulators have been approving pilot programs and building precedents with favorable investment decisions. With the development taking real shape, there are still areas to be cautious about, however. Systematic, wide-scale deployment of demand response has yet to be demonstrated. Systems integration is a considerable challenge. Worries regarding technology obsolescence continue, with new twists as new communications capabilities emerge.     

Regional transmission organizations: FERC Order 2000

The US Federal Energy Regulatory Commission (FERC) has changed its world. On 20 December 1999, it issued Order 2000, its final rule on regional transmission organizations (RTOs). On 25 February 2000, it followed this with Order 2000-A, which responded to requests for rehearing from many parties with “We meant what we said”, and it also clarified a few fine points. Order 2000 calls for, but does not quite require, companies owning transmission systems to put the grid under the control of RTOs. FERC requires transmission-owning companies under its jurisdiction to file certain papers by late 2000 or early 2001. These papers can be either proposals to form RTOs or progress reports on the development of RTO proposals. RTOs will have sole responsibility for operation and expansion of the transmission system, maintaining short-term reliability, establishing and managing tariffs, and responding to requests for service     

Do generation firms in restructured electricity markets have incentives to support social-welfare-improving transmission investments?

This paper examines the incentives that generation firms have in restructured electricity markets for supporting long-term transmission investments. In particular, we study whether generation firms, which arguably play a dominant role in the restructured electricity markets, have the incentives to fund or support incremental social-welfare-improving transmission investments. We examine this question in a two-node network and explore how such incentives are affected by the ownership of financial transmission rights (FTRs) by generation firms. In the analyzed two-node network, we show both (i) that the net exporter generation firm has the correct incentives to increase the transmission capacity incrementally up to a certain level and (ii) that, although a policy that allocates FTRs to the net exporter generation firm can be desirable from a social point of view, such a policy would dilute the net-importer-generation-firm's incentives to support transmission expansion. Moreover, if all FTRs were allocated or auctioned off to the net exporter generation firm, then it is possible to increase both consumer surplus and social welfare while keeping the net exporter generation firm revenue neutral.     

“十二五”节能服务产业发展前景与趋势

《国务院关于加快培育和发展战略性新兴产业的决定》明确宣布国家将重点培育和发展节能环保产业等七大战略性新兴产业,而节能服务产业属于节能环保产业范畴,被寄予引领整个节能环保产业发展的厚望。加快推行合同能源管理、加快发展节能服务产业是"十二五"加快经济转型的战略选择和迫切要求。我国现有的节能服务产业发展支持政策可归结为法律法规支持、行政规章支持、专项财政支持以及规划引导和工程推动等4类,这些政策的制定和施行为"十二五"期间我国节能服务产业的快速发展营造了较好的政策环境。"十二五"期间,我国节能服务市场需求的驱动力来自市场驱动和政策驱动两个方面,全社会对节能服务的市场需求巨大。届时节能服务公司数量将经历一个先增后减的过程,"十二五"后期全国公司数量将为1500家左右,有大型企业背景的节能服务公司可能带来不公平竞争,跨国公司或将成为我国节能服务市场重要的竞争参与者;节能服务市场的开发将主要集中在工业领域,同时在建筑领域业务活动将有所加强,东、中、西部节能服务市场开发的差距将缩小,节能服务市场将进一步细分。     

标尺竞争机制下的配电网增量成本定价模型

配电服务定价是输配分开过程中的重要问题之一,鉴于传统的配电管制正在向激励性管制转变,分析了标尺竞争机制下配电服务定价的相关问题,提出了一种基于标尺竞争机制的配电网增量成本定价模型,该模型基于配电网扩容计划估算增量成本和边际成本,并从每个配网使用者对配网负荷的使用份额来分析推导出配电服务价格。算例分析结果表明,该定价模型能有效促进配电公司之间的竞争,从而激励配电企业采取措施提高效率、降低成本。     

高绩效综合生产与资源计划管理方案

综合生产与资源计划是输配电企业生产过程中一项很重要的工作计划,输配电企业由于计划编制多头管理,缺乏统一沟通协调,计划之间不能有效集成,往往造成计划执行经常变动、资源浪费、物资不能及时供应、设备重复停役的现象,对企业效益、服务质量造成影响。通过研究高绩效综合生产与资源计划,提出通过有效集成生产计划、资源计划、供应计划、停电计划,形成综合生产与资源计划,指导日常生产工作,以提高计划执行率,降低供应成本,减少停电次数,优化资源配置,对于输配电企业的生产管理具有很强的借鉴意义。