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Energy Journal Issue

The Energy Journal
Volume17, Number 4

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Economic and Regulatory Factors Affecting the Maintenance of Nucleaer Power Plants

James G. Hewlett

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-1
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This paper examines the factors causing the escalation in the 1980s and' subsequent leveling off of nuclear power plant non-fuel Operating and Maintenance (O&M) costs. Over the period 1974-93, real (inflation-adjusted) non-fuel O&M costs escalated from about $23 to about $97 per kilowatt of installed capacity (kW). However, much of the escalation in costs occurred in the 1980s. Over the period 1975-87, real O&M costs escalated at an annual rate of about 11 percent. Since then, the annual growth rate in real O&M costs fell to about I percent. The research found that the escalation in O&M costs was primarily due to increased regulatory activity by the Nuclear Regulatory, Commission. More important, there is little evidence that the moderation in the growth in O&M costs was regulatory induced, but instead was due to changes in the economic incentives to improve plant performance.

Gas or Electricity, which is Cheaper? An Econometric Approach with Application to Australian Expenditure Data

Robert Bartels, Denzil G. Fiebig and Michael H. Plumb

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-2
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The question of whether it is cheaper for households to use electricity or gas for space heating, water heating and cooking, generates much debate in Australia. Generally, gas appliances are technically less efficient than electrical appliances, but on a per MJ basis, gas is cheaper than electricity. The trade-off between these two factors has typically been assessed using an engineering approach which ignores the fact that gas and electric appliances might be used in different ways in the home and that there may be price effects. This paper utilises an alternative perspective based on econometric methods. We analyse the actual energy expenditures of a large sample of Australian households and estimate the expenditure on the main end-uses for households using different fuel types. We find that households using electricity for main heating spend considerably less than households using gas. For cooking, households using gas generally spend less, while for water heating the results are mixed. We discuss several possible interpretations of these results in terms of consumer preferences and running costs.

How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level

Paul W. Parfomak and Lester B. Lave

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-3
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The current movement toward utility restructuring raises questions about the future of utility conservation programs, which have long suffered from illinformed and conflicting perceptions about their ability to affect customer loads. Controversy has arisen because of the inherent difficulty in measuring conservation impacts and because utilities have had clear economic incentives to overestimate impacts. This study uses econometric techniques to examine the aggregate commercial and industrial conservation impacts reported expost by 39 utilities in the Northeast U.S. and California through 1993. The study finds that 99.4% of the reported conservation impacts are statistically observable in system level sales after accounting for economic and weather effects. The results indicate that utility-run conservation programs have, indeed, been effective in reducing customer loads. The study finds no evidence the utilities have systematically overstated conservation effects.

Identifying Distributed Generation and Demand Side Management Investment Opportunities

Thomas E. Hoff

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-4
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Distributed generation and targeted demand side management programs offer electric utilities alternatives to large transmission and distribution (T&P) system capacity investments. This paper presents a method to estimate how much a utility can afford to pay for these alternatives when the change in system capacity due to the distributed resource is constant from year to year and when there is no uncertainty. The method is concise, has intuitive appeal, has minimal data requirements, and is accurate when benchmarked against two existing case studies. Analysts who want to screen distributed resource investment opportunities with a minimal amount of effort will find the method particularly useful.

CO2 Emission Reduction Costs in the Residential Sector: Behavioral Parameters in a Bottom-Up Simulation Model

Mark Jaccard, Alison Bailie and John Nyboer

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-5
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Cost estimates for reducing energy-related CO2 emissions vary with modeling assumptions and methods. Much debate has centered on the tendency for top-down models to suggest high costs and for bottom-up models to suggest low costs. This study incorporates behavioral parameters, derived from end-use equipment acquisition surveys, in a bottom-up simulation model ofthe residential sector in order to probe the basis for differing cost estimates and to test various policy suggestions. Simulating the effect of carbon taxes on a business as usual forecast, the results suggest that a CO2 tax will lead to significant net costs of adjustment if the factors leading to higher private discount rates reflect in part real costs and risks. The results also suggest that it may be in society's interest to pursue fuel switching policies with equal or greater vigour than energy efficiency improvements for the goal of reducing CO2emissions in the residential sector. As further research helps to distinguish the significance of these perceived costs and risks, and to refine projections of technology costs, the inputs to the model can be adjusted in order to refine the estimates for policy makers of CO2 reduction costs and of appropriate strategies for achieving reduction goals.

Energy Efficiency, Economic Efficiency and Future CO2 Emissions from the Developing World

Peter J. G. Pearson and Roger Fouquet

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-6
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This paper examines the potential role of energy efficiency and economic efficiency in influencing the future carbon dioxide emissions of developing countries. It explores and offers support to the hypothesis that, despite the potential value to the developing world of greater energy efficiency, if tight restrictions on global carbon dioxide emissions were considered necessary, efficiency alone could make only a limited contribution to restraining the projected growth of developing country emissions. This is because of the projected rapid energy growth rates in most developing countries, especially in the industrial sector and from fossil-fuelled electricity and transport, associated with growth in per capita incomes and population. The potential contribution of other possible measures to address global carbon dioxide emissions, particularly fuel switching, is also briefly examined.