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Econometric Benchmarking of Cost Performance: The Case of U.S. Power Distributors

Mark Newton Lowry, Lullit Getachew, and David Hovde

Year: 2005
Volume: Volume 26
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No3-4
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Abstract:
Benchmarking of cost efficiency has growing use in energy utility regulation. The state of the art has been limited in many countries by the small size of available national data sets and poor data on capital cost. Data available in the United States place fewer constraints on benchmarking methods. This paper develops an econometric cost benchmarking model for power distribution that is based on U.S. data. The model can address total cost and its major components. Numerous cost drivers are identified. Statistical tests of efficiency hypotheses are performed. The cost performances of utilities are compared to the industry norm. The suitability of the alternative frontier standard in regulatory applications is discussed.



Valuing Barrels of Oil Equivalent

James L. Smith

Year: 2015
Volume: Volume 36
Number: Adelman Special Issue
DOI: 10.5547/01956574.36.SI1.jsmi
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Abstract:
By convention, the petroleum industry relies on thermal equivalence to summarize the results of upstream oil and gas operations - measuring outputs in terms of barrels of "oil equivalent." This despite the fact that the two commodities trade at nothing like thermal parity. Drawing on a well-known exponential production model of petroleum reserves, we demonstrate the potential for thermal equivalence to substantially distort common measures of exploration and development success. Drawing on a recent survey of actual upstream results, and relative to a proposed measure based on economic equivalence, we show that the extent of bias in estimates of value, cost, and profitability is indeed large.



Transient and Persistent Energy Efficiency in the Wastewater Sector based on Economic Foundations

Stefano Longo, Mona Chitnis, Miguel Mauricio-Iglesias, Almudena Hospido

Year: 2020
Volume: Volume 41
Number: Number 6
DOI: 10.5547/01956574.41.6.slon
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Abstract:
Given the increasing importance of the wastewater sector in terms of energy usage, the understanding of the level of energy efficiency of wastewater treatment plants (WWTPs) is useful to both the industry itself as well as policy makers. Here, based on economic foundations, we apply a Stochastic Frontier Analysis (SFA) approach for energy demand modelling to estimate energy efficiency in the wastewater sector. Using specific SFA models and panel data from 183 Swiss WWTPs over the period 2001 to 2015, the paper illustrates that distinguishing between persistent and transient inefficiency is essential to deduce appropriate energy efficiency diagnosis in WWTPs. In this respect, persistent energy inefficiency is found to be more severe than transient energy inefficiency. Furthermore, it is shown that the age of the equipment influences the demand for energy and the energy savings due to technological innovation are quantified. Finally, economies of output density and scale are estimated demonstrating that for plants operating below optimal scale significant energy savings can be achieved if plants would be operated at higher size. Moreover, our analysis reveals also that for plants larger than 100,000 Population Equivalent, at least from an energy efficiency point of view, it would be no more beneficial to increase their scale.





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