Intertemporal Allocation of Capital Costs in Electric Utility Capacity Expansion Planning Under Uncertainty

This paper concerns marginal cost pricing in a capacity expansion problem for the electric utility industry. We develop a characterization of equipment selection and marginal capital cost allocation based on an optimal capacity plan, in the context of either a finite, discretely distributed stochastic demand forecast, or in the deterministic case of multiple users identified by temporal considerations. In either case, a two stage linear program with recourse is shown to result. The main purpose of this paper is to conduct an analysis in order to determine a marginal cost pricing strategy for sharing capital costs given an optimal capacity plan, and to provide insightful economic interpretations. Our results also generalize a special case previously studied to demonstrate how a marginal cost pricing strategy may result in some of the capacity costs being borne by off-peak users.

• 저널Management Science · 30(1) · 1–19
• 토픽Electric Power System Optimization · Electrical and Electronic Engineering
• DOI10.1287/mnsc.30.1.1
• 저자Hanif D. Sherali, A. L. Soyster, Frederic H. Murphy, Suvrajeet Sen