Texas Interconnection Grid: Economic Optimal Capacity Utilization Rate Evidence

Eric L. Prentis
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Eric L. Prentis: School of Accounting and Finance, Wenzhou-Kean University, Wenzhou, China.

International Journal of Energy Economics and Policy, 2015, vol. 5, issue 3, 686-692

Abstract: For the fi rst time in the literature, the supply and demand model, with 2011-2014 data, is used to analyze the Texas Interconnection grid electricity market. The electric utility industry s production function, fi xed, variable and total cost (TC) curve represents the supply curve. The demand curve is the electricity price in the assumed perfectly competitive electricity market. The effi cient scale of production is established located where the U-shaped average TC curve reaches a minimum and using marginal analysis, where marginal revenue equals marginal cost, to determine the economic optimal capacity utilization rate that maximizes electric utility industry profi ts. This paper s aggregate results on the economics of the electric utility market are meaningful, insightful and well-timed having important electric utility policy implications

Keywords: Economic Optimal Capacity Utilization Rate; Effi cient Scale of Production; Capacity Planning. Electric Utility Policy (search for similar items in EconPapers)
JEL-codes: G31 G38 H44 K23 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2015-03-07

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