Trends in transmission, distribution, and administration costs for U.S. investor-owned electric utilities

Robert L. Fares and Carey W. King

Energy Policy, 2017, vol. 105, issue C, 354-362

Abstract: This paper analyzes the cost of transmission, distribution, and administration for U.S. investor-owned electric utilities. We analyze data reported to the Federal Energy Regulatory Commission (FERC) from 1994 to 2014 using linear regression to understand how the number of customers in a utility's territory, annual peak demand, and annual energy sales affect annual TD&A spending. Then, we use Edison Electric Institute data for 1960 to 1992 to show trends in TD&A spending between 1960 and 2014. We find that the number of customers in a utility's territory is the single best predictor for annual TD&A costs. Between 1994 and 2014, the average cost per customer was $119/Customer-Year for transmission, $291/Customer-Year for distribution, and $333/Customer-Year for utility administration. Total TD&A costs per customer have been approximately $700–$800/Customer-Year since 1960, but the cost per kWh of energy sold was significantly higher in the 1960s because the average customer used less than half as much energy annually versus 2014. Thus, TD&A costs per kWh are likely to increase if kWh energy sales decline in the future unless cost recovery is transitioned to a mechanism not based solely on kWh sales.

Keywords: Transmission; Distribution; Electricity; Economics (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421517301118
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:105:y:2017:i:c:p:354-362

DOI: 10.1016/j.enpol.2017.02.036

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().