An Optimization Model for Production Costing in Electric Utilities

J. C. Ammons and L. F. McGinnis
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J. C. Ammons: Georgia Institute of Technology
L. F. McGinnis: Georgia Institute of Technology

Management Science, 1983, vol. 29, issue 3, 307-316

Abstract: Estimating the annual production cost is a crucial component in long range capacity planning for electric utilities. Traditional simulation-based methods are quite expensive in terms of computer resources (space and time), while simpler mathematical programming-based models generally assume a linear variable production cost. This paper presents a method that incorporates quadratic production costs for each unit and uses optimization submodels to develop a system production cost versus output curve. The method is tested using data from a large southeastern utility. Production cost estimates within one percent of the estimates from a large simulation model were obtained with a small fraction of the simulation model's computing time. The concluding section discusses how the new method might be incorporated in procedures for capacity planning.

Keywords: programming: quadratic; application (search for similar items in EconPapers)
Date: 1983
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:29:y:1983:i:3:p:307-316

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