OR Practice—An Analysis of Baltimore Gas and Electric Company's Technology Choice

Ralph L. Keeney, John F. Lathrop and Alan Sicherman
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Ralph L. Keeney: University of Southern California, Los Angeles, California
John F. Lathrop: Strategic Insights, Cupertino, California
Alan Sicherman: Lawrence Livermore National Laboratory, Livermore, California

Operations Research, 1986, vol. 34, issue 1, 18-39

Abstract: The Baltimore Gas and Electric Company (BGE) must select a strategy for adding 600 megawatts of electric generating capacity at the Perryman site near Baltimore to come on-line in the 1990s. This paper reports an analysis that evaluates strategies involving either a conventional coal facility or one of three technologies not currently available commercially. A key issue is whether the perceived advantages of the new technologies are worth the risks of not having, the generation capacity early enough to meet load growth. The analysis evaluates strategies using several BGE objectives, including customer cost, shareholder return, corporate image, health and safety, and feasibility. These objectives are combined by means of an evaluation function that uses corporate value tradeoffs, elicited first from analysts in the Generation Planning Unit and then refined in interviews with five BGE senior executives. Uncertainties addressed in the analysis include load growth, time when a new technology becomes available, and construction and licensing delay. The analysis is partially based on preliminary input information, but designed for iterative use incorporating better information. The computer software for the model has been transferred to BGE to be used to provide insights into technology choice problems.

Keywords: 182 generation expansion planning considering future technologies; 543 corporate planning considering future technologies; 852 multiattribute evaluation in corporate planning (search for similar items in EconPapers)
Date: 1986
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