Charles J. Cicchetti

University of Southern California | USC · Policy, Planning and development

compares to Models for Wholesale electricity markets

Shows how regulated energy companies can offer energy efficiency programs efficiently and fairly. Compares the rankings of states and major utilities.

Explains the regulatory principles and economic theory of utility sponsored energy efficiency and demand side management program. Data is analyzed that ranks U.S. states based on performance and success by year and cumulative.

Expands earlier book Going Green and Getting Regulation Right from energy efficiency into Climate Change including DER, EV, storage, carbon fees, and GND.

Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced. From an economic and policy standpoint, long-term energy contracts should be abr...

The authors would like to thank Paul Davidson for his comments and helpful discussions. They would also like to thank Peter Loeb for statistical assistance and William Harrington and the Western Union Telegraph Company for providing the data. The analysis and inferences are entirely the authors' and do not necessarily reflect the position of the Te...

The previous discussion adds mathematical complexity to reconcile and accommodate economic principles, regulation, and optimal investment. As the pricing rules become increasingly complex, it is not surprising that there is little reasonable likelihood that regulators would have the necessary data and precise inputs to establish utility tariffs wit...

These analyses confirm that virtually all variations in pricing during the period January 1, 2000 through June 20, 2001 can be explained by fundamental economic forces and specific regulatory policies in these markets. The markets created by the CPUC, the California Legislature, the CPX, then-Governor Davis, and the FERC profoundly influenced some...

Design flaws that had been masked when supply exceeded demand, were painfully exposed when market forces conspired to increase demand and reduce supply. Next, we explore several hypotheses to analyze econometrically these various facts and data.

The investigations with respect to market manipulation are ongoing. To date, some charges have been dismissed and in others, penalties have been paid without admission of guilt. The process is not complete. Therefore, it is not possible to reach a final conclusion. That said, two things seem relatively certain. First, the root causes of California’...

Competitive wholesale market approaches for organizing electricity markets are based upon the conceptual principles of competitive markets. For markets to meet competitive criteria, it is necessary that neither generators nor buyers have market power and, thus, cannot establish price or quantity outcomes. California encouraged new generation owners...

California has choices. The worst seems to be in the past. The costs of recovering from the 18-month energy crisis are high. These costs will be spread over about a decade. There is great uncertainty over who or what types of institutions will emerge as the dominant suppliers in the future. Cooperation could yield benefits under new partnerships. T...

Our main conclusions are that underlying factors, especially the prices at and relative to Henry Hub, explain the underlying natural gas prices to a considerable extent. The daily natural gas analysis rejects the hypothesis that natural gas prices were somehow artificially inflated during this period. If the natural gas markets had been manipulated...

In the post-Reagan political world, concerns with “pushy” regulation have given political wind to economistslrs questions about the natural monopoly status of generation. The growth in successful independent power producers that sold electricity on a MWH, not a power station, basis provided additional impetus to deregulate generation in much of the...

As California’s aging natural gas-fired plants were called upon to run much harder and longer than anyone had anticipated, NOx reclaim credits became scarce and more expensive. Operators often chose to shut down power production if credits were not available or were extremely high priced. 4 Whether plants were curtailed or shut down, the outcome wa...

Marginal-cost pricing for gas and electric utilities has been accepted after years of debate, but its present form of implementation does not resolve the problem of whether the individual consumer or the utility will control load management decisions. The authors examine issues surrounding time-of-use pricing versus load management, the determinati...

The two alternative forms of regional transmission organizations represent fundamentally different approaches. Generally, a transco will create more fertile ground for product and price differentiation and competition, while ISOs will tend to uniform access charges and special rules and markets for addressing competition.

The coming of competition in California and elsewhere will not mean less regulation but more—at least in the short run. The acid test of the transition will be whether the responsible political officials can define and impose a “competitive transition charge” on a basis that is fair to all parties, and then hold fast against customer pressures to a...

This study estimates a von Neumann-Morgenstern utility function using market data and microeconometric methods. The authors investigate the decision whether to purchase insurance against the risk of telephone line trouble in the home. Using the choices of approximately 10,000 residential customers, they determine the shape of the utility function a...

Public utility regulation lacks a formal proxy for the economic profits that can be earned in an effectively competitive market if a firm is efficient or innovative. After all, public utility regulation operated on cost-plus basis. If a utility is efficient or innovative and lowers its costs, its typical reward is to have its rates reduced. This is...

Academic and policy debate has centered around an apparent "underinvestment in conservation." This paper outlines traditional explanations for underinvestment and presents a prospect theory analysis of individual conservation behavior. On the basis of investment criteria, individuals seem to discriminate against conservation investments. While thes...

This study estimates a von Neumann-Morgenstern utility function using market data and micro-econometric methods. We investigate the decision whether to purchase insurance against the risk of telephone line trouble in the home. Using the choices of approximately 10,000 residential customers, we determine the shape of the utility function and the deg...

This paper examines problems with the admissibility of contingent use methodology surveys in natural resource damage assessment cases under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as well as the propriety of their use in formulating public policy. Using a contingent use survey conducted in conjunct...

The paper focuses on the alternative end-use tariff structures for natural gas. Emphasis is on marginal-cost pricing. First, there is a brief description of traditional natural gas pricing structures. While there is considerable variability between utilities, all do contain some common features. The second section contains a discussion of these tar...

The purpose of the study is to provide a practical guide for the analysis of the marginal cost structure of electric utilities for the purpose of designing electricity tariffs. The intended audience consists of those who have a working familiarity with electric power systems and who desire a general, but less abstract, discussion of the marginal co...

This chapter presents a general methodology for accommodating and measuring congestion-related quality deterioration. The model presented in the chapter is a straightforward extension of Lancaster's framework. In this scheme, an individual is assumed to have a utility function expressed in terms of attributes or characteristics. Each good or servic...

En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamient...

The purpose of this paper is to analyze the effects of the Bureau of Reclamation's water resource projects over the period 1930-1970 on regional economic growth in the Southwest. The empirical results indicate that these investments have had an impact on regional economic growth and that the extent of the effect depends on the nature of the water i...

The French energy system is reviewed. Forecasting techniques, electricity planning and design, environmental impact analysis, electricity pricing (theory and practice), and price elasticity estimation are discussed.

En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamient...

The growth in outdoor recreation activity over the past decade, and the increased limitations on the supply of natural environments and facilities required as inputs to this activity, have precipitated growing concern on the part of planners and managers over the adequacy of recreational facilities. This paper reviews the major economic modeling ap...

The essence of economic evaluation is a double entry system, in which the social benefits generated by an activity are measured and appropriately set off against social costs. The 'Principles and Standards' is inadequate in its prescription of benefit estimation techniques and virtually ignores certain significant opportunity costs, especially thos...

The historical development of the Mandatory Oil Import Quota Program is ; reviewed, and the manner in which it functions is described. Several analyses ; made during and shortly after the Cabinet Task Force Report are reviewed, and ; these are updated to reflect changing market conditions. Finally, the equity and ; efficiency aspects of the program...

With increasing demand for low-density recreational services and limited supply of facilities to provide them, congestion is becoming an important management problem. The purpose of this paper is to outline a model of congestion, estimate the effect of it upon individual willingness to pay for wilderness experiences, and illustrate how these result...

This study of the problem of transporting Alaskan oil to the United States concludes that a Canadian pipeline to the Great Lakes is preferable to the proposed Alaskan pipeline-tanker route to the West Coast. The Trans-Alaska Pipeline is compared to alternative Canadian routes on the basis of economic benefits and costs, environmental impact, profit...

Recreation studies have in the past confused the terms demand and use. Demand refers to the schedule of quantities that the community will desire at all possible prices. Use or participation is the realization of both demand and supply considerations. Accordingly, a priori information in addition to the data must be supplied prior to the estimation...

Introduction, 528. — The framework of the model, 530. — Demand uncertainty and option value, 533. — Some extensions of the model, 536. — Conclusions and policy implications, 537.

A look at the current energy-utility regulatory and financial environment reveals three distinct aspects of the deteriorating financial health of US utilities: (1) energy prices will rise unless returns on equity are increased, (2) the US is moving into a period of competitive disadvantage in worldwide markets, and (3) despite the need for long lea...

We develop a willingness to pay model for assessing the value of political demonstrations and apply this model.

The Nixon-Ford administrations asked Americans to accept an expensive and inappropriate energy policy in the concept of Project Independence, according to Mr. Cicchetti. He further feels that policy errors have served to drain domestic resources, reduce supplies from Canada and the Middle East, pass up the better Trans-Canadian Pipeline route in fa...

The interaction of gas storage and interruptable industrial gas service is numerically illustrated in this report. Cost functions, demand functions, and tariff structures are defined, estimated, or postulated, as appropriate. Through use of a computer program developed for the study, 48 combinations of simulated cost, demand and tariff conditions,...

Future United States natural gas demand depends on the quality of natural gas service to industrial users. This interim report synthesizes and develops rules by which the economic efficiency of various improvements may be analyzed. Specifically, the rules indicate the cost and demand conditions under which different combinations of transmission act...

This study attempts to identify the influence of production-type variables on outdoor recreation activity. A large amount of previous recreation research has been concerned with estimating recreation “demand.” In this paper, it is argued that there are inherent problems in estimating recreation “demand” that often lead to erroneous policy conclusio...