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n South African Journal of Industrial Engineering - Capital investment criterion for bulk electricity transmission infrastructure : a consumption approach

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Abstract

The primary technical function of an electric utility company is to supply electrical energy to its customers economically and at acceptable levels of reliability. The aspects of economics and reliability are however, competing constraints, since increased reliability of supply generally requires increased capital investment, which leads to higher prices for electricity. Traditional capital budgeting criteria, such as positive net present value, have been found to inhibit sound economic capital investment decision-making within the bulk electricity transmission environment. It is submitted that the results of this investigation will enable the operators of bulk electricity transmission systems to match the level of investment in reliability related infrastructure, with customers? reliability preferences. To do this it is necessary to incorporate the economic value-of-service reliability to customers into the economic evaluation used by utility planners.

Extracted from text ... 45 CAPITAL INVESTMENT CRITERION FOR BULK ELECTRICITY TRANSMISSION INFRASTRUCTURE: A CONSUMPTION APPROACH R.D. Smith and R.J.O. Joubert [1] [1] Respectively MBL Student and Professor UNISA Graduate School of Business Leadership jouberjo@alpha.unisa.ac.za ABSTRACT The primary technical function of an electric utility company is to supply electrical energy to its customers economically and at acceptable levels of reliability. The aspects of economics and reliability are however, competing constraints, since increased reliability of supply generally requires increased capital investment, which leads to higher prices for electricity. Traditional capital budgeting criteria, such as positive net present value, have been found to inhibit sound economic capital investment decision-making within the bulk electricity transmission environment. It is submitted that the results ..

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/content/indeng/13/1/EJC46032
2002-01-01
2016-12-05
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