Elements of the Swiss Market for Electricity

1.1 Economic issues to be analyzed This research examines two elements of the Swiss market for electricity: the residential electricity demand by time-of-use and the cost structure of municipal electricity distribution utilities. The empirical results of demand and cost elasticities allow the investigation of interesting economic and policy issues such as the desirability of a widespread introduction of time-of-use pricing for residential customers, the desirability of side-by-side competition in the distribution of electricity and, more generally, the economic effects of a reduction of the load factor and of mergers between electric distribution utilities on costs. Desirability of time-of-use pricing In the last decade there has been an intensifying debate in Switzerland about efficacy of electricity rate reforms in order to improve the efficiency of electricity use. This debate was initiated by two main events. First, there was an important growth of electricity consumption. Second, the Chernobyl accident in 1986 aroused widespread public concern about the problems associated with nuclear power and waste disposal. As a result, in 1991 the Swiss voted, in a referendum, a lO-year moratorium on the 2 construction of new nuclear power plants. Moreover, plans to expand production of hydroelectric power (construction of new dams or expanding existing ones) have been stiffly opposed by environmental groups. These developments have consistently curtailed potential expansion of domestic electricity supply. As a result, Switzerland during the winter has to import electricity from foreign countries.

Contenu

1 Introduction.- 1.1 Economic issues to be analyzed.- 1.2 Market for electricity: a short overview of demand, supply, regulation and tariff structures.- I Electricity demand by time-of-use.- 2 Implementing Consumer Theory.- 2.1 Review of consumer theory.- 2.2 Two-stage budgeting approach.- 2.3 Aggregation and consumer behavior.- 2.4 Compensating and equivalent variation in a conditional demand system.- 2.5 Functional form and the AIDS model.- 2.6 Review of the literature.- 3 Representative Consumer Behavior Model.- 3.1 Model specification.- 3.2 Data and variables.- 3.3 Estimation Results.- 3.4 Partial elasticity estimates.- 3.5 Concluding comments.- 4 Aggregate Consumer Behavior Model.- 4.1 Model specification.- 4.2 Data and variables.- 4.3 Estimation results.- 4.4 Partial elasticity estimates.- 4.5 Concluding comments.- 5 Household Consumer Behavior Model.- 5.1 Model specification.- 5.2 Data and variables.- 5.3 Estimation results.- 5.4 Partial elasticity estimates.- 5.5 Concluding comments.- 6 Summary and Conclusions to Part I.- II The cost structure of Swiss electric utilities.- 7 Implementing Producer Theory.- 7.1 Review of traditional production theory.- 7.2 Functional form and the translog model.- 7.3 Output characteristics.- 7.4 Review of the literature.- 8 The Long-Run Cost Model.- 8.1 Model specification.- 8.2 Data and estimation procedure.- 8.3 Estimation results.- 8.4 Estimated economies of scale.- 8.5 Marginal and average total costs.- 8.6 Cost effects of load factor.- 8.7 Elasticities of factor demand and substitution.- 8.8 Concluding comments.- 9 The Short-Run Cost Model.- 9.1 Model specification.- 9.2 Data and estimation procedure.- 9.3 Estimation Results.- 9.4 Long-run equilibrium conditions.- 9.5 Economies of utilization and scale.- 9.6 Marginal and average variable costs.- 9.7 Elasticities of factor demand and substitution.- 9.8 Concluding comments.- 10 Summary and Conclusions to Part II.- Appendix A.- Appendix B.- References.