This book describes the processes through which rates for energy consumption are derived, ranging from initial analyses of the supply and demand parameters to the final forms and levels of end-use consumer prices. The author argues against aggressive accounting procedures, and suggests criteria for choosing firm's position on pending public policy issues. A handbook on energy formulae for non-professionals is included in the book. The author is adjunct professor at the University of Portland.
Energy Systems Series Editor: Panos M. Pardalos, University of Florida, USA
For further volumes: http://www.springer.com/series/8368
Roger L. Conkling
Energy Pricing Economics and Principles
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Dr. Roger L. Conkling University of Portland School of Business Administration North Willamette Boulevard 5000 Portland 97203-5798, Oregon USA
[email protected]
ISSN 1867-8998 e-ISSN 1867-9005 ISBN 978-3-642-15490-4 e-ISBN 978-3-642-15491-1 DOI 10.1007/978-3-642-15491-1 Springer Heidelberg Dordrecht London New York © Springer-Verlag Berlin Heidelberg 2011 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover illustration: Cover art is designed by Alex Kaufmann Cover design: WMXDesign GmbH, Heidelberg Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)
To April 4, 1941, the wedding day that brought Meta, beautiful, gracious, and caring We have celebrated 4/4 annually for sixty-nine years since
Acknowledgments
The author is most grateful to Brother Donald J. Stabrowski, C.S.C., Provost of the University of Portland, and to Robin D. Anderson, Dean and Franz Chair in Entrepreneurship of the Dr. Robert B. Pamplin, Jr. School of Business Administration, for permitting the use of the University’s facilities for the completion of this book. The author is also grateful to Gwynn Klobes, Erica Jones, and Kathleen Staten for their supervision of the typing by students of the final draft of the manuscript. Also deserving mention are student-typist Olga Mosiychuk, for overcoming the obstacles of last-minute changes, and next-door neighbor, Tim O’Hearn, for outsmarting his intractable computer. He owes thanks to Leonard A. Girard, General Council and Secretary, Portland General Electric Company (retired), and Thomas E. Bottorff, Senior Vice President, Regulatory Relations, Pacific Gas and Electric Company, for their encouragement in the early stages. But greatest of all is his debt of appreciation and gratitude to his wife, Meta, and to his daughter, Beth, for their help and understanding throughout the writing process.
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Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . 1.1 Distinguishing Between Cost and Price . . . . . 1.2 Cost and Price in Our Daily Vocabulary . . . . 1.3 The Credibility of Cost . . . . . . . . . . . . . 1.4 Total Cost of the Operation a