1. Electricity regulation

Question 1

What characterizes a natural monopoly?

Answer 1

1. Economies of scale
2. Network effects
3. Switching costs

Question 2

Examples natural monopoly

Answer 2

Web search
Messaging
London Underground
Rail network

Question 3

How is the cost of service defined?

Answer 3

CoS (t) = OC(t) + IC(t) + R(t)

OC: variable cost
IC: Investment cost recovery
R: rate of return on capital

Question 4

Major drivers of PURPA

Answer 4

1. Energy security & independence

2. Information asymmetry and lack of trust

Question 5

Major drivers of PURPA

Answer 5

1. Energy security & independence

2. Information asymmetry and lack of trust

Question 6

Which are the regulatory institutions?

Answer 6

1. The ministry concerned
2. A regulatory comission, more or less independent from the ministry
3. The competition authority

Question 7

Name the 2 regulatory commissions at US state level

Answer 7

1. Federal Electricity Regulatory Commision

2. Public Utility Commission

Question 8

Which are the nascent power sytems?

Answer 8

1870: individual generators
1879: incandescence lamp by edison

Question 9

Which challenges did Pearl street face?

Answer 9

1. Building the network of wires and underground tubes

2. Metering and charging the costs