Marginal Cost Pricing Rules for System Net Benefits, Demand Behavior, and WaterUtility Financing: Conceptual Underpinnings and Case Study of the Phoenix Water and Wastewater Department

摘要

The goal of the study is to improve our understanding of the promise and problemsconnected with the practical application of marginal cost pricing approximations in the water supply field. A background discussion is provided on the theory of efficient utility pricing in the presence of scale economies, peaking problems and concern for equity. The theory depends on well-defined capital cost functions, while the real world provides, at best, sets of discrete investment alternatives that define a particular utility's expansion path over some planning horizon. To deal with reality, several marginal cost pricing approximations have been developed, and three of these are examined in the study: 'textbook', Turvey and average. The examination compares their performance in the context of the Phoenix, Arizona, water utility and its expansion plan through 2010.