Planning in a public utility

Abstract

This paper examines the pricing and allocation of electrical energy in the United States. Development planning for electrical energy is a continuous and sequential process involving mobilization and efficient use of resources over time and over space. Combining the temporal and spatial aspects of the problem, the concept of net social payoff is used as a basis for deducing the conditions of spatial and intertemporal equilibrium. The most important conclusion is that misallocation of electrical energy exists among consuming sectors. Because the price of electrical energy is too low for the industrial sector, the industrial sector is consuming a greater quantity than is optimal. Moreover, a better resource allocation would obtain if electrical energy development and operation were carried out by utilities on a national basis.