A Spatial equilibrium perspective for planning the production of electrical energy

A spatial and temporal equilibrium model of production, consumption, prices, and transmission is constructed to determine the efficient pricing and allocation of electrical energy in the United States. Regional coordination is technically feasible and economically attractive. It also maximizes environmental efficiencies. The duplication of electrical generation and transmission facilities yields a misallocation of resources.The utilities put forth specific arguments against coordinated operations. Yet in a fully integrated power system, each region would be expected to maximize the benefits of time diversity by purchasing from outside the region in lieu of the expansion of regional capacity. The Federal Energy Regulatory Commission has not yet made a serious move to encourage regional coordination and planning, but the Commission has the authority to promote such operations if it chooses to do so.The author is an economist with the Department of Energy. The views expressed are those of the author and do not necessarily represent the policies of the Department of Energy or the views of other staff members.