| This thesis is composed of three papers (Chapters 1-3) on pricing and reliability, investment under uncertainty and optimal rationing of electric power after capacity shocks. Chapter 1 proposes a feasible price mechanism for small generation markets (like those found in Latin American countries), a combination of spot pricing, interruptible contracts and time-of-use tariffs with frequent updating. The attractiveness of hydroelectric power is subjected to criticism, and a method to find its opportunity cost presented. Reliability theory and practice is subject to a historic reappraisal. Chapter 2 presents a complementary slackness relationship between operation and lumpy capacity additions under uncertainty. Variational inequalities of the Hamilton-Jacobi-Bellman type are derived for the cases of constant and increasing returns to scale, which follow from the application of stochastic control techniques to real option problems. Chapter 3 is an empirical policy analysis of the optimal reallocation of scarce electricity supplies after a major natural disaster, by economic sector and electricity service area. A linear programming model capturing the technical and economic features of the problem is presented and implemented for Shelby County, Tennessee. A policy discussion on ex ante implementation of capacity-contingent rationing rules is also presented. Finally, Chapter 4 summarizes the results and points out topics to be addressed in future research, including modeling, power sector reform and implementation of optimal rationing policies. |
