Application of Risk Analysis in Prioritizing Investments in Terms of Value-Based Management and Power Quality
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Application of Risk Analysis in Prioritizing Investments in Terms of Value-Based Management and Power Quality Renato de Campos · Hector Arango · Benedito Donizeti Bonatto · Simone Cristina Nunes Araujo
Received: 26 January 2012 / Revised: 28 September 2012 / Accepted: 16 March 2013 / Published online: 23 April 2013 © Brazilian Society for Automatics–SBA 2013
Abstract This paper presents a theoretical model for the prioritization process of investments for electric system expansion and improvement of quality levels for the supply of electricity from a distribution utility. Such model is based on the criteria of economic valued added (EVA) and the analysis in the risk-return plane. In this project a market model called tariff optimization (TAROT) was adopted, which allows the representation and calculation of the economic value added by the agents (consumers, companies, government, and society), as opposed to the classical methods that rely on the calculation of net profit. It presents an example of application of the model considering the real data of a power distribution company, where, from a candidate set of investments, whose risks and returns are known, a computer program is developed for computation of the prioritization according to a methodology and criteria based on a frontier of risk-return threshold (risk-return hurdle rates) resulting in an optimized sequence of executions. Keywords Economic model · Electricity market regulation · Prioritization of investments · Value-based management · Power quality R. de Campos · H. Arango · B. D. Bonatto (B) Federal Univeristy of Itajuba (UNIFEI), Av. BPS, 1303 Pinheirinho, Itajuba, MG 37500-903, Brazil e-mail: [email protected] R. de Campos e-mail: [email protected] H. Arango e-mail: [email protected] S. C. N. Araujo Matrix Energy Engineering, Rua Purpurina, 287 Sumarezinho, Sao Paulo, SP 05435-030, Brazil e-mail: [email protected]
List of Symbols a b B d D δ B G L V e E EBIT EBITDA EBT G hL hV J L O p P PROI q R r rA rD
Avidity (MR$/TWh) Satiety (MR$/TWh)2 Total invested capital (MR$) Depreciation factor Assets depreciation (MR$) Leverage factor or indebtedness percentage of the total invested capital Capital variation (MR$) Operating costs variation (MR$) Profits variation (MR$) Economic value added variation (MR$) Operating costs factor (MR$/TWh) Consumed energy (TWh) Earnings before interests and taxes (MR$) Earnings before interests, taxes, depreciation, and amortization (MR$) Earnings before taxes (MR$) Operating costs (MR$) Threshold rate for the generation of profits Threshold rate for adding value (hurdle rate) Interests (MR$) Net profit (MR$) Power quality imperfection onus (MR$) Energy loss factor (MR$/TWh)2 Electricity price (MR$) Profit return on investment Power quality imperfection onus factor (MR$/TWh) Distribution utility income (MR$) Rate of return Shareholder rate of return Debt interests
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J Control Autom Electr Syst (2013) 24:513–521
rW S t T U V VROI Y
Weighted average cost of capital (WACC) Surp
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