Reliability and public utility pricing

Journal Article · Wed Mar 01 04:00:00 EST 1978 · Am. Econ. Rev.; (United States)

OSTI ID:5128709

Crew, M A; Kleindorfer, P R

A model is used to explore the question of how to choose reliability levels under uncertainty and to expand earlier work by the authors and others. The basic problems of utility price setting to maximize either profits or welfare are examined and shown to change with the presence of reliability constraints. A rationale for these constraints is introduced as the cost of rationing under conditions of excess demand. Rationing is shown to induce the same optimal behavior for both the stochastic and the deterministic solutions. The analysis suggests that a coupling of rate-of-return regulations with specific reliability-level constraints will make regulation policies more viable. 19 references.

• Research Organization: Rutgers--the State Univ., New Brunswick, NJ
• OSTI ID: 5128709
• Journal Information: Am. Econ. Rev.; (United States), Journal Name: Am. Econ. Rev.; (United States) Vol. 68:1; ISSN AERNA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
ALLOCATIONS
BEHAVIOR
CHARGES
DEMAND FACTORS
ECONOMETRICS
ECONOMIC IMPACT
ECONOMIC POLICY
ECONOMICS
GOVERNMENT POLICIES
INCOME
PUBLIC UTILITIES
RATE STRUCTURE
REGULATIONS
RELIABILITY
SOCIAL IMPACT