Response model and activity analysis of the revenue reconciliation problem in the marginal cost pricing of electricity

Thesis/Dissertation · Tue Jan 01 04:00:00 EST 1980

OSTI ID:5415709

Hassig, N L

The objective of the research was to determine if feasible reconciliation procedures exist that meet the multiple (and sometimes competing) goals of the electricity pricing problem while staying within the constraints of the problem. The answer was that such procedures do exist. Selection among the alternative, feasible procedures depends on the weighting factors placed on the goals. One procedure did not universally satisfy all the goals; the various procedures satisfied the alternative goals to varying degrees. The selection process was sensitive to the initial conditions of the model and to the band width of the constraint boundary conditions. Discriminate analysis was used to identify the variables that contribute the most to the optimal selection process. The results of the research indicated that the variables that are the most effective in selecting among the various procedures were the following: the ratio of peak to off-peak prices, the amount of revenue adjustment required, the constraint on equity, the constraint on peak price stability, and the constraint on meeting the revenue requirement. The poicy recommendations that can be derived from this research are very relevant in light of today's energy problems. Time-of-use pricing of electricity is needed in order to signal to the consumer the true cost of electricity by season and by time of day. Marginal costs capture such costs and rates should be based on such costs. Revenue reconciliation procedures make marginal cost-based rates feasible from a regulatory requirement perspective. This research showed that such procedures are available and selection among alternative procedures depends on the preference rankings placed on the multiple, and sometimes competing goals of electricity pricing.

• OSTI ID: 5415709
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
296000* -- Energy Planning & Policy-- Electric Power
COMPUTERIZED SIMULATION
ECONOMICS
ELECTRIC POWER
ELECTRIC UTILITIES
FORECASTING
LOAD MANAGEMENT
MANAGEMENT
MARGINAL-COST PRICING
POWER
POWER DEMAND
PRICES
PUBLIC UTILITIES
RATE STRUCTURE
SIMULATION