Evaluation of lifeline and time-of-day pricing structure and estimation of residential electricity demand
The overall purpose of this study is to evaluate alternative electricity price structures in terms of efficiency and consumer welfare. The lifeline rate structure - charging a lower price in the initial block and higher prices in the trailing blocks - and the marginal-cost-based time-of-day price structure have been suggested as alternatives to the declining-block price structure. The rationale for lifeline rate structure is that the low-electricity users also have low incomes. Thus, this price structure will reduce the cost of electricity to the poor. Also, it is claimed that the lifeline rate structure reduces the total use of residential electricity. Lifeline rate structure can be criticized on the grounds that (1) it gives an incorrect cost signal to the customers, leading to inefficient allocation of resources, and (2) low-use customers do not always have low incomes. The primary criteria used to evaluate alternative price structures in this study are (a) efficiency measured by total welfare, which is the sum of consumer and producer surplus, and (b) customer welfare, which is measured by consumer surplus alone. The secondary criterion used to evaluate alternative price structure is conservation (decrease in the quantity of electricity demanded). The demand functions for each income group and rate class under each price structure were estimated utilizing individual customer sample data. The demand function and the actual revenue paid were used to calculate the consumer surplus of each category.
- OSTI ID:
- 6501322
- Country of Publication:
- United States
- Language:
- English
Similar Records
Lifeline rates: are they useful
Target efficiency of lifeline electricity pricing and other energy subsidy programs: a survey-based policy analysis
Related Subjects
290200 -- Energy Planning & Policy-- Economics & Sociology
296000* -- Energy Planning & Policy-- Electric Power
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320603 -- Energy Conservation
Consumption
& Utilization-- Municipalities & Community Systems-- Public Utilities-- (1980-)
CONSUMER PROTECTION
ECONOMIC ELASTICITY
ELECTRIC POWER
ELECTRIC UTILITIES
EVALUATION
MARGINAL-COST PRICING
POWER
POWER DEMAND
PRICES
PUBLIC UTILITIES
RATE STRUCTURE
RESIDENTIAL SECTOR
TIME-OF-USE PRICING