Complex ideas inhibit use of marginal-pricing theory

Journal Article · Wed Dec 01 04:00:00 EST 1982 · Electr. Light Power; (United States)

OSTI ID:6868236

An Economic Development/Conservation Foundation committee examined why the utility industry failed to apply straightforward marginal-cost pricing, it learned that, apart from historical and political aspects, pricing electricity at its replacement cost may be too complex. The report notes four major problems: (1) technical difficulties of measuring costs over time, (2) regulatory difficulties of moving from direct state control to a variety of opinions on cost calculations, (3) how to handle excess revenues, and (4) consumer opposition to higher rates. Utilities could begin by charging large users more and encouraging conservation. However, including construction work in progress (CWIP) costs in the rate base, while it pushes toward marginal-cost pricing, may not be good policy. (DCK)

• OSTI ID: 6868236
• Journal Information: Electr. Light Power; (United States), Journal Name: Electr. Light Power; (United States) Vol. 60:12; ISSN ELLPA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
296000* -- Energy Planning & Policy-- Electric Power
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320603 -- Energy Conservation
Consumption
& Utilization-- Municipalities & Community Systems-- Public Utilities-- (1980-)
COST ESTIMATION
ELECTRIC UTILITIES
MARGINAL-COST PRICING
PRICES
PRICING REGULATIONS
PUBLIC OPINION
PUBLIC UTILITIES
REGULATIONS