Reliability differentiated pricing of electricity service

Technical Report · Thu Mar 01 04:00:00 EST 1990

OSTI ID:6980112

Rau, N S; Hegazy, Y

It has been suggested that electricity customers be given the choice of opting for different levels of service reliability. Customers would then subscribe to level of reliability that best suits them and their processes. Such a choice would unbundle the service. Implicit in the suggestion is the assumption that in the long run, unbundle service improves the lots of both customers and producers. In other words, reliability differentiated service improves efficiency. The purpose of this study is two-fold. First, we examine the practicality of implementing reliability differentiated service. Second we compare economic welfare measurements as they pertain to reliability-based prices and other methods for setting the prices for electricity services. In essence, the reliability-based prices present customers with the prospect of electing to pay a particular price for a specific service reliability. However, these prices are not optimal in the sense they cause the maximization of consumer plus producer surpluses in a regulated environment. Instead, these prices are constrained by hour-specific revenue requirements for two customer classes. Hence, they are not efficient prices although they possess the potential to increase economic welfare when compared to other economically suboptimal regulated prices. 27 refs., 19 figs., 13 tabs.

• Research Organization: National Regulatory Research Inst., Columbus, OH (USA)
• OSTI ID: 6980112
• Report Number(s): NRRI-90-5; ON: TI90010814
• Country of Publication: United States
• Language: English

Related Subjects

24 POWER TRANSMISSION AND DISTRIBUTION
240201 -- Power System Networks
Transmission & Distribution-- AC Systems-- (1990-)
240700* -- Power Transmission & Distribution-- Economic
Industrial & Business Aspects-- (1990-)
29 ENERGY PLANNING, POLICY, AND ECONOMY
296000 -- Energy Planning & Policy-- Electric Power
DEMAND
ECONOMIC ANALYSIS
ECONOMICS
EFFICIENCY
ELECTRIC UTILITIES
ENERGY DEMAND
LOAD MANAGEMENT
MANAGEMENT
MISSION ANALYSIS
POWER DISTRIBUTION
PRICES
PUBLIC OPINION
PUBLIC UTILITIES
QUALITY ASSURANCE
REGULATIONS
RELIABILITY
SPECIFICATIONS
SURVEYS