Optimal pricing of non-utility generated electric power

Journal Article · Tue Feb 01 04:00:00 EST 1994 · IEEE Transactions on Power Systems (Institute of Electrical and Electronics Engineers); (United States)

DOI:https://doi.org/10.1109/59.317585· OSTI ID:7109642

Siddiqi, S N; Baughman, M L ^[1]

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1. Univ. of Texas, Austin, TX (United States). Dept. of Electrical and Computer Engineering

The importance of an optimal pricing policy for pricing non-utility generated power is pointed out in this paper. An optimal pricing policy leads to benefits for all concerned: the utility, industry, and the utility's other customers. In this paper, it is shown that reliability differentiated real-time pricing provides an optimal non-utility generated power pricing policy, from a societal welfare point of view. Firm capacity purchase, and hence an optimal price for purchasing firm capacity, are an integral part of this pricing policy. A case study shows that real-time pricing without firm capacity purchase results in improper investment decisions and higher costs for the system as a whole. Without explicit firm capacity purchase, the utility makes greater investment in capacity addition in order to meet its reliability criteria than is socially optimal. It is concluded that the non-utility generated power pricing policy presented in this paper and implied by reliability differentiated pricing policy results in social welfare-maximizing investment and operation decisions.

• OSTI ID: 7109642
• Journal Information: IEEE Transactions on Power Systems (Institute of Electrical and Electronics Engineers); (United States), Journal Name: IEEE Transactions on Power Systems (Institute of Electrical and Electronics Engineers); (United States) Vol. 9:1; ISSN 0885-8950; ISSN ITPSEG
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290201 -- Energy Planning & Policy-- Economics-- (1992-)
293000* -- Energy Planning & Policy-- Policy
Legislation
& Regulation
296000 -- Energy Planning & Policy-- Electric Power
DUAL-PURPOSE POWER PLANTS
ELECTRIC UTILITIES
PLANNING
POWER PLANTS
PRICES
PUBLIC UTILITIES
RATE STRUCTURE
TIME-OF-USE PRICING