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Price Discrimination and the Adoption of the Electricity Demand Charge

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  • Neufeld, John L.

Abstract

Between 1905 and 1915, as state price regulation became widespread, electric utilities in the United States faced severe competition. The primary source of electricity for industry then was not utilities but self-generation by the user in an “isolated plant.†The demand-charge rate structure first became widespread during this period. The demand-charge rate structure has been interpreted as a misapplication of the peak-load pricing principle, a view which has made its popularity a puzzle. Instead it was adopted as a sophisticated mechanism which institutionalized profit-maximizing price discrimination given the competition from isolated plants.

Suggested Citation

  • Neufeld, John L., 1987. "Price Discrimination and the Adoption of the Electricity Demand Charge," The Journal of Economic History, Cambridge University Press, vol. 47(3), pages 693-709, September.
    • Handle: RePEc:cup:jechis:v:47:y:1987:i:03:p:693-709_04
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    Cited by:

    1. Vincent Geloso & Germain Belzile, 2018. "Electricity in Quebec before Nationalization, 1919 to 1939," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(1), pages 101-119, March.
    2. Arellano, M. Soledad & Serra, Pablo, 2007. "Spatial peak-load pricing," Energy Economics, Elsevier, vol. 29(2), pages 228-239, March.
    3. Brown, David P. & Sappington, David E.M., 2018. "On the role of maximum demand charges in the presence of distributed generation resources," Energy Economics, Elsevier, vol. 69(C), pages 237-249.
    4. Strong, Derek Ryan, 2017. "The Early Diffusion of Smart Meters in the US Electric Power Industry," Thesis Commons 7zprk, Center for Open Science.
    5. Madureira, Nuno Luís, 2010. "The European debate on rate systems in the interwar period," Energy Policy, Elsevier, vol. 38(8), pages 4703-4711, August.
    6. Seung-Ju Lee & Yourim Yoon, 2020. "Electricity Cost Optimization in Energy Storage Systems by Combining a Genetic Algorithm with Dynamic Programming," Mathematics, MDPI, vol. 8(9), pages 1-20, September.
    7. Ziyi Zhao, 2023. "Operation Simulation and Economic Analysis of Household Hybrid PV and BESS Systems in the Improved TOU Mode," Sustainability, MDPI, vol. 15(11), pages 1-23, May.
    8. María Inés Barbero & Andrea Lluch & Norma S. Lanciotti & Alexandre Macchione Saes, 2014. "American & Foreign Power in Argentina and Brazil (1926–65)," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 54(2), pages 120-144, July.

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