Peak Load Pricing in the Electric Utility Industry
Abstract
In the electric utility industry cost minimization requires that heterogeneous electric generation technologies be used to produce electricity demands of different durations. In contrast to the conclusions of traditional peak-load pricing theory, the existence of a heterogeneous capital stock means that off-peak marginal cost prices almost always should include some marginal capacity costs, and that the profit maximizing regulated electric utility may set peak price above marginal cost and off-peak price below marginal cost in order to encourage the expansion of capital-intensive base load generating capacity.Download Info
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Bibliographic Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 7 (1976)
Issue (Month): 1 (Spring)
Pages: 232-241
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Web page: http://www.rje.org
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Web: http://gemini.econ.umd.edu/cgi-bin/rje_online.cgi
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- N. Vijayamohanan Pillai, 2003. "A contribution to peak load pricing theory and application," Centre for Development Studies, Trivendrum Working Papers 346, Centre for Development Studies, Trivendrum, India.
- John G. Riley & Charles R. Scherer, 1976. "Optimal Water Pricing with Cyclical Supply and Demand," UCLA Economics Working Papers 077, UCLA Department of Economics.
- Porat, Yigal & Irith, Rotlevi & Turvey, Ralph, 1997. "Long-run marginal electricity generation costs in Israel," Energy Policy, Elsevier, vol. 25(4), pages 401-411, March.
- Friedman, Lee S., 2011. "The importance of marginal cost electricity pricing to the success of greenhouse gas reduction programs," Energy Policy, Elsevier, vol. 39(11), pages 7347-7360.
- José Pablo Arellano, 2004. "Principios para Tarificar la Transmisión Eléctrica," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(123), pages 231-253.
- Ted Bergstrom & Jeff Mackie-Mason, . "The Simple Analytics of Peak-Load Pricing," Papers _035, University of Michigan, Department of Economics.
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