IDEAS home Printed from https://ideas.repec.org/p/fth/lavaen/9617.html
   My bibliography  Save this paper

Load Management Programs, Cross-Subsidies and Transaction Costs: The Case of Self-Rationing

Author

Listed:
  • Roland, M.
  • Bernard, J.T.

Abstract

Load management programs are used by electric utilities to reduce the amount of reserve capacity that is required in order to meet peak consumption. Although these programs are generally offered to costumers as alternatives to regular service, economic models of their allocative efficiency have always been based on the implicit assumption that they were the only services available. This paper presents a model in which the consumer has the option to subscribe to regular service or to participate in a particular load management program, called self- rationing.

Suggested Citation

  • Roland, M. & Bernard, J.T., 1996. "Load Management Programs, Cross-Subsidies and Transaction Costs: The Case of Self-Rationing," Papers 9617, Laval - Recherche en Energie.
    • Handle: RePEc:fth:lavaen:9617
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chao, Hung-po & Wilson, Robert, 1987. "Priority Service: Pricing, Investment, and Market Organization," American Economic Review, American Economic Association, vol. 77(5), pages 899-916, December.
    2. Bohi, Douglas R. & Palmer, Karen L., 1996. "The efficiency of wholesale vs. retail competition in electricity," The Electricity Journal, Elsevier, vol. 9(8), pages 12-20, October.
    3. Beard, T. Randolph & Sweeney, George H. & Gropper, Daniel M., 1995. "Subsidy free pricing of interruptible service contracts," Energy Economics, Elsevier, vol. 17(1), pages 53-58, January.
    4. Spulber, Daniel F, 1992. "Optimal Nonlinear Pricing and Contingent Contracts," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 747-772, November.
    5. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008, January.
    6. Spulber, Daniel F, 1992. "Capacity-Contingent Nonlinear Pricing by Regulated Firms," Journal of Regulatory Economics, Springer, vol. 4(4), pages 299-319, December.
    7. Joseph A. Doucet & Shinuel S. Oren, 1991. "Onsite Backup Generation and Interruption Insurance for Electricity Distribution," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 79-94.
    8. Thomas N. Taylor & Peter M. Schwarz, 1986. "A Residential Demand Charge: Evidence from the Duke Power Time-of-Day Pricing Experiment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 135-151.
    9. Woo, Chi-Keung, 1990. "Efficient Electricity Pricing with Self-Rationing," Journal of Regulatory Economics, Springer, vol. 2(1), pages 69-81, March.
    10. Thomas N. Taylor & Peter M. Schwarz, 1990. "The Long-Run Effects of a Time-of-Use Demand Charge," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 431-445, Autumn.
    11. Caves, Douglas W. & Christensen, Laurits R., 1980. "Econometric analysis of residential time-of-use electricity pricing experiments," Journal of Econometrics, Elsevier, vol. 14(3), pages 287-306, December.
    12. MARCHAND, Maurice G., 1974. "Pricing power supplied on an interruptible basis," LIDAM Reprints CORE 186, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Paul L. Joskow, 1997. "Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 119-138, Summer.
    14. Panzar, John C & Sibley, David S, 1978. "Public Utility Pricing under Risk: The Case of Self-Rationing," American Economic Review, American Economic Association, vol. 68(5), pages 888-895, December.
    15. Wilson, Robert, 1989. "Ramsey Pricing of Priority Service," Journal of Regulatory Economics, Springer, vol. 1(3), pages 189-202, September.
    16. Marchand, M. G., 1974. "Pricing power supplied on an interruptible basis," European Economic Review, Elsevier, vol. 5(3), pages 263-274.
    17. Oren, Shmuel S & Doucet, Joseph A, 1990. "Interruption Insurance for Generation and Distribution of Electric Power," Journal of Regulatory Economics, Springer, vol. 2(1), pages 5-19, March.
    18. Doucet, Joseph A & Roland, Michel, 1993. "Efficient Self-Rationing of Electricity Revisited," Journal of Regulatory Economics, Springer, vol. 5(1), pages 91-100, March.
    19. Chao, Hung-po & Oren, Shmuel S. & Smith, Stephen A. & Wilson, Robert B., 1986. "Multilevel demand subscription pricing for electric power," Energy Economics, Elsevier, vol. 8(4), pages 199-217, October.
    20. Lee, Seong-Uh, 1993. "Welfare-Optimal Pricing and Capacity Selection under an Ex Ante Maximum Demand Charge," Journal of Regulatory Economics, Springer, vol. 5(3), pages 317-335, September.
    21. Filippini, Massimo, 1995. "Electricity demand by time of use An application of the household AIDS model," Energy Economics, Elsevier, vol. 17(3), pages 197-204, July.
    22. Schwarz, Peter M & Taylor, Thomas N, 1987. "Public Utility Pricing under Risk; the Case of Self-Rationing: Comment and Extension," American Economic Review, American Economic Association, vol. 77(4), pages 734-739, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jacopo Torriti & Philipp Grunewald, 2014. "Demand Side Response: Patterns in Europe and Future Policy Perspectives under Capacity Mechanisms," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    2. Heggie, Alastair & Eager, Dan & McKinnon, Ken & Van Der Weijde, Adriaan H., 2018. "Power rationing in a long-term power shortage," Energy Policy, Elsevier, vol. 121(C), pages 202-210.
    3. repec:hal:wpspec:info:hdl:2441/c6t1fl36hv9s7q89j8m3l01c9 is not listed on IDEAS
    4. Salies, Evens, 2013. "Real-time pricing when some consumers resist in saving electricity," Energy Policy, Elsevier, vol. 59(C), pages 843-849.
    5. Evens Salies, 2012. "Real-time pricing when consumers have saving costs," Working Papers hal-01070292, HAL.
    6. repec:hal:spmain:info:hdl:2441/1v5t17iu579ln8fcl17pe3te92 is not listed on IDEAS
    7. Hunt., Julian David & Stilpen, Daniel & de Freitas, Marcos Aurélio Vasconcelos, 2018. "A review of the causes, impacts and solutions for electricity supply crises in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 88(C), pages 208-222.
    8. repec:spo:wpecon:info:hdl:2441/c6t1fl36hv9s7q89j8m3l01c9 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/c6t1fl36hv9s7q89j8m3l01c9 is not listed on IDEAS
    10. Anatoly P. Dzyuba & Irina A. Solovyeva, 2020. "Demand-side management mechanisms in industry," Journal of New Economy, Ural State University of Economics, vol. 21(3), pages 175-195, October.
    11. Olkkonen, Ville & Rinne, Samuli & Hast, Aira & Syri, Sanna, 2017. "Benefits of DSM measures in the future Finnish energy system," Energy, Elsevier, vol. 137(C), pages 729-738.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doucet, Joseph A. & Jo Min, Kyung & Roland, Michel & Strauss, Todd, 1996. "Electricity rationing through a two-stage mechanism," Energy Economics, Elsevier, vol. 18(3), pages 247-263, July.
    2. Lambin, Xavier, 2020. "Integration of Demand Response in Electricity Market Capacity Mechanisms," Utilities Policy, Elsevier, vol. 64(C).
    3. David, Laurent & Le Breton, Michel & Merillon, Olivier, 2007. "Public Utility Pricing and Capacity Choice with Stochastic Demand," IDEI Working Papers 489, Institut d'Économie Industrielle (IDEI), Toulouse.
    4. Fred Schroyen & Adekola Oyenuga, 2011. "Optimal pricing and capacity choice for a public service under risk of interruption," Journal of Regulatory Economics, Springer, vol. 39(3), pages 252-272, June.
    5. Chao, Hung-po, 2011. "Efficient pricing and investment in electricity markets with intermittent resources," Energy Policy, Elsevier, vol. 39(7), pages 3945-3953, July.
    6. Woo, C.K. & Sreedharan, P. & Hargreaves, J. & Kahrl, F. & Wang, J. & Horowitz, I., 2014. "A review of electricity product differentiation," Applied Energy, Elsevier, vol. 114(C), pages 262-272.
    7. Hung-po Chao, 2011. "Demand response in wholesale electricity markets: the choice of customer baseline," Journal of Regulatory Economics, Springer, vol. 39(1), pages 68-88, February.
    8. Seeto, Dewey & Woo, C. K. & Horowitz, Ira, 1997. "Time-of-use rates vs. Hopkinson tariffs redux: An analysis of the choice of rate structures in a regulated electricity distribution company," Energy Economics, Elsevier, vol. 19(2), pages 169-185, May.
    9. 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.
    10. Serra, Pablo J., 1997. "Energy pricing under uncertain supply," Energy Economics, Elsevier, vol. 19(2), pages 209-223, May.
    11. Hung-po Chao, 2012. "Competitive electricity markets with consumer subscription service in a smart grid," Journal of Regulatory Economics, Springer, vol. 41(1), pages 155-180, February.
    12. Moore, J. & Woo, C.K. & Horii, B. & Price, S. & Olson, A., 2010. "Estimating the option value of a non-firm electricity tariff," Energy, Elsevier, vol. 35(4), pages 1609-1614.
    13. Heggie, Alastair & Eager, Dan & McKinnon, Ken & Van Der Weijde, Adriaan H., 2018. "Power rationing in a long-term power shortage," Energy Policy, Elsevier, vol. 121(C), pages 202-210.
    14. Horowitz, I. & Woo, C.K., 2006. "Designing Pareto-superior demand-response rate options," Energy, Elsevier, vol. 31(6), pages 1040-1051.
    15. Robert H. Patrick & Frank A. Wolak, 2001. "Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices," NBER Working Papers 8213, National Bureau of Economic Research, Inc.
    16. Woo, C.K. & Kollman, E. & Orans, R. & Price, S. & Horii, B., 2008. "Now that California has AMI, what can the state do with it?," Energy Policy, Elsevier, vol. 36(4), pages 1366-1374, April.
    17. Eugenio J. Miravete, 2002. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 943-971.
    18. Farhad Billimoria & Filiberto Fele & Iacopo Savelli & Thomas Morstyn & Malcolm McCulloch, 2023. "An Insurance Paradigm for Improving Power System Resilience via Distributed Investment," Papers 2302.01456, arXiv.org.
    19. Matsukawa, Isamu, 2006. "Regulating a Monopoly Offering Priority Service," MPRA Paper 991, University Library of Munich, Germany.
    20. Greening, Lorna A., 2010. "Demand response resources: Who is responsible for implementation in a deregulated market?," Energy, Elsevier, vol. 35(4), pages 1518-1525.

    More about this item

    Keywords

    ELECTRICITY; MONOPOLIES;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fth:lavaen:9617. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Krichel (email available below). General contact details of provider: https://edirc.repec.org/data/grlvlca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.