Spatial peak-load pricing
This article extends the traditional electricity peak-load pricing model to include transmission costs. In the context of a two-node, two-technology electric power system, where suppliers face inelastic demand, we show that when the marginal plant is located at the energy-importing center, generators located away from that center should pay the marginal capacity transmission cost; otherwise, consumers should bear this cost through capacity payments. Since electric power transmission is a natural monopoly, marginal-cost pricing does not fully cover costs. We propose distributing the revenue deficit among users in proportion to the surplus they derive from the service priced at marginal cost.
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- Yves Balasko, "undated".
"Theoretical perspectives on three issues of electricity economics,"
GSIA Working Papers
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- Green, Richard, 1997. "Electricity transmission pricing: an international comparison," Utilities Policy, Elsevier, vol. 6(3), pages 177-184, September.
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- Neufeld, John L., 1987. "Price Discrimination and the Adoption of the Electricity Demand Charge," The Journal of Economic History, Cambridge University Press, vol. 47(03), pages 693-709, September.
- 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. Full references (including those not matched with items on IDEAS)
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