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Capacity Rationing and Fixed Cost Collection

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  • Chi-Keung Woo

Abstract

This paper proposes a simple load management program with a two-part tariff to ration an electric utility’s installed capacity and to collect its fixed costs under asymmetric information and demand uncertainty. Because of its simplicity, the program is a practical alternative to spot pricing and rationing schemes with highly nonlinear rate structures.

Suggested Citation

  • Chi-Keung Woo, 1991. "Capacity Rationing and Fixed Cost Collection," The Energy Journal, , vol. 12(2), pages 153-164, April.
    • Handle: RePEc:sae:enejou:v:12:y:1991:i:2:p:153-164
    DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No2-9
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    References listed on IDEAS

    as
    1. Marchand, M. G., 1974. "Pricing power supplied on an interruptible basis," European Economic Review, Elsevier, vol. 5(3), pages 263-274.
    2. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
    3. 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).
    4. 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.
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