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The Hopkinson tariff alternative to TOU rates in the Israel Electric Corporation

  • C.K. Woo

    (Energy and Environmental Economics, Inc., 353 Sacramento Street, Suite 1700, San Francisco, CA 94111, USA)

  • Brian Horii

    (Energy and Environmental Economics, Inc., 353 Sacramento Street, Suite 1700, San Francisco, CA 94111, USA)

  • Ira Horowitz

    (Decision and Information Sciences, Warrington College of Business Administration, University of Florida, Gainesville, FL 32611, USA)

This paper determines three alternative Hopkinson tariffs to replace the Israel Electric Corporation's time-of-use (TOU) energy rate. The first apportions any system residual revenue requirement between customer classes, based on their respective historic peak demands. The second collects the same revenue as the current TOU rates. The third allocates generation revenue requirements for base-load and peaking generation plants in proportion to the base-load and peak-period energy consumption of each class, and allocates transmission and distribution revenue requirements in proportion to the connected load of each class. We show that a Hopkinson tariff with demand subscription is an attractive alternative to TOU rates, especially when quantity rationing is essential to maintaining a balance between the provision of energy and the demand for it. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1040
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 23 (2002)
Issue (Month): 1 ()
Pages: 9-19

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Handle: RePEc:wly:mgtdec:v:23:y:2002:i:1:p:9-19
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Acton, Jan Paul, 1982. "An Evaluation of Economists' Influence on Electric Utility Rate Reforms," American Economic Review, American Economic Association, vol. 72(2), pages 114-19, May.
  2. Joseph Vardi & Jacob Zahavi & Benjamin Avi-Itzhak, 1977. "Variable Load Pricing in the Face of Loss of Load Probability," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 270-288, Spring.
  3. Roger E. Bohn & Michael C. Caramanis & Fred C. Schweppe, 1984. "Optimal Pricing in Electrical Networks over Space and Time," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 360-376, Autumn.
  4. Chi-Keung Woo, 1991. "Capacity Rationing and Fixed Cost Collection," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 153-163.
  5. 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 747-72, November.
  6. Paul L. Joskow, 1976. "Contributions to the Theory of Marginal Cost Pricing," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 197-206, Spring.
  7. 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.
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