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The Egyptian Electricity Market: Designing a Prudent Peak Load Pricing Model


  • Dina Mohamed Yousri

    () (Faculty of Management Technology, The German University in Cairo)


Electricity prices in Egypt have been set significantly lower than the real economic cost of its production and supply. These subsidies encourage the waste of energy and increase the fluctuation in demand, triggering a huge need of additional power generation capacity in Egypt. This dialectical paper addresses this problem by first theoretically analyzing the Egyptian electricity market and then discussing a possible peak load pricing system. According to the results, especially low income households will shift their demand from the peak period to the off peak period. A properly implemented peak load pricing system could reduce the need for power capacity expansion by significant 2000-3000 MW, accompanied by additional savings in the network transmission capacity.

Suggested Citation

  • Dina Mohamed Yousri, 2011. "The Egyptian Electricity Market: Designing a Prudent Peak Load Pricing Model," Working Papers 29, The German University in Cairo, Faculty of Management Technology.
  • Handle: RePEc:guc:wpaper:29

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    References listed on IDEAS

    1. Bailey, Elizabeth E, 1972. "Peak-Load Pricing Under Regulatory Constraint," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 662-679, July-Aug..
    2. 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.
    3. Della Valle, Anna P., 1988. "Short-run versus long-run marginal cost pricing," Energy Economics, Elsevier, vol. 10(4), pages 283-286, October.
    4. Kleindorfer, Paul R & Fernando, Chitru S, 1993. "Peak-Load Pricing and Reliability under Uncertainty," Journal of Regulatory Economics, Springer, vol. 5(1), pages 5-23, March.
    5. Manning, Williard Jr. & Mitchell, Bridger M. & Acton, Jan Paul, 1979. "Design of the Los Angeles peak-load pricing experiment for electricity," Journal of Econometrics, Elsevier, vol. 11(1), pages 131-194, September.
    6. Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-248, November.
    7. Ralph Turvey, 1968. "Peak-Load Pricing," Journal of Political Economy, University of Chicago Press, vol. 76, pages 101-101.
    8. Berg, Sandford V. & Savvides, Andreas, 1983. "The theory of maximum kW demand charges for electricity," Energy Economics, Elsevier, vol. 5(4), pages 258-266, October.
    9. Brennan, Timothy J., 2003. "Electricity Capacity Requirements: Who Pays?," The Electricity Journal, Elsevier, vol. 16(8), pages 11-22, October.
    10. J. A. Kay, 1979. "Uncertainty, Congestion and Peak Load Pricing," Review of Economic Studies, Oxford University Press, vol. 46(4), pages 601-611.
    11. Waverman, Leonard, 1975. "Peak-Load Pricing under Regulatory Constraint: A Proof of Inefficiency," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 645-654, June.
    12. Kenneth E. Train, 1991. "Optimal Regulation: The Economic Theory of Natural Monopoly," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200848, July.
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    More about this item


    Energy; Electricity; Peak Load Pricing; Peak Demand; Off-Peak Demand;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General


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