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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)

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    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.

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    File URL: http://mgt.guc.edu.eg/wpapers/029Yousri2011.pdf
    File Function: First version, 2011
    Download Restriction: no

    Paper provided by The German University in Cairo, Faculty of Management Technology in its series Working Papers with number 29.

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    Length: 21 pages
    Date of creation: Dec 2011
    Date of revision:
    Handle: RePEc:guc:wpaper:29
    Contact details of provider: Web page: http://mgt.guc.edu.eg/economics/RePEc/guc/

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    1. Kenneth E. Train, 1991. "Optimal Regulation: The Economic Theory of Natural Monopoly," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200848, June.
    2. Brennan, Timothy J., 2003. "Electricity Capacity Requirements: Who Pays?," The Electricity Journal, Elsevier, vol. 16(8), pages 11-22, October.
    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. Kay, J A, 1979. "Uncertainty, Congestion and Peak Load Pricing," Review of Economic Studies, Wiley Blackwell, vol. 46(4), pages 601-11, October.
    5. Ralph Turvey, 1968. "Peak-Load Pricing," Journal of Political Economy, University of Chicago Press, vol. 76, pages 101.
    6. 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.
    7. 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 215-48, November.
    8. 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.
    9. 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.
    10. 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.
    11. Bailey, Elizabeth E, 1972. "Peak-Load Pricing Under Regulatory Constraint," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 662-79, July-Aug..
    12. 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 645-54, June.
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