peak-load pricing

peak-load pricing

the principle of charging higher PRICES for certain products (that cannot be stored) at times of peak demand to reflect the higher MARGINAL COSTS of supplying products at peak times. Peak-load pricing is designed to encourage consumers to spread their demand more evenly so as to avoid the need to invest in plant that is then grossly underutilized at off-peak times. Peak-load pricing is used in electricity supply, railways, etc., using multipart tariffs.

See TWO-PART TARIFF.

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The study emphasises the need to re-examine the tariff structure, including the use of subsidies and variable peak-load pricing, and assess whether it is flexible enough for the private sector to sell electricity to the national grid on a commercially viable basis.
Oren (2003) explains that capacity payments derive from the peak-load pricing theory, so that energy is priced at marginal cost and capacity payments recover fixed costs.
Such payments are rooted in the theory of peak-load pricing, so that energy is priced at marginal cost and a capacity payment is used to recover the fixed capacity cost.
Peak-load pricing principles that hold for hotels hold for electricity as well.
However, the economics of peak-load pricing with a bit of real-world noise could produce patterns like those observed in the studies described above, without necessarily any exercise of market power.
Thus, peak-load pricing will create a series of complicated market-place reactions, and indeterminant transfers of wealth.
Downs admits that these remedies, in addition to being political anathema, do not attack the problem of congestion directly, as peak-load pricing does.
He brought Gordes and another local conservation specialist over there to do energy audits of local businesses and to brief local utility officials on peak-load pricing and similar strategies.
Also, if there are multiplants, the plants with the highest marginal costs are generally used only during the peak; peak-load pricing will not only decrease the marginal cost but the capacity (peak demand) cost as well.
Most electric utilities are adopting time-of-day and peak-load pricing as conservation incentives.
While recognizing the advantages of slot systems in lessening delays, economists have criticized both approaches as being sub-optimal, and have advocated procedures such as slot auctions, peak-load pricing and slot trading to better utilize congested airports.
Time-of-use pricing is introduced in Chapter 8, where peak-load pricing is treated extensively.