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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Consequently, we conclude that there is a sound economic rationale for introducing some form of peak-load pricing into the system operator's optimizing criterion.
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.
This is MacAvoy's version of the peak-load pricing problem that is frequently examined in the electricity literature.
We start with the algebraic example that ties this new rationale for price maintenance to the phenomenon known as peak-load pricing and that is also the basis for some other points.
The economic literature on peak-load pricing, management, fuel-switching, alternative fuel sources, and related issues is so extensive that we can only hope to list a few works, including those by Steiner (1957), Panzar and Sibley (1978), Crew and Kleindorfer (1978), Hamlen and Tschirhart (1980), Brown and Sibley (1986), and Phillips (1988).(10) We also recognize the growing literature on real time pricing and other pricing innovations being emphasized in the face of the current trend towards deregulation of wholesale bulk power and retail markets.(11) However, the price of electricity generated at federally owned hydropower facilities is limited to the recovery of actual costs and is not adjusted to reflect market conditions.
Also, the conversion from uniform pricing to peak-load pricing may work in reducing the price of the service (Bergstrom and MacKie-Mason, 1991).
Downs is most attracted to "peak-load pricing", which attempts to equate the private marginal cost of driving to the social marginal cost, by increasing the cost of driving during rush-hour.
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.
Next, Crew and Kleindorfer examine the issue of peak-load pricing. The regulatory pricing scheme must account for a demand that is not uniform throughout a time period.