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Capacity Rationing and Fixed Cost Collection

This paper proposes a simple load management program with a two-part tariff to ration an electric utility's installed capacity and to collect its fixed costs under asymmetric information and demand uncertainty. Because of its simplicity, the program is a practical alternative to spot pricing and rationing schemes with highly nonlinear rate structures.

Purchase ( $25 )

Energy Specializations: Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes:
D42 - Market Structure, Pricing, and Design: Monopoly
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electric utilities, load management, Reliability. Rationing, Fixed cost collection

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No2-9

Published in Volume 12, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.