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Emission Costs, Consumer Bypass and Efficient Pricing of Electricity

Chi-Keung Woo, Benjamin Hobbs, Ren Orans, Roger Pupp and Brian Horii

Year: 1994
Volume: Volume15
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-3
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Abstract:
Electricity generation causes external costs because of the emission of air pollutants. Pricing an electric utility's service at the sum of the utility's marginal generation cost and marginal emission cost, however, is inefficient due to "bypass" by large industrial customers and the need to maintain the utility's financial viability. This paper derives the optimal tax on emission and efficient prices for retail service to two customer classes, one of which has the option to self-generate. These rules are used to evaluate the pricing proposals made in a recent rate case in California. These proposals are shown to be inefficient, in that they encourage over-consumption by residential customers who do not have access to alternative sources of electricity supply.



Customers' Choice Among Retail Energy Suppliers: The Willingness-to-Pay for Service Attributes

Andrew A. Goett, Kathleen Hudson and Kenneth E. Train

Year: 2000
Volume: Volume21
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No4-1
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Abstract:
We examine small/medium commercial and industrial customers' choices among energy suppliers in conjoint-type experiments. The distribution of customers' willingness to pay is estimated for more than 40 attributes of suppliers, including sign-up bonuses, amount and type of renewables, billing options, bundling with other services, reductions in voltage fluctuations, and charitable contributions. These estimates provide guidance for suppliers in designing service options and to economists in anticipating the services that will be offered in competitive retail energy markets.





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