Priority pricing in electricity supply: An application for Israel

Michael Beenstock; Ephraim Goldin

doi:10.1016/s0928-7655(96)00017-6

Priority pricing in electricity supply: An application for Israel

Michael Beenstock^*
, Ephraim Goldin

^*Corresponding author for this work

Department of Economics

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

It is well known that in the event of a shortage in generation capacity, it is inefficient if the electricity utility cuts off customers randomly. It is preferable to set up a market in service priority in which customers who have a greater need pay more for the right not to be cut off. We use an econometric model of outage costs in Israel to calculate the menu of priority rates by season and time of day. Top priority rates range from zero, when the loss-of-load probability (LOLP) is zero, to 8 cents (US) per kWh when the LOLP is greatest.

Original language	English
Pages (from-to)	175-189
Number of pages	15
Journal	Resource and Energy Economics
Volume	19
Issue number	3
DOIs	https://doi.org/10.1016/s0928-7655(96)00017-6
State	Published - Aug 1997

Keywords

Non-linear pricing
Outages
Service priority

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10.1016/s0928-7655(96)00017-6

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AB - It is well known that in the event of a shortage in generation capacity, it is inefficient if the electricity utility cuts off customers randomly. It is preferable to set up a market in service priority in which customers who have a greater need pay more for the right not to be cut off. We use an econometric model of outage costs in Israel to calculate the menu of priority rates by season and time of day. Top priority rates range from zero, when the loss-of-load probability (LOLP) is zero, to 8 cents (US) per kWh when the LOLP is greatest.

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Priority pricing in electricity supply: An application for Israel

Abstract

Keywords

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