Reliability of service and optimal pricing of electricity

Derek McKay

Expert InsightsPublished 1977

The optimal pricing of electricity under conditions of certainty has been extensively studied. Recent attempts to extend this work to situations of uncertainty have required assumptions concerning the rationing mechanism. This paper assumes that individual quantitative rationing in real-time is feasible due to recent advances in electronics. These technological innovations allow new types of transaction to be considered. A scheme which allows each individual to choose the optimal reliability of service is examined and is shown to have a number of attractive properties. These properties suggest a way in which the institutional framework might be restructured in order to produce competitive behavior in the generation sector.

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1977
  • Pages: 13
  • Document Number: P-6017

Citation

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McKay, Derek, Reliability of service and optimal pricing of electricity. Santa Monica, CA: RAND Corporation, 1977. https://www.rand.org/pubs/papers/P6017.html.
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