We explore three voluntary service options - real-time pricing, time-of-use pricing, and curtailable/interruptible service - that a local distribution company might offer its customers in order to encourage them to alter their electricity usage in response to changes in the electricity-spot-market price. These options are simple and practical, and make minimal information demands. We show that each of the options is Pareto-superior ex ante, in that it benefits both the participants and the company offering it, while not affecting the non-participants. The options are shown to be Pareto-superior ex post as well, except under certain exceptional circumstances.
Scopus Subject Areas
- Civil and Structural Engineering
- Building and Construction
- Mechanical Engineering
- Industrial and Manufacturing Engineering
- Electrical and Electronic Engineering