Designing Pareto-superior demand-response rate options

I. Horowitz; Chi-Keung WOO

doi:10.1016/j.energy.2005.02.013

Designing Pareto-superior demand-response rate options

I. Horowitz, Chi-Keung WOO^*

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › peer-review

39 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	1040-1051
Number of pages	12
Journal	Energy
Volume	31
Issue number	6-7
DOIs	https://doi.org/10.1016/j.energy.2005.02.013
Publication status	Published - 2006

Scopus Subject Areas

Civil and Structural Engineering
Building and Construction
Pollution
Mechanical Engineering
Industrial and Manufacturing Engineering
Electrical and Electronic Engineering

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10.1016/j.energy.2005.02.013

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AB - 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.

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Designing Pareto-superior demand-response rate options

Abstract

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