IDEAS home Printed from https://ideas.repec.org/a/rje/bellje/v8y1977ispringp270-288.html
   My bibliography  Save this article

Variable Load Pricing in the Face of Loss of Load Probability

Author

Listed:
  • Joseph Vardi
  • Jacob Zahavi
  • Benjamin Avi-Itzhak

Abstract

In contrast to traditional methods which impose capacity costs on peak customers only, it is shown that, depending upon the design criterion employed in planning for the capacity expansion of the power system, off-peak marginal cost prices should also be imputed with some marginal capacity costs. Taking the loss of load probability (LOLP) design criterion as an example, we establish this conclusion formally, and suggest an algorithm to apportion accurately marginal capacity costs to various periods. The algorithm is then extended for power systems planned to meet a given loss of energy probability (LEOP) design target. Provisions to incorporate random deviations of customer's demand and maintenance requirements in the calculation process are also suggested.

Suggested Citation

  • Joseph Vardi & Jacob Zahavi & Benjamin Avi-Itzhak, 1977. "Variable Load Pricing in the Face of Loss of Load Probability," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 270-288, Spring.
    • Handle: RePEc:rje:bellje:v:8:y:1977:i:spring:p:270-288
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0361-915X%28197721%298%3A1%3C270%3AVLPITF%3E2.0.CO%3B2-B&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark W. Gellerson & Shawna P. Grosskopf, 1980. "Public Utility Pricing, Investment, and Reliability under Uncertainty: A Review," Public Finance Review, , vol. 8(4), pages 477-492, October.
    2. Porat, Yigal & Irith, Rotlevi & Turvey, Ralph, 1997. "Long-run marginal electricity generation costs in Israel," Energy Policy, Elsevier, vol. 25(4), pages 401-411, March.
    3. Roques, Fabien A., 2008. "Market design for generation adequacy: Healing causes rather than symptoms," Utilities Policy, Elsevier, vol. 16(3), pages 171-183, September.
    4. C.K. Woo & Brian Horii & Ira Horowitz, 2002. "The Hopkinson tariff alternative to TOU rates in the Israel Electric Corporation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 9-19.
    5. Sreedharan, P. & Miller, D. & Price, S. & Woo, C.K., 2012. "Avoided cost estimation and cost-effectiveness of permanent load shifting in California," Applied Energy, Elsevier, vol. 96(C), pages 115-121.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:8:y:1977:i:spring:p:270-288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.