IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v15y1994i3p43-54.html
   My bibliography  Save this article

Emission Costs, Consumer Bypass and Efficient Pricing of Electricity

Author

Listed:
  • Chi-Keung Woo
  • Benjamin Hobbs
  • Ren Orans
  • Roger Pupp
  • Brian Horii

Abstract

Electricity generation causes external costs because of the emission of air pollutants. Pricing an electric utility's service at the sum of the utility's marginal generation cost and marginal emission cost, however, is inefficient due to “bypass†by large industrial customers and the need to maintain the utility's financial viability. This paper derives the optimal tax on emission and efficient prices for retail service to two customer classes, one of which has the option to self-generate. These rules are used to evaluate the pricing proposals made in a recent rate case in California. These proposals are shown to be inefficient, in that they encourage over-consumption by residential customers who do not have access to alternative sources of electricity supply.

Suggested Citation

  • Chi-Keung Woo & Benjamin Hobbs & Ren Orans & Roger Pupp & Brian Horii, 1994. "Emission Costs, Consumer Bypass and Efficient Pricing of Electricity," The Energy Journal, , vol. 15(3), pages 43-54, July.
    • Handle: RePEc:sae:enejou:v:15:y:1994:i:3:p:43-54
    DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No3-3
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol15-No3-3
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol15-No3-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jean-Jacques Laffont, 1988. "Fundamentals of Public Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121271, December.
    2. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Walter Cont & Fernando Navajas & Francisco Pizzi & Alberto Porto, 2020. "Precios y tarifas de servicios públicos. Evolución. 1945-2018," Asociación Argentina de Economía Política: Working Papers 4328, Asociación Argentina de Economía Política.
    2. Pang‐Ryong Kim, 1997. "The Effect of Profit Regulations on Combined Two‐Part and Peak‐Load Pricing," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 238-247, September.
    3. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 22, Edward Elgar Publishing.
    4. Hugh Sibly & Richard Tooth, 2014. "The consequences of using increasing block tariffs to price urban water," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 223-243, April.
    5. Fuente, David & Kabubo-Mariara, Jane & Kimuyu, Peter & Mwaura, Mbutu & Whittington, Dale, 2017. "Assessing the Performance of Alternative Water and Sanitation Tariffs: The Case of Nairobi, Kenya," EfD Discussion Paper 17-21, Environment for Development, University of Gothenburg.
    6. Leonardo Felli & Antonio Merlo, 2006. "Endogenous Lobbying," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 180-215, March.
    7. David Encaoua & Michel Moreaux, 1987. "L'analyse théorique des problèmes de tarification et d'allocation des coûts dans les télécommunications," Revue Économique, Programme National Persée, vol. 38(2), pages 375-414.
    8. Peter J. Lambert & Helen T. Naughton, 2009. "The Equal Absolute Sacrifice Principle Revisited," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 328-349, April.
    9. Schlereth, Christian & Stepanchuk, Tanja & Skiera, Bernd, 2010. "Optimization and analysis of the profitability of tariff structures with two-part tariffs," European Journal of Operational Research, Elsevier, vol. 206(3), pages 691-701, November.
    10. Berliant, Marcus & Gouveia, Miguel, 2022. "On the Political Economy of Nonlinear Income Taxation," MPRA Paper 113140, University Library of Munich, Germany.
    11. Gorkem Celik & Dongsoo Shin & Roland Strausz, 2021. "Public good overprovision by a manipulative provider," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 314-333, June.
    12. Brennan, Timothy J., 2000. "The Economics of Competition Policy: Recent Developments and Cautionary Notes in Antitrust and Regulation," Discussion Papers 10716, Resources for the Future.
    13. Chisari, Omar O. & Rodríguez-Pardina, Martín, 1998. "Algunos determinantes de la inversión en sectores de infraestructura en la Argentina," Series Históricas 7445, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Ferrari, Giorgio & Riedel, Frank & Steg, Jan-Henrik, 2016. "Continuous-Time Public Good Contribution under Uncertainty," Center for Mathematical Economics Working Papers 485, Center for Mathematical Economics, Bielefeld University.
    15. Bernard, Jean-Thomas & Roland, Michel, 2000. "Load management programs, cross-subsidies and transaction costs: the case of self-rationing," Resource and Energy Economics, Elsevier, vol. 22(2), pages 161-188, May.
    16. Chi-Keung Woo & Dewy Q. Seeto, 1988. "Optimal Off-peak Incremental Sales Rate Design in Electricity Pricing," The Energy Journal, , vol. 9(1), pages 95-102, January.
    17. Rao, Narasimha D., 2013. "Distributional impacts of climate change mitigation in Indian electricity: The influence of governance," Energy Policy, Elsevier, vol. 61(C), pages 1344-1356.
    18. Castro Rodríguez, Fidel, 1997. "Wright tariffs in the spanish electricity industry: The case of residential consumption," UC3M Working papers. Economics 6074, Universidad Carlos III de Madrid. Departamento de Economía.
    19. Martin Chick, 2011. "The 3 Rs: Regulation, risk and responsibility in British utilities since 1945," Business History, Taylor & Francis Journals, vol. 53(5), pages 747-760, August.
    20. Jean-Marc Bonnisseau & Elena Mercato, 2010. "Externalities, consumption constraints and regular economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(1), pages 123-147, July.

    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:sae:enejou:v:15:y:1994:i:3:p:43-54. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: SAGE Publications (email available below). General contact details of provider: .

    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.