While there is growing interest in Real Time Pricing as a competitive tool, its adoption to date has been constrained by wariness on the part of many utilities and many of their customers. That wariness is not misplaced, for Real Time Pricing is not for everyone. In order for both utilities and their customers to benefit, the pricing system must be properly tailored for, and offered to, the app...

(ISO-NE) for providing review comments on a draft of this report. We also thank the utility program managers who were willing to be interviewed and who provided valuable information on the RTP tariffs included in this study. The authors are solely responsible for any errors or omissions contained in this report.

We consider the problem of designing a pricing mechanism for precisely controlling the real-time balance in electricity markets, where retail brokers aggregate the supply and demand of a number of individual customers, and must purchase or sell power at the wholesale level such that the total supply matches total demand. This is typically done for future time periods by buying and selling power...

Introduction In “The Ethics of Dynamic Pricing,” Faruqui (Faruqui 2010) lays out a case for improved efficiency in using dynamic prices for retail electricity tariffs and addresses various issues about the distributional effects of alternative pricing mechanisms. The principal contrast is between flat or nearly constant energy prices and time-varying prices that reflect more closely the margina...

Exchanges often sell both trading services and price information. We study the effect of combining the sale of these two products on price discovery, in a rational expectations model. We show that pricing errors and thereby speculators’ trading profits decline when price information becomes available in real-time to a wider number of speculators. As a result, speculators’ willingness to pay for...

In this paper, we assume a firm tries to determine the optimal price, vehicle route and location of the depot in each zone to maximise its profit. Therefore, in this paper zone pricing is studied which contributes to the literature of location-routing problems (LRP). Zone pricing is one of the most important pricing policies that are prevalently used by many companies. The proposed problem is v...

This paper analyzes the results of a critical peak pricing (CPP) experiment involving 123 residential customers of the City of Anaheim Public Utilities (APU) over the period June 1, 2005 to October 14, 2005. Using a nonparametric condition mean estimation framework that allows for customer-specific fixed effects and day-of-sample fixed effects, I find that customers in the treatment group consu...