Congestion and Peak load pricing: a comparison in electricity and transportation
Abstract: Prices signal the scarcity of resources on the market and produce their efficient allocation. Given the level of high fixed costs characterising most public Utilities (electricity and transport are no exemption to this) there is a strong case for a discriminating use of prices. The demand for public utility service varies periodically and its management constitute the core of the peak load pricing problem. A fundamental aspect of peak load theory is the specific object of pricing. We assume that peak load implies pricing far the use of scarce resource capacity in production, whereas peak load far the use of a network, that is congestion charging, is aimed at the internalisation of external costs. In the case of transport we might adopt, far example, peak load pricing far the management of excessive bus demand and use congestion charging to internalise the external costs imposed by private transportation. In the electricity sector peak load pri¬cing might be used to manage the excessive power demand while congestion pricing is just a part of the transmission pricing mechanism that has to be complemented by electricity losses charging. In the case of transport the two problems overlap since production and transmission coincide.
European Transport / Trasporti Europei
VI (2000) 14
EUT Edizioni Università di Trieste
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica europea
Edoardo Marcucci, Paolo Polidori, "Congestion and Peak load pricing: a comparison in electricity and transportation", in: European Transport / Trasporti Europei, VI (2000) 14, pp. 24-32