Peak-Load Pricing: European Lessons for U.S. Energy Policy

Since the 1973/74 oil embargo, critics have attacked the traditional methods of pricing electricity and have called for fundamental revisions in the structure of electricity rates. Among the most-promising proposals are those that advocate peak-load pricing, which bases the price of electricity on the time of day or the month in which it is used. This volume constitutes the first comprehensive evaluation of the challenge of shifting the $50 billion American electricity sector to peak-load rate structures and the opportunities for increasing the efficiency of national energy resources that such changes promise. The authors examine the role of electricity pricing in national energy policy and the economic principles that form the foundation for electricity rate structures. They provide an integrated presentation of the theory of peak-load pricing and its role in national energy policy, a detailed examination of its practical application in European electricity utilities (where it has been in use for some time), and its implications for American energy policy.