Multilevel demand subscription pricing for electric power

This paper investigates a general demand subscription pricing policy for electric power service, ie a menu of service contracts for assigning different interruption probabilities and prices to different load levels. This interruptibility feature is combined with a nonlinear energy price schedule to encourage load flattening. We derive a customer value model and a weighted sum objective function for the supplier and consumers for selecting optimal price structures of this type. The general form of the optimal price policy is derived and discussed, and the implementation methodology is outlined. An illustrative example is solved in detail.