Electricity Marginal Cost Pricing

Applications in Eliciting Demand Responses


  • Monica Greer

Packed with case studies and practical real-world examples, Electricity Marginal Cost Pricing Principles allows regulators, engineers and energy economists to choose the pricing model that best fits their individual market.

Written by an author with 13 years of practical experience, the book begins with a clear and rigorous explanation of the theory of efficient pricing and how it impacts investor-owned, publicly-owned, and cooperatively-owned utilities using tried and true methods such as multiple-output, functional form, and multiproduct cost models. The author then moves on to include self-contained chapters on applying estimating cost models, including a cubic cost specification and policy implications while supplying actual data and examples to allow regulators, energy economists, and engineers to get "a feel" for the methods with which efficient prices are derived in today’s challenging electricity market. The book is accompanied by a companion website which will allow for the testing of methods and validating results.

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Power Engineers, Electrical Engineers, Energy Engineers, Energy Economist, Environmental Engineers, Mechanical Engineers, and Industrial Engineers


Book information

  • Published: February 2012
  • ISBN: 978-0-12-385134-5


"Having trouble comprehending your electric bill? Think you can evaluate motor efficiency savings by using one simple number for price per kilowatt-hour? This book will enlighten you."--Electrical Apparatus October 2012

Table of Contents

    1. Introduction
    2. The Theory of Natural Monopoly
    3. Regulation and Policies pertaining to the Electric Utility Industry
    4. Economics and Econometrics of Cost Models
    5. Estimating Cost Models
    6. Case Study: Cubic Cost Model to Estimate the Marginal Cost of Providing Electricity to End Users
    7. Case Study: Cost Models to Illustrate Price and Substitution Elasticities Using KLEM Data
    8. The Theory of Efficient Pricing
    9. The Price and Substitution Elasticities of Demand Models
    10. Case Study: Real-Time Pricing of Electricity