Over the years 1947-86, electricity has become an important source of energy The social, political, economic and institutional conditions under which the electricity industry has evolved in India are studied in this thesis Though electricity demand has increased in India, due to electricity supply shortages after 1972 it was difficult to study electricity demand since no data are available on unconstrained demand Hence, the factors affecting electricity sales are studied at all-India level for three consumer groups: i) industrial ii) agricultural and iii) "other" consumers Since states in India differ in their characteristics, electricity sales to industrial and agricultural consumers were studied for the States of Bihar, Kerala, Maharashtra and Punjab In this analysis, economic and econometric principles are applied to historical data On the basis of demand theory, income elasticities were expected to be positive and the price elasticities were expected to be negative From the analysis, it was found that income and price elasticities varied across States and across different consumer groups Income elasticities were found to be positive and high in each case Price elasticities were negative and very low in each case with the exception of industrial consumers in Punjab The time-of-day ("unrestricted") demand for power in Gujarat was studied for the years 1985-86 to 1988-89 The expectation of an hourly and seasonal pattern in the ("unrestricted") demand for power was confirmed A series of 24 seemingly unrelated equations testing the effects of employment and price on "unrestricted" demand for power at each hour of the day were analysed It was found that the observed hourly pattern of power demand could not be affected in the desired manner with the existing pricing policy and structure in Gujarat Pricing remains an important practical tool for managing electricity demand Pricing also directly affects the performance of the State Electricity Board The financial performance of Gujarat State Electricity Board was examined and found to be poor due to its pricing policy On the basis of the literature on the theory of pricing in public enterprises, a method of calculating prices in Gujarat was derived Due to data constraints, the estimation of prices in the period 1961-86 was limited to prices charged to all consumers of the Gujarat Electricity Board taken as a group For similar reasons, it also ignored the response of consumers at different time of the day The prices charged by Gujarat Electricity Board were then compared with the estimated prices It was found that the estimated prices were higher than the prices charged by Gujarat Electricity Board in the period 1961-86 One of the consequences of low electricity prices was Gujarat Electricity Board's poor financial performance The study concludes that it is important for the State Electricity Boards in India to study their costs and demand in order to derive a pricing policy that allows the consumer to be aware of the costs and helps the State Electricity Boards to eliminate financial losses

The welfare economics of optional seasonal time-of-day electricity tariffs

Electricity demand and pricing in India: 1947-1986.

This paper reviews some of the major insights of the economics literature regarding regulation of the electricity industry. We start with a brief review of the theory of natural monopoly. Then, as the most popular pricing method, peak-load pricing is assessed for the U.S. and Chile. Next, the three most commonly used regulation methods in the electricity industry are reviewed and the problems of these regulation methods are summarized. Ramsey-pricing regulation is subject to a series of unrealistic assumptions and highly depends on the availability of good information about price elasticity. Pricecap regulation, on the other hand, is subject to quality issues. Rate of return regulation has a negative impact on innovation. The paper further discusses the supply quality (reliability) issue. The impact of different regulation methods on welfare is reviewed. Lastly, the relationship between investment and market power is addressed in detail.

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/pdf/regulating-the-electricity-industry-4rpnlpwjnx.pdf

Regulating the Electricity Industry

A number of experiments designed to test the feasibility of seasonal-time-of-day pricing are currently underway in the United States. This paper addresses some of the problems that these experiments are likely to encounter, and describes a methodology for measuring the welfare benefits and costs from STD pricing. The importance of a well-articulated model of consumer demand as part of the design of an experiment is stressed. It is suggested that in the Southern and Southwestern parts of the country, realistic seasonal differentials may exhaust most of the welfare benefits of moving to marginal cost pricing.

Experiments in Seasonal-Time-of-Day Pricing of Electricity to Residential Users

/pdf/evaluating-time-of-day-electricity-rates-for-residential-27fpx0efkr.pdf

The welfare economics of optional seasonal time-of-day electricity tariffs

Citations

Electricity demand and pricing in India: 1947-1986.

Regulating the Electricity Industry

References

Experiments in Seasonal-Time-of-Day Pricing of Electricity to Residential Users

Evaluating Time-of-Day Electricity Rates for Residential Customers

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