Theory, Volume 1, Queueing Systems
Theory, Volume 1, Queueing Systems
| Hi-index | 0.00 |
In this paper we develop a general dynamic pricing scheme based on consumer-indexed marginal cost, and demonstrate its properties in a simulated electricity market derived from New York ISO data. We show that monotonic marginal (MM) pricing provides price certainty, ensuring that every consumer's instantaneous price is non-increasing for a constant consumption level. Additionally, we show that MM pricing ensures budget balance for energy suppliers, allowing them to recover any operating costs and a profit margin. Using a Summer 2012 peak load day as a case study, we simulate a population of over 25000 electricity users and evaluate the performance of an example MM pricing plan versus historical real-time prices under various demand elasticities. The results demonstrate that MM pricing can provide system-level demand response and cost savings comparable with real-time pricing, while protecting consumers from price volatility.