Designing a critical peak pricing scheme for the profit maximization objective considering price responsiveness of customers

Designing a Profit-Maximizing Critical Peak Pricing Scheme Considering the Payback Phenomenon

“…In addition, the main concerns of an LSE operating a CPP scheme are the optimal schedule of critical events and the resulting profit. However, if payback is present, the optimal event schedule and the LSE's profit, which are determined without considering payback as in [11], would change in a manner differing from the characteristics of the payback phenomenon. Nonetheless, few studies have examined the payback within CPP schemes; even fewer have presented how CPP parameters, such as the peak rate, should be chosen to maximize LSE profits considering the payback.…”

“…The second problem in CPP design involves selection of the peak rate. Recent research [11] presents guidelines for determining the optimal peak rate (along with other CPP parameters) to achieve maximum profits for an LSE. In [12], a methodology is proposed to determine the peak rate as well as the optimal events schedule considering variable wind power generation.…”

“…Accordingly, it affects the profits enjoyed by the LSE and thus must be appropriately considered when designing a profit-maximizing CPP scheme. The optimal peak rate in a CPP scheme is determined in [11] based on the assumption that customers' demand is not recovered but rather purely reduced when critical events take place. However, if the payback phenomenon occurs, the optimal peak rate given in [11] no longer ensures optimality.…”

“…The optimal peak rate in a CPP scheme is determined in [11] based on the assumption that customers' demand is not recovered but rather purely reduced when critical events take place. However, if the payback phenomenon occurs, the optimal peak rate given in [11] no longer ensures optimality. In addition, the main concerns of an LSE operating a CPP scheme are the optimal schedule of critical events and the resulting profit.…”

Load-shift incentives for household demand response: Evaluation of hourly dynamic pricing and rebate schemes in a wind-based electricity system

“…Static prices simplify the analysis of different retail pricing structures, which might be the reason that besides real-time pricing also many analyses of simpler rate structures have been performed. Some of them study critical event pricing [30,31], but most works look into the effects of time-of-use rates from the perspective of utilities [32][33][34] or customers [35,36].…”