TARIFFS AND LOAD MANAGEMENT - A POST, PRIVATISATION STUDY OF THE UK ELECTRICITY SUPPLY INDUSTRY

A utility can influence its customers' load by providing financial inc entives through the prices charged for electricity at different times of use. By designing discriminatory time of use tariffs in which the p rice of electricity corresponds to the marginal cost of supply, a util ity provides appropriate signals to the customer to increase consumpti on of electricity at off-peak periods. The utilization of off-peak ele ctricity results in the improvement of system load factor which is an indicator for the utilities to decide to defer investment in new gener ating and transmission capacity. The need to utilize off-peak electric ity provides ample justification for the investigation of the determin ants of the off-peak demand functions, customers' response to discrimi natory prices and their implication to system load management. Using t he econometric approach, this paper reports a study of the British exp erience in the field of tariffs and load management in the case of the privatised Electricity Supply Industry (ESI). The results of this stu dy may be applicable to the Regional Electricity Companies in the U.K. . The utilities in several developing countries may find this study re levant, if they decide to restructure their industry for increasing ef ficiency and tariff for implementing load management (LM) instead of a rbitrary load shedding.