Do distribution companies loose money with an electricity flexible tariff?: A review of the Chilean case

Sonia Vera, Felipe Bernal and Enzo Sauma

Energy, 2013, vol. 55, issue C, 295-303

Abstract: We can get an (energy efficiency) EE improvement if we produce a flatter daily load curve, leading to a higher efficiency of the power system, making better use of the generation and transport electricity chain, thus avoiding over-investment in equipment used just few hours a year. Tariff flexibility of the (Time of Use) TOU type is one of these measures. Generally, TOU systems are designed to minimize total system cost, which may cause losses in distribution companies (DISCOs), generating opposition. On the contrary, the present paper proposes a TOU system for electricity consumption in Chile where optimal prices are obtained in order to maximize total income of DISCOs. In this manner, the proposed TOU system is, by definition, beneficial for DISCOs and it may lead to a win–win situation among DISCOs and consumers. In particular, we show that such a system, implemented in a country like Chile, would allow for DISCOs a total potential benefit of 811.7 millions of dollars for the 3-year study period (2005–2007), considering initiatives that promote a 5% savings in real consumption during on-peak hours, obtained by the spread or difference between the proposed and the current systems.

Keywords: Tariff flexibility; Time of Use; Energy efficiency; Flexible pricing system; Load curve (search for similar items in EconPapers)
JEL-codes: D42 D61 L11 L94 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:55:y:2013:i:c:p:295-303

DOI: 10.1016/j.energy.2013.03.024

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