Abstract
A “menu” of interruptible service offerings provides a means for matching the reliability of electric power to the preferences of consumers with diverse interruption costs. Appropriately designed pricing induces a distribution of customer service selections such that the welfare loss (i.e., total interruption cost) of all customers is minimized, when averaged over a distribution of shortfall situations. This paper derives one and two dimensional price menus that consider lost service time and interruption frequency as separate attributes. The relative efficiencies of three types of menus are compared and discussed.
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