The influence of nonlinear pricing policy on residential electricity demand—A case study of Anhui residents

Abstract

In this paper, we propose a power structure of economic models of price responsive loads, based on price elasticity of electricity demand, perceived price and customer benefit function. Taking Anhui province as an example, we estimate the influences of block pricing policy and TOU-block pricing policy (the combination of blocking pricing policy and time-of-use (TOU) pricing policy) on residential electricity demand and electricity expenses. We find that the present block pricing policy may help lower the residential electricity consumption at about 1.4%–3.0% per year, which indicates that the effect of energy conservation is not obvious; while the TOU-block pricing policy may help lower the yearly electricity consumption at less than 1%, which implies that, compared with block pricing, the TOU-block pricing policy plays a weaker role in reducing electricity consumption. Moreover, block pricing policy results in a yearly increase of 2.34%–4.28% power expenses on urban residents, while TOU-block pricing policy may lower the corresponding expense at 8.17%–14.30%, which shows that block pricing policy plays a limited role in increasing the electricity expense of urban residents. In addition, the TOU-block pricing policy may effectively alleviate the effect of block pricing on urban residents' electricity expense. Generally speaking, we see limited prospect in the goal attainment of the present TOU-block pricing policy.