Pareto Dominance Through Self-Selecting Tariffs: The Case of TOU Electricity Rates for Agricultural Customers

Abstract

We estimate the impact of a voluntary time-of-use (TOU) rale option for electricity used in agricultural pumping. We find that offering the TOU tariff in addition to standard, non-TOU rates increases the profits of the electric utility and Pareto dominates the offering of standard rates alone. The analysis provides an example of the fact that Pareto improvements can be obtained by Judiciously expanding the set of self-selecting tariffs offered by a public utility.

Keywords

TOU electricity rates Agriculture Self-selecting tariffs Pareto dominance

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