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All time-of-use tariffs are designed to be cost neutral with the existing flat rate tariff assuming the same base case operating scenario.
Dummy variable identifying a flat rate tariff.
This holds true even though consumers are charged more at the margin than in a pay-per-use tariff and the maximum possible bill amount is higher under a cost cap compared to a flat rate tariff.
Since we abstract from any bias (or irrationality), we can provide insights under which condition a cost cap tariff should be chosen, even though it offers a higher variable rate than the concurrently offered pay-per-use tariff and a higher cost ceiling than the concurrently offered flat rate tariff.
Open image in new window Fig. 4 Optimal tariff choice for different preference levels (offset) and parameterizations of the cost cap tariff in relation to the pay-per-use and flat rate tariff ((p_{rm CC}/{p_{rm PU}}) and (c_{rm CC}/{b_{rm FR}}).) The figure is derived for the values (p_{rm PU}=0.10,b_{rm FR}=40,betand=0.001) and (text{range}=1).
Similar(55)
It makes use of Gaussian Mixture Model clustering technique to group half-hour interval flat rate tariffs within a day into clusters to determine ToU tariffs.
This paper proposes a novel method to design feasible Time-of-Use (ToU) tariffs for domestic customers from flat rate tariffs by clustering techniques.
Thereby, note that cost cap tariffs are offered both by the same company in addition to its pay-per-use and flat rate tariffs as well as in response to flat rate and/or pay-per-use tariffs by competitors.
This paper develops and empirically validates a consumer surplus model that explains the optimal consumption pattern under cost cap tariffs and the conditions under which cost cap tariffs are chosen over pure pay-per-use and flat rate tariffs by a rational consumer.
It can be a flat-rate tariff linked to weight – as is the case with cheddar cheese – or calculated as a proportion of the overall value of the goods.
Revenues include the monthly payments based on the selected flat-rate tariff and the upgrade options (such as the data and SMS flat rate).
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