We calculate how changes in assumptions about (1) the correlation between household income and water use, and (2) households' response to average or marginal prices affect the tariffs' performance in terms of these three criteria.
We focus on the realistic case where the marginal price of the cost cap tariff is not smaller than the marginal price of the pay-per-use tariff and where the cost cap level is at or above the price level of the flat rate.
Open image in new window Fig. 6 Consumer's indifference curve for different marginal price levels of the CC tariff ((p_{rm CC})) and uncertainty levels (offset).
In a situation where the PCT was unable to pay for an unanticipated surge in activity, the two organisations agreed to relax the PbR rules so that the trust was paid at what were effectively marginal rates rather than according to tariff.
We separately investigate the implication of using price vectors with increases and decreases in tariffs from current levels, on marginal value estimate from choice experiment data developed using prospect theory.
On the other hand, the POC tariff, if made proportional to marginal costs alone, fails to account for sunk costs and extent of use of network.
While it is anticipated that the use of a different country's tariff may only have a marginal effect on the resulting mapping function, the utilities generated may not be appropriate for information resource allocation decisions for the country of study.
Therefore, consumers are willing to accept a higher marginal price compared to a pay-per-use tariff as well as a cost cap which is priced above the fixed fee of a flat rate.
This chapter describes the main options for designing water and sanitation (W&S) tariffs, including the basic ideas of dynamic marginal cost pricing in the W&S sector.
The pay per use tariff is also called as usage price, marginal price or per unit charge.
