Tariff design for load building / energy conservation a DSM formulation

In this paper an optimal based tariff design formulation is introduced for achieving load building or energy conservation DSM target objectives. For a load building DSM objective tariffs are usually designed in a decreasing form (higher consumption corresponds to lower average price per kWh); while for an energy conservation DSM objective tariffs are usually designed in an increasing form (higher consumption corresponds to higher average price per kWh). The introduced optimal tariff design model determines: tariff levels and their corresponding energy levels to achieve objective revenue levels as required by the aforementioned DSM targets. The optimal tariff formulation introduced in this paper utilizes the price of energy for each energy level as its control variables, while levels of energy consumption (energy block size), the corresponding number of consumers and revenues are the state variables. Total energy consumption and total number of consumers serve as the equality constraints. The proposed optimal tariff formulation structure is applied to the real data of the Egyptian residential and commercial consumer sectors and results are compared to the existing tariff structure.