Investigation on TOU pricing principles

Time-of-use (TOU) power price is one of the most important economic methods in demand side management (DSM). If reasonable TOU power price to consumers is determined, consumers can be motivated to take part in innovation of power industry and to adjust modes of power consumption. Thus TOU power price has very significant influence on ensuring the stable and optimal running of power system. The aim of this paper is to study the TOU pricing principles. The main problems that occur in the implementing of TOU power price are analyzed in the first part of this paper. And some primary principles for TOU pricing are proposed in the second part. First, the TOU pricing must accord with the object of the DSM. It means that the TOU power price can benefit any or all of consumers, power supplies and society, but can´t hurt any of consumers, power supplies and society. Second, primary principles for determining the peak-valley time partitions, basic price of the flat-time, and the ratio between peak price and valley price are gained. And some TOU pricing principles about avoiding power supply loss risk and determination of consumer response curve are also discussed in the second part of this paper. In the third part of this paper, according to the proposed TOU pricing principles, a simple mathematic model of TOU power price is obtained. One of the proposed principles can be expressed as a restricted condition in the mathematic model. Using the load data of Nanjing, the effect of the peak-valley time partitions on the power system is discussed by the simulation analysis. And the effects of basic price of the flat-time, and the ratio between peak price and valley price, are also discussed in the third part of this paper. Some meaningful results indicate that the TOU pricing principles proposed in this paper are reasonable