A Block-of-Use Electricity Retail Pricing Approach Based on the Customer Load Profile

The utilization rate of generation assets significantly affects the profits of generation companies. Since the daily load profiles of customers are not considered in conventional time-of-use (TOU) pricing, a fairness issue may arise because of cross subsidy. To address this issue, a block-of-use (BOU) electricity retail pricing approach is proposed, in which the price varies from block to block instead of varying from period to period. The aggregated daily load profile is horizontally divided into blocks according to the utilization rate of the generation assets. A block filling approach is proposed to allocate the customer load into different blocks. The contribution of each customer's load profile to the generation assets can be quantified. A BOU pricing approach is proposed, in which the rate of each block consists of the fixed rate and the variable rate. The mathematical model of the proposed approach is formulated. The case study based on the actual load data verifies the effectiveness of the proposed approach and model. Compared to the TOU scheme, cross subsidy is resolved, the average rate of customers with friendly behaviors is low and that of customers with unfriendly behaviors is high in the BOU pricing.