Analysis of Competition between Electricity and Town-Gas Suppliers under Time-of-Use Pricing

Abstract

Time-of-use pricing attracts attention in energy utilities such as electricity and town-gas, as a method of load management. These energy utilities are supplied by separate private companies, and hence there may be a certain competition between these suppliers by strategic use of time-of-use pricing for substitutable demand. In the pesent paper, strategic price setting by these competitive energy suppliers is analyzed based on a game model. Theoretical analysis and a numerical case study of the model show that the competitive suppliers discount prices for peak demand, and that the competition makes the market inefficient.