2011 Volume 4 Issue 1 Pages 61-76
The two-part tariff is adopted not only to many contracts for electricity supply but also to those for capacity trading. Previously, the fixed charge in the two-part tariff was thought to cover a part of fixed costs, but now it is getting considered to be a premium for the capacity reservation as the deregulation of the power industry progresses. The two-part tariff which appropriately reflects demand risk is expected to ensure the adequacy of power supply. In this paper, we construct a valuation model for the two-part tariff under power demand uncertainty with considering technology mix which is a set of generators with various fixed cost and variable cost. Further, some new perspectives are provided.