ABSTRACT
This chapter examines the importance of coordinated energy planning and pricing, with particular reference to the inter-relationships among the pricing policies adopted in various energy sub-sectors such as electric power, petroleum, natural gas, coal, and traditional fuels. Decision-makers in an increasing number of countries have realized that energy sector investment planning and pricing should be carried out on an integrated basis within the framework of a national energy master plan that determines energy policy, ranging from short-run supply-demand management to long-run planning. The objectives of energy pricing are closely related to the goals of energy planning, but are more specific. Shadow pricing theory has been developed mainly for use in the cost-benefit analysis of projects. A more general characteristic of peak-load pricing is that energy prices have to be structured. There are several additional economic, political, and social considerations that may be adequate justification for departing from a strictly efficient pricing policy.
