ABSTRACT
This chapter commences by introducing a model for Revenue Management under Critical Peak Pricing (CPP). It then establishes distribution of price and steadiness conditions before explaining how regulators can maximise the benefits of Revenue Management. CPP end-users pay lower off-peak fares, but there is no distinction in the information available to end-users who consume off-peak at low prices vis-à-vis those who consume at peak at high prices. Smart meters will provide Energy suppliers with the opportunity to increase the number of end-users who could be notified about the very significant change in price. Through dynamic pricing programmes, such as CPP, energy suppliers exploit prior knowledge about when demand peaks occur. If the energy regulator is free to set prices so that energy suppliers earn strictly positive prices even from troughs in demand, CPP can be set at significant profit levels.
