Current electricity tariffs do not reflect the real costs that a customer incurs to a supplier, as units are charged at the same rate, regardless of the consumption pattern. In this paper, we propose a prediction-of-use (POU) tariff that better reflects the predictability cost of a customer. Our tariff asks customers to pre-commit to a baseline consumption, and charges them based on both their actual consumption and the deviation from the anticipated baseline. First, we study, from a cooperative game theory perspective, the cost game induced by a single such tariff, and show customers would have an incentive to minimize their risk, by joining together when buying electricity as a grand coalition. Second, we study the efficient (i.e., cost-minimizing) structure of buying groups for the more realistic setting when multiple, competing POU tariffs are available. We propose a polynomial time algorithm to compute the efficient buyer groups, and validate our approach experimentally, using a large-scale data set of domestic consumers in the U.K.

doi.org/10.1109/TSG.2017.2660580
IEEE Transactions on Smart Grid

Robu, V, Vinyals, M, Rogers, A, & Jennings, N. (2018). Efficient Buyer Groups With Prediction-of-Use Electricity Tariffs. IEEE Transactions on Smart Grid, 9(5). doi:10.1109/TSG.2017.2660580