A Principal-Agent Theory Based Optimal Electricity Price Contract Design with Selectable Load Rate

Based on comprehensive cost pricing method and the power supply cost for power consumers in different voltage grades was analyzed while the load characteristics were considered. On this basis, applying the commission-agent theory in economics a commission-agent model, in which the two-part optional electricity price was considered, was established. By means of rigorous mathematical derivation a mathematical analytic solution for such an institutional arrangement problem, i.e., to obtain the optimal contract function that could effectively solve the adverse selection problem in the selective pricing, was given. Results of calculation example show that the proposed incentive mechanism can not only reflect real costs of electricity consumers in different voltage grades under different load rates to implement the fair pricing, but also can give the consumers the right of choice and encourage them rational electricity consumption, besides, when there are four or five options the pricing effect of such a package can be close to complete nonlinear price form