Research on Tiered Electricity Pricing to Address Cross-Subsidies Based on a Nonlinear Demand Function

The problem of cross-subsidy in my country's electricity prices is particularly prominent and needs to be solved urgently in terms of fairness and economic efficiency. Reasonable tiered electricity prices can improve the current situation of cross-subsidy by increasing block electricity prices, while also improving the efficiency of electricity utilization and alleviating the pressure on energy supply. However, in the research and analysis of cross-subsidy, most of the linear demand functions are used. Based on the previous work, this paper makes two innovative attempts: (1) Based on the price elasticity differences of users in different classes, the linear demand function is expanded to an actual nonlinear demand function; (2) The user satisfaction model [1] and the welfare change model [2] are combined to construct a two-step optimization model to determine the optimal tiered electricity quantity and optimal electricity price of the tiered electricity price. In the design of the scheme, the impact of the change in tiered electricity quantity on the electricity price ratio is fully considered. In the process of adjusting the electricity prices of each tier, the tiered electricity quantity is adjusted to form a dynamic tiered electricity price adjustment scheme. The survey data of Chengdu, Sichuan Province in 2015 was used for example analysis. For this data set, the social welfare can be increased by 1.1833 million yuan throughout the year. (Abstract)