The European debate on rate systems in the interwar period

Abstract

This article describes a particular branch that evolved in the diffusion of electrical rate systems in twentieth-century Europe and the debate that ensued between the competitive, promotional and cost based approaches. Three major questions are addressed: What factors and historical circumstances favoured the emergence of more or less efficient pricing schemes? Why did some enterprises opt for promotional rates while others defended the cost based alternative? What is the historical origin of marginal cost pricing? It is shown how the volatility of the costs that characterize hydro-electric production made this particular technology very sensitive to a cost approach towards pricing and to a seasonal and time-of-day perspective on rate systems.