Consider a public utility that offers its service at two different times. We study the effects of a change from uniform pricing through the day to peak-load pricing. We show that a regulated utility constrained to a fixed rate of return on capital can plausibly reduce its prices in both peak and off-peak times. Peak-load pricing can lead to either increased or decreased amount of capital for a regulated firm. We find a simple criterion for whether an individual gains or loses form pesk-load pricing.

Consider a public utility that offers its service at two different times. We study the effects of a change from uniform pricing throughout the day to peak-load pricing. We show that for a utility constrained to operate with a fixed rate of return on capital, the introduction of peak-load pricing can plausibly reduce the price of the service it both in peak and off-peak times. We also find that peak-load pricing can lead to either greater or smaller capacity than uniform pricing. We find a simple criterion for determining whether a particular individual gains or loses from peak-load pricing.