A Bilevel Approach for Optimal Price-Setting of Time-and-Level-of-Use Tariffs

The Time-and-Level-of-Use (TLOU) system is a recently developed approach for electric energy pricing, extending Time-of-Use with an energy capacity that customers can book in advance for a given consumption time. We define a bilevel optimization model for determining the pricing parameters of TLOU, maximizing the supplier revenue while anticipating an optimal reaction of the customer. A solution approach is built, based on the discrete finite set of optimality candidates of the lower-level customer problem.